Technical assistance and policy lending from World Bank leads Jamaica to LNG lock-in
/ Our Today
administrator
The World Bank is reporting that its technical assistance and Development Policy Financing (DPF) have led to a massive investment in gas infrastructure in Jamaica.
The World Banks says it has provided Jamaica with technical assistance for planning and regulation of the gas sector, which facilitated more than US$1 billion of private sector investment in liquefied natural gas (LNG). This includes investments for two new natural gas plants and associated infrastructure.
A new import terminal for LNG was opened in Jamaica in June 2019, which is the first of its kind in the Caribbean. The plant provides fuel to several facilities including the Jamaica Public Service’s (JPS) soon-to-be-completed 190-megawatt power plant in Old Harbour.
This is being done through natural gas pipelines. The World Bank’s technical assistance formed part of the Jamaica Energy Security and Efficiency Enhancement Project, a US$15 million loan originally approved in 2011 that has resulted in reform of the country’s energy regulations.
Subsequent to this in 2017, the World Bank approved a US$70 million DPF loan to Jamaica. This financing included a ‘prior action’ that required a new Electricity Act, to be in place for which the World Bank provided technical assistance in addition to the provision of fungible budget support to Jamaica.
Jamaica’s shift to LNG
With support from the proposed DPF, the New Electricity Act was passed in July 2015 and the Act coming into operation in August 2015.
According to the World Bank, “the shift to LNG was designed to replace ‘out-of-date oil plants’, with the 2017 DPF”, noting that “this prior action is expected to contribute [to climate] mitigation co-benefits by introducing a legal and regulatory framework that promotes the increased use of natural gas and renewable energy sources.”
This is part of a wider strategy by the World Bank that positions gas as a ‘transition’ fuel to lower greenhouse gas (GHG) emissions of energy systems in many borrower countries.
The bank’s World Bank Outlook 2050 policy note of its ‘decarbonistation’ strategy stated that the funding institution would, “support planning of energy market reforms with natural gas trading and regional integration to improve power systems flexibility.”
The reforms, which raise the prospect of long-term ‘lock-in’ of natural gas infrastructure by Jamaica, as part of a wider programme of Washington-led interventions in Jamaica.
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