In an
article in Jamaica’s Sunday Gleaner dated 21 April 2013 titled: “More Lessons from the Past – Missed EnergyOpportunities”, William Saunders, Energy Consultant, outlined Jamaica’s
failure to act upon initiates to diversify its energy mix from 1978, when
Jamaica formulated its first energy plan.
In a much earlier
article in Jamaica’s Sunday Gleaner dated 30 March 2008 titled: “Jamaica’s Energy Challenge – part III”,
Zia Mian, a retired senior World Bank official and international energy
consultant, stated that: “Jamaica’s economy is relatively energy
intensive”.
Jamaica has
one of the highest rates of energy consumption in Latin America and the
Caribbean region. This is mainly due to
heavy usage by the bauxite/alumina sector.
The oil consumption per sector from 2004-2011 is shown in table 1.
Table 1: Jamaica's Oil
Consumption per Sector (‘000BBLS)
|
||||||||
SECTOR:
|
2004
|
2005
|
2006
|
2007
|
2008
|
2009
|
2010
|
2011
|
Transport
|
6,076
|
6,248
|
6,373
|
6,080
|
5,835
|
6,403
|
5,648
|
6,012
|
Electricity
|
6,226
|
6,555
|
6,390
|
6,654
|
6,275
|
6,662
|
6,578
|
6,529
|
Bauxite/Alumina
|
9,444
|
9,799
|
9,552
|
8,808
|
9,392
|
3,494
|
2,885
|
3,753
|
Shipping/Aviation
|
2,161
|
3,203
|
5,224
|
5,904
|
4,404
|
3,882
|
3,768
|
3,514
|
Other
|
1,629
|
1,521
|
1,625
|
1,281
|
1,212
|
1,157
|
1,139
|
1,195
|
TOTAL =
|
25,536
|
27,326
|
29,164
|
28,727
|
27,118
|
21,598
|
20,019
|
21,003
|
Source: Data derived from Ministry of Science,
Technology, Energy and Mining (click here)
in an
article titled: “Energy Cost and our
Economic Future – Future of Alumina Sector Hinges on Energy Cost”, in the
Mona School of Business Nov/Dec 2011 issue, Carlton Davis, former Cabinet
Secretary and chairman of the Jamaica Bauxite Institute, stated, that:
“Given the importance of the cost of energy in
the production of alumina and the consensus that oil will be more expensive
over the long-term than natural gas or coal it is incumbent that oil is
replaced by one of these two fuels... (and) Government has a lead role in
affecting this transformation.”
The cost to
import fuel into Jamaica from 2008-2011 is shown in table 2. Fuel is by far the largest expenditure on imported
goods. With the exception of 2009 and
2010, the cost of importing fuels was greater than half of the returns from
exports.
Table 2: Trade in Goods & Services [J$’000]
|
||||
Year:
|
2008
|
2009
|
2010
|
2011
|
Exports:
|
418,360,800
|
367,316,800
|
361,232,600
|
383,865,600
|
Goods
|
180,630,391
|
116,355,584
|
116,449,101
|
139,533,852
|
Services
|
237,730,409
|
250,961,216
|
244,783,499
|
244,331,748
|
Imports:
|
714,509,600
|
558,285,200
|
571,607,900
|
668,087,200
|
Fuels
|
226,802,098
|
124,996,495
|
147,081,190
|
209,816,388
|
Other Goods
|
361,461,471
|
161,141,521
|
174,444,804
|
312,036,055
|
Services
|
126,246,031
|
272,147,184
|
250,081,906
|
146,234,757
|
Source: Data derived from the Statistical Institute of
Jamaica
Jamaica has a serious trade deficit, and oil
is a major contributor. Devaluation normally
boosts exports, but not in Jamaica. An assessment of Jamaica’s exchange rate
policy from 1962 onward appears in an academic paper by Dr. Michael Witter’s titled:
“Exchange Rate Policy in Jamaica: A
Critical Assessment”.
He
concluded that devaluation had the effect of inflating the value of imports
significantly over that of exports. Cheap oil imports which prevailed in the
1950s through to the OPEC action in 1973 factored in Jamaica’s economic
growth. But, oil prices are projected to
reach US$150 – US$200 in the near future.
Prior to
the global recession in 2008, consumption in the shipping/aviation sector has also
risen. As the global economy recovers and Jamaica completes its logistical hub,
in preparation for the widening of the Panama Canal, this sector could easily
overtake the electricity sector in its use of energy.
Promising
signs on the horizon need to produce tangible results. Construction of the 381
MW, LNG-fired power plant is one of them. The Private Sector Organization of
Jamaica (PSOJ) needs to consider Jamaica’s history of missed opportunity and
reconsider their involvement in this project.
Paul Hay is a Jamaican national, founder of PAUL HAY Capital Projects: a consultancy, based in Kingston Jamaica, with a vision of providing strategic planning and implementation services to organizations for non-residential facilities in the Caribbean.
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Paul Hay is a Jamaican national, founder of PAUL HAY Capital Projects: a consultancy, based in Kingston Jamaica, with a vision of providing strategic planning and implementation services to organizations for non-residential facilities in the Caribbean.
Related article/s:
Solar Energy can improve the Caribbean's Economic Future with ConservationNation Burned while Government played the Fool