Minister of Energy Daryl Vaz’s announcement that the Jamaica Public Service Company’s (JPS) licence has to be renewed on terms more favourable to Jamaica and to take into account the elevated role renewables will play in the country’s energy consumption.

Many, including media houses, got it wrong, proclaiming that the JPS licence would not be renewed. Minister Vaz did not say that; he said he was looking for better terms, and that the deal signed in 2001 saw Jamaicans having to pay among the highest electricity bills in the Caribbean.

Jamaica has a total GDP of US$20 billion and last year spent US$1.5 billion on imported fuels, which means that 10 per cent of its GDP goes into energy costs. This is prohibitive to growth.

Jamaica’s income per capita is around US$7,500, and its citizens have to pay US$0.36 cents per kilowatt/hour for electricity. This is a substantial burden to its people and prohibitive to businesses. Many companies cite energy cost as one of their top-line operating expenses, and it is just too high in Jamaica.

All this weighs on Vaz’s mind and goes some way in explaining his call to renegotiate JPS’ monopoly. The government signed a terrible deal in 2001, which hurt its people. That deal is up for renewal in 2027 and Minister Vaz wants to set things straight well before that in order that JPS are under no illusions that it will continue to be business as usual.

Minister Vaz said: “My letter to the JPS was written pursuant to Condition 27 of the licence, which provides for the Government of Jamaica to acquire the licence’s business at the expiration of the terms of the licence.”

This is where Vaz speaks for most Jamaicans, and given his reputation for getting things done, makes him perhaps the best government operative to preside over this JPS licence situation.

Hear what he says, which JPS must acknowledge is fair and reasonable: “The Government of Jamaica is determined that consumers of electricity in Jamaica should be placed in the best position to benefit from these developments. The current licensing arrangement with the JPS does not provide sufficient incentives to bring renewables onto the grid at scale, and it provides for generation via imported fossil fuels, which is not cost-effective. It is time for reform.”

Indeed, it is time for reform. JPS should not have a monopoly to generate, transmit, distribute and supply electricity for public and private purposes within Jamaica, not at this time in the 21st century. As it transpires,  no other power supplier can do business without JPS’ say-so or without paying the company a fee. Jamaica broke up the telecoms monopoly, and it must do likewise with JPS.

JPS is the most despised company in Jamaica despite having the best communications manager in Winsome Callum. It has not done enough on its public image and to endear itself to the Jamaican people. This was clear to see last September when many people saw a 50 per cent hike in their electricity bill.

This gives Minister Vaz leverage, and Jamaicans are behind him on this, so too are the business community.

A joint statement from the Jamaica Chamber of Commerce (JCC), Jamaica Manufacturers and Exporters Association (JMEA) and Private Sector Organisation of Jamaica (PSOJ) is both instructive and shares the sentiment of many in the business community.

“We welcome the minister’s clear recognition that Jamaica’s electricity sector is in urgent need of reform. High energy costs have long presented a significant barrier to growth for businesses and an undue burden on households 

“The government’s objective to renegotiate licensing terms in pursuit of more competitive pricing and improved national energy security is aligned with long-standing calls from the business community for structural transformation in this space.”

The CEO of JPS, Hugh Grant, should know that the present terms of the licence are onerous and egregious. He may argue for his company’s interests, and that’s all very well, but Jamaica’s interests must be paramount.

Jamaica was duped into buying into a major switch to LNG, where Fortress Energy played a major role, however, the country was left to the mercy of volatility in pricing. Renewables only make up 13 per cent of the country’s energy supply, and that must increase. As much as 90 per cent of Jamaica’s energy consumption comes from imported fuels, which puts a tremendous strain on its trade balance. 

Daryl Vaz has repeatedly declared that the country has to become more dependent on its own energy supply and drastically reduce fuel imports. The Government aims to have 50 per cent of Jamaica’s electricity generated from renewable sources by 2027. This is commendable and achievable given the abundance of sunshine Jamaica is bathed in. 

Renewable energy players should not be stymied by JPS. Their ability to profit and operate should not be dependent on JPS. A more competitive energy ecosystem is required, and one where there is better customer service. Monopolies do not “’generate’ (pun totally intended) better customer service. JPS cannot be allowed to be the only game in town.

This renewal of the licence should not be politicised. The Opposition should also call for the terms to be more favourable to the country, and that JPS is not in a position to hold the country to ransom.

Minister Vaz explained his rationale when he said: “ Anybody that comes to the table has to come to the table to talk to me about a brand new licence and I am going to the table without being disadvantaged, as has happened in the past. I am going to get the best deal, however, I need to get it. So that answers your question that I am not limited to the existing licensee, nor am I limited to one or two. I am going to the world.

“Whatever the process is that I stipulated in the procurement guidelines, I’m guided by that. But I’m just saying to you that I’m not going to negotiate with a particular party. Whatever it is, I’m going to see what is out there in 2025 to 2027; what is the best for Jamaica and the Jamaican people.”

The electricity supply licence should never have been granted for over 25 years; that was a crazy move. Perhaps ten years, and then open for renewal by negotiation. For having such a long licence, it lessens a government’s options and has it to abide by a grandfathered licence.

There has been controversy surrounding JPS’ licence in the past.

Ten years ago, the Court of Appeal ruled that the licence granted to JPS is legal when the Supreme Court held that the Energy Minister did not have the authority to grant such an inhibiting licence. JPS wanted to change the licence in order that it could modernise and replace old generators and create better efficiencies. 

Former JPS CEO Kelly Tomblin made her position clear that Jamaica’s electricity prices would not necessarily be lowered due to competition.

Tomblin said: “ When they privatised, they were afraid that a monopoly would take over, so they said you can competitively bid. We understand why it was done, but it’s been 14 years since privatisation, let’s revisit it. You should bring in an economist to look at markets our size to see how they work best instead of thinking that we want competition because it sounds good.”

Kelly Tomblin and Dan Theoc got the better of Vin Lawrence and the then government. Since the JPS licence deal was signed in 2001, it has been renegotiated just twice, once in 2011 and again in 2016.

In 2011, the Government put investors first, saying that changing terms would send the wrong signal to investors and would scare them away from Jamaica.

In 2016, a new electricity licence was issued to replace the old one, with greater emphasis placed on a new regulatory framework. This was done pursuant to Condition 30, thereby amending the All-Island Electric Licence 2011.