BROADCAST TO THE NATION BY THE PRIME MINISTER, THE MOST HON. P.J. PATTERSON

You will recall that in a broadcast to the nation in June, I raised the subject of the serious challenge we face with regard to the spiraling cost of a resource in which the nation is deficient as well as our excessive use of energy.
I said then that this had the potential to seriously hinder our carefully planned development programmes. The cost of energy also has a direct bearing on the personal lives of all of us, as each family seeks to meet daily living expenses and plan a secure future for our children through investment in education and health care.
At that time, I told you that I was undertaking personal oversight of the very important exercise of developing a comprehensive National Energy Policy and an action plan for the next decade.
This evening, I want to give a brief progress report and provide some information on our new energy strategies for national development.
International developments over the last 18-24 months have once again made energy the most critical economic problem which we face as a nation.
Let me first give you an idea of the increase in our annual cost of importing oil. The amount has risen from about US$316 million in 1998 to three times that figure now. That increase is greater than the combined increases in the net foreign exchange earnings from our two largest export industries: tourism and bauxite.
The annual import bill has moved from about one-third of our total export earnings to more than a half of these earnings in recent times.
In addition to the impact on personal household expenses, increased costs for electricity are also affecting the competitiveness of our goods and services in both the domestic and export markets. If we do not take decisive action, this could lead to loss of business and jobs.International political economic conditions make the outlook for oil prices both uncertain and unfavourable.
As we develop our Energy Policy we have to take a number of factors into account:
1. We have to aggressively search for sources of fuel which can be obtained at reasonable and predictable prices over the medium to long-term.
2. We have to ensure that there are adequate supplies of energy to keep the wheels of industry and commerce going.
3. We have to improve efficiency in key areas such as the generation, transmission and distribution of electricity; in the transport sector and in the production of goods and services.
Every consumer is no doubt aware of our heavy consumption of fuel for transportation.
We must improve efficiencies in its use and reduce the heavy expenditure on gasoline. So we will have to concentrate on strategies to effect substantial savings in this area.
Among the strategies being considered in this regard are: the inclusion of incentives in the proposed tax reform programme to encourage a shift to diesel and hybrid electric vehicles and diversification of our fuel mix, to include 5 – 10 % ethanol in gasoline.
As simple as it may seem, more effective traffic management in our urban areas can realize savings. The improved road system, which is now well advanced, will also make a major contribution.
At the same time, we must identify and use alternative sources of energy such as liquefied natural gas (LNG), solar and wind energy, in order to reduce our heavy dependence on oil.
Exploration for oil and gas in our land and marine territorial areas is a priority. There is encouraging geological evidence that this may yield positive results, but only time will tell.
We must also keep in focus the need to strike a balance between availability of fuel, its costs and the impact on our environment.
As we develop the Policy, we must bear in mind the opportunities that exist for arrangements within CARICOM to ensure security of supply and stable pricing arrangements. With the security and stability which comes with these arrangements, we can use energy as a tool to improve the competitiveness of our economy as we move to establish the Caribbean Single Market and Economy (CSME).
All these factors, as well as the inputs of social partners to ensure their active participation in its implementation, will be taken into account, as we work towards our target date for the promulgation of our new Energy Policy.
I have spoken before about seeking sources of supply for Liquefied Natural Gas (LNG).
This is a key element of the strategy to diversify our energy supply. Tomorrow I leave for Port of Spain where I propose to initial a Heads of Agreement with Prime Minister Patrick Manning. This Agreement is expected to lead to a competitive, predictable and assured long-term supply arrangement for LNG on an agreed base pricing and escalation basis. This is to be seen as just one of the great benefits that will flow from the integration of regional economies when the CSME comes into being.
LNG brings one considerable advantage. It will allow the introduction of electricity generation plants at vastly increased levels of efficiency, and more environmentally friendly, compared with the oil-fired plants that we now utilize.
Another advantage is that the use of LNG provides additional energy for uses other than the provision electricity, such as for food processing, light manufacturing and other applications. It opens up major opportunities for our local producers with the potential to revitalize our manufacturing sector as well as other economic spin-offs.
You already know of the large investment project to expand the JAMALCO Plant in Clarendon. This involves a doubling of the size of the plant, with increase in output and foreign exchange earnings, as well as job creation. The supply of LNG will make it possible for the investment in that expansion to be combined with increased power generation for the public supply of electricity for homes and businesses with efficiency gains for both. This planned investment in energy represents a further stage in our development strategy. Energy is a major element in the cost of doing business and all of this will make Jamaica even more attractive for investment.
It represents a further stage in the major investments and economic expansion which we have achieved as a direct result of the modern infrastructure in which the government has invested – in the construction of roads and highways, expansion of our sea and airports and in telecommunications.
While work continues on formulating the Energy Policy, there are some elements on which we have already made progress. Let us take for instance, our initiatives regarding exploration for oil and gas. We have prepared a package of geological data and material which is now on sale to potential investors and we have already received expressions of interest. We had a soft launch in Mexico last month and a more substantial promotional programme will begin with a meeting with investors in London scheduled for later this month.
The Wigton Wind Farm has been commissioned and is producing electricity beyond the target set.
The recent explosion at the Petrojam refinery obviously has implications for our foreign exchange expenditure on fuel, which will increase by some Three Million US Dollars per month until the facility is back up and running. In the meanwhile, we will ensure that adequate supplies of petroleum products are available to meet our needs. We are taking immediate steps to repair the damage so that the refinery can be back in production in the shortest possible time.
While we are making commendable and encouraging progress in a number of areas, we still face some serious challenges which we must work hard to overcome. We must persist in our efforts to reduce the unacceptable levels of crime and violence. Operation Kingfish has already shown some results and the Security Forces are in the forefront of the struggle as they risk their lives to protect us. Each of us must do all we can to help them. Without the fullest support and cooperation of the public they cannot succeed.
Happily, we continue to enjoy a high level of national unity and confidence which we first saw in the successful social partnership agreement between the government and the workers through their trade unions. This unity has been sustained and has grown even stronger, as we work together to recover from the ravages of Hurricane Ivan. As I have said previously, it caused serious damage to our homes and businesses but did not break our spirit. I will shortly be giving a complete update on all aspects of our Reconstruction efforts.
Despite the damage from Hurricane Ivan, due to our determined efforts, our investment programme has not missed a beat. Just last month, we broke ground for the multi-million dollar upscale Rose Hall Shopping Complex.
The ground breaking for the Iberostar Hotel also at Rose Hall took place. This hotel is the first of three properties in the planned Cinnamon Hill development and will add some 1000 of the 3000 hotel rooms projected for the Montego Bay area in our Master Plan for Tourism.
The 850-room hotel under construction at Mammee Bay continues on schedule.
We will soon be breaking ground for the Oyster Bay Development in Trelawny which will see the construction of almost 2000 rooms.
We recently held a very successful conference for more than 60 local and foreign investors who have a genuine interest in the Harmony Cove Development Project. Early next month we will see the opening on schedule of the segment of Highway 2000 which runs from Bushy Park to Mandela Highway.
I believe that our faith in the future of our country is truly justified. Let us continue to work together as we fulfill our vision of a nation of economic prosperity and social harmony. May God continue to bless us all and bless Jamaica this precious land we love.