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Articles
Tuesday, 8 May 2012
Is Energy at Government's Strategic Thinking?
Topic: Energy Conservation

THE EDITOR, Sir:

 

The Science, Technology, Energy and Mining Minister, Hon. Phillip Paulwell, at a press briefing on 2 May 2012 launched the Government of Jamaica/Inter-American Development Bank’s (GoJ/IDG) Energy Efficiency and Conservation Programme, which was the end product of the IDB Energy Efficiency and Conservation Technical Assistance (EECTA) Agreement signed on 2009 for US$20 million.  He explained that the current programme would make investments in energy efficiency and conservation to effect $2.6 billion savings in electricity bills of government ministries, agencies and public institutions.  He further directed these bodies to use their latest electricity consumption as a benchmark and reduce their consumption or be penalized.  This he said he spoke “the firm authority of the Minister of Finance”.  But, have we not heard this before?

                On 19 April 2011, the then Minister of Finance and Public Service, Hon. Audley Shaw, reported that budgetary allocations to a number of departments had been reduced by cutting the amount for utilities.  The year before that, Minister Shaw had issued the same directive without much success.  Since Minister Paulwell mentioned the electricity costs of February 2012 as being the highest at J$ 1.2 billion, are we to assume last year’s effort was also without success?

                Since the Minister spoke of using the last electricity cost as a benchmark, I suspect the effort of the last financial year was also without much saving.  In my article of 16 May 2011 titled “Energy Woe”, I made mention of the IDB Project Profile titled Jamaica Energy Efficiency and Conservation Program which estimated initial savings of 6.7%, not the 15% proposed by the then administration, and concluded by stating that “…failure to control expenditure cannot be attributed to the implementing ministries and agencies but to poor planning and unrealistic expectations”.  How is the pronouncement of the present administration different?

                The IDB profile mentions three components: institutional strengthening, investment in energy efficiency, and the demand-side management and public campaign.  It is not clear whether any of these components overlap.  But assuming no overlap, the first began when public sector workers were trained under a UNDP program to equip them to be energy monitors.  They received their certificates at a ceremony at the PCJ Auditorium on 21 April 2011.  This was the only component dealt with under the last administration.  When Minister Paulwell mentioned replacing 90,000 light bulbs, improving insulation and sealing building envelopes, and replacing 5,000 air-condition units he was announcing the beginning of the second component.  He also made mention of the third when he referred to workshops for public and private stakeholders on energy efficiency and conservation.  So, we seem to be better prepared this time around, though he gave no time-frame for implementation.

                The IDB profile made reference to 25% savings by 2015, which is consistent with their country strategy 2011 – 2015.  This projected saving is approximately equivalent to the $2.6 billion savings mentioned by Minister Paulwell.  But if the benchmark is this year, 2012, then we should only realize the stated savings by 2016.  According to the profile, “preliminary calculations for the program confirm the potential for savings in the public sector of up to US$ 7 million per year”.  Nevertheless, the Jamaica Information Service states that the project will be executed over a 4 year period, with savings of US$ 9 million per annum and a net present value of US$ 133.1 million after 20 years. This would indicate that a greater degree of planning has gone into this year’s programme.  But at the current exchange rate, the savings less amortization will be less than half the savings mentioned by the minister, after 20 years.  it is not clear whether this 20 year period is for the repayment of the loan, or the project life cycle.  Nevertheless, the second component, estimated to cost $9.6 billion will be spread over the next 4 financial years, and should provide jobs for local engineers and suppliers.

                It should now be apparent that, the outcome of the project as commendable as it is will not be as significant as alluded to.  More than likely, the investment referred to will be funded by an external source and will have to be repaid.  So, Jamaica will not benefit from the full extent of the savings even after 20 years.  If this time is the project lifecycle, then further funds will be needed to replace the investment.  This should not serve to discourage such an exercise but should be an example of what can happen when we wait too long to implement necessary energy efficiency and conservation measures.  The government should benefit from some savings this financial year, let us hope the expectation will be realistic.  Let us hope that energy will be at the forefront of this administration’s strategic thinking during their budget presentation.  We expect specificity and announcement of specific initiatives relevant to goal of saving energy and creating a competitive economy: attainable plans based off realistic objectives.  That should be our realistic expectation.

 

I am, etc.

 

 

Paul Hay MBA, BA(Arch.)
Managing Partner
PAUL HAY Capital Projects

Caribbean Capital Projects Management



P. O. Box 3367
Constant Springs, Kgn. 8
Jamaica, W.I.

tel: 1 (876) 756-0631
cel: 1 (876) 324-4274
fax: 1 (876) 756-0631

e-mail: paul.hay@phcjam.com
skype name: phcjam
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Posted by phcjam at 12:05 PM EDT
Updated: Wednesday, 16 May 2012 10:04 AM EDT

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