Jamaica
faces major challenges
By
Roxanne Stapleton
Trinidad Express
Port
Spain
Petroleumworld.com
09 24 06
TURNING
TO electricity, Geddes opened: "We did a tariff
review in 2004. We went around the island meeting
with the stakeholders and a decision was handed
down as to what the tariff review would be.
"On
average it was between 5.5 per cent and 11 per cent
across the different rate categories - it was a
price cap implemented for the Light and Power Company.
"Included
in that is the provision for the annual adjustment
for inflation, also in the equation for the annual
adjustment, is something known as the Z Factor which
has its origins in the license.
"That
Z Factor is defined as an instrument that the company
can use to reclaim through the tariff, damage on
losses that it has sustained due to something outside
of its control.
"I'm
not talking about if they chose to invest their
money in a very shaky bank or stock market.
"It
was subsequently defined in 2005 as a hurricane
damaging their transmission and distribution lines.
"Hurricane
Ivan hit Jamaica in 2004 and countries in the hurricane
belt do not get insurance for their transmission
and distribution lines - South Florida, the Caribbean,
they don't.
"So
those lines are out there without insurance and
they are the first things that come down in a hurricane
and they came down during Hurricane Ivan.
"The
Light and Power Company submitted a bill to us for
Ja$1.5 billion and we looked at it and there were
issues and decisions stating that they could recoup
Ja$500 million from the Jamaican public over a two
year period.
"That
worked out to about seven cents Jamaican per kilowatt
hour.
"Communication
with the consumers and other factors resulted in
them saying no, they (Light and Power) shouldn't
be able to claim from us for damages - they should
have insured the lines.
"We
conveyed to them (consumers) that you can't get
insurance and a company could get wiped out with
one hurricane and it's in nobody's interest to have
that.
"By
September 2005, a month later, there were island-wide
demonstrations - objections to the Ja$500 million.
"They
did not agree with the principle that they had to
pay that money and on the face of it there is some
validity.
"You
can insure your house, but if you choose not to,
you'll have to stand the losses.
"Light
and Power didn't have a choice - there's no insurance
to cover them.
"To
this day, the public still expresses their discontent
over that decision - they say the OUR is too much
in league with the utility companies.
"In
fact, there was a cartoon that came out that showed
the director general in bed with the JPS CEO and
the Minister of Utilities and Energy, with the Opposition
coming through the door saying I caught you - basically
suggesting that we're in bed with them and abandoning
the consumer, but that's not the case.
"We're
a creature of law and statutes and we have to abide
by what the law states and until we get to a state
that consumers understand their rights and those
of the utility companies, we are going to have run-ins.
"God
forbid a hurricane hits Jamaica again and those
lines come down.
"We
do have what's termed as a Reserve Fund or self-insurance
fund, but that had just come into effect in 2004
and so it didn't have enough money to cover it.
"In
2005 we were affected by Hurricane Emily, Dennis
and Wilma and the office decided that the damage
suffered would come out of that Fund, so the consumer
did not have to directly pay for that damage which
was significantly less."
And
what about the telecommunications sector?
"The
Minister of Industry, Commerce, Science and Technology
at the time, Phillip Worrell, was the primary architect
in unravelling the monopoly that Cable and Wireless
had and it was done over three phases.
"The
last phase to go was the International Carrier Licenses
which allowed to terminate land calls on their own
network and route calls overseas without going through
Cable and Wireless.
"The
first phase I think was Internet services and then
Domestic Carrier which is intra-island calls."
And
Jamaica's water and sewerage - as you know our WASA
has turned out to be a $30 billion headache for
the Patrick Manning Administration?
"The
National Water Commission applied for a tariff review
in 2003," Geddes said and Garfield Bryan, OUR's
manager Consumer Relations interjected.
Bryan
commented: "There are now provisions for smaller
water companies to get licenses for specific geographic
areas, some of which we have approved, especially
in areas where there are new housing developments.
"So
that's a part of the liberalisation that's taking
place in Jamaica.
"The
last (water) tariff review was in 2003 and it became
effective in January 2004 to last for a two year
period to the end of 2006 - so we are expecting
another application for a new rate review, as the
existing tariff will come to an end at the close
of this year.
"When
we get that we have a national consultation process."
And
what about the challenges faced by the Water Commission?
"Very
old infrastructure and billions of dollars of debt
have been written off by the Jamaican Government
also.
"There's
a vast amount of social water - that is to place
water in areas that are clearly not economic but
the need exists.
"There's
also another major point of unaccounted for water,
which is a problem your WASA too faces, along with
the significant capital losses due to this unaccounted
water.
"It
comprises stolen water, leaks, water for parks,
hydrants, stand pipes and so on."
What
kind of price tag is your Government currently faced
with to fix your water and sewerage woes?
"For
the sewerage aspect, there's a Ja$10 billion and
for water it would be several billion, a very substantial
amount.
"In
Jamaica there's metering for both residential and
commercial - people tend not to conserve when they
don't have to pay for each drop they use,"
Bryan closed.
Trinidad
Express
Wednesday, September 20th 2006
Copyright
©2006 Trinidad Express. All Rights Reserved.
