Gov’t Approves Sale of JPS Shares to Korean Company (EWP)

KINGSTON — Cabinet has consented to Marubeni Corporation's transfer of 50 per cent of its shares in the Jamaica Public Service Company (JPS) to Korea East-West Power Company limited (EWP).

The transfer means that EWP will have 40 percent interest in the JPS, Marubeni Corporation’s interest will be reduced from 80 percent to 40 percent, the Government will retain its 19.9 percent, and about 3,000 shareholders will continue to own the remaining 0.1 per cent.

Minister of Energy and Mining, Hon Clive Mullings, in making the disclosure in the House of Representatives on Tuesday July 19, 2011, told the House that EWP is expected to significantly improve the operations of the JPS.

“The company is wholly owned by the Government of South Korea, and ranks as the largest thermal power company in the Republic of Korea, owning and operating in excess of 9,000 megawatts of power generation facilities in the country,” he explained.

He also noted that, notwithstanding the impressive resume of EWP, the Government deliberated long and hard on the application by Marubeni to sell the 50 per cent of its shares to EWP, as all factors had to be carefully considered.

“The main purpose being, to aggressively pursue the best strategy to significantly reduce the high prices local consumers have to pay for electricity,” Mr. Mullings said.

He noted that the only real solution to the need for significant and meaningful reduction in the price of electricity lies in the use of modern, efficient plants to generate electricity from cheaper energy sources.

Mr. Mullings said that the dependence on oil over several decades, with the necessary investments to install modern efficient plants, is the source of the country’s energy crisis.

“The generation of electricity takes up 80 per cent of the total cost to generate, transmit and distribute electricity islandwide. Hence, the replacement of these plants by modern efficient units burning natural gas is the strategy that has been adopted by this Government and commands our primary focus,” he stated.

Turning to the issue of the Government using the circumstances of EWP's desire to invest in JPS to negotiate for competition in the transmission and distribution of electricity throughout the island, Mr. Mullings said the suggestion offered no real savings or reduction in price to consumers, since the transmission and distribution of electricity only accounts for 20 per cent of the cost of electricity.

He also stated that JPS and its shareholders have already committed to installing the 480 megawatts of electricity urgently required, without a Government of Jamaica guarantee.

“The practical option to the Government is to ensure that the JPS, backed by its shareholders, undertake the most expeditious installation of the 480 megawatt of electricity burning Liquefied Natural Gas,” Mr. Mullings said.

By LATONYA LINTON, JIS Reporter