By McPherse Thompson, Assistant Financial News EditorTHE FINANCIAL fortunes of the Jamaica Public Service Company (JPSCo) have continued to improve, with the privatised light and power supplier reporting a $26.5 million increase in net profit for the nine months to December 2002, compared with the 12-month period the previous year.
Although the $1.175 billion profit intake was essentially flat, reflecting just a 2.3 per cent increase over the figure for the previous financial year, the directors believe it was encouraging, given the comparative period.
The JPSCo has actually changed its reporting year from a fiscal year ending March each year, to a calendar year, and therefore the 2002 results represent nine months' activity for the period April 1 to December 31.
According to the results, released to shareholders at the company's annual general meeting in Kingston on Tuesday, operating revenues for the fiscal period totalled just over $16.3 billion, a 16 per cent annualised increase over the $18.8 billion the previous year.
Both James Harris, the company's chairman, and Charles Matthews, president and chief executive officer, have attributed the increase in operating revenues to the combined effects of a 7.2 per cent increase in non-fuel billing rates implemented in April, last year, as well as increases in world fuel prices and an increase in energy sales of 2.2 million megawatt hour or 4.2 per cent more than the previous year.
Operating and maintenance costs for the period amounted to $14.7 billion, just under $2.3 billion less than the previous reporting period, and was attributable primarily to a significant increase in fuel costs caused by the volatile world oil market.
In addition, the depreciation of the Jamaican dollar and an increase in net generation together accounted for 10 per cent of the overall increased costs, the directors said. An increase in purchased power costs and the related currency depreciation also contributed to the increase in operating and maintenance costs, they said.
Mr. Harris and Mr. Matthews also reported that the improved operating performance of the JPSCo, "as evidenced by the significant reduction in outages in comparison with the previous year, was testimony to the fact that we have successfully began to overcome our challenges."
In March 2001, Mirant Corporation of Atlanta, Georgia, United States, acquired 80 per cent of the Jamaican Government's stake in the JPSCo and has since set about trying to transform the organisation from a money-losing entity.
"We are confident that by the way we do business, we have established the foundation for world-class performance and long-term financial viability," said the statement to shareholders from Mr. Harris and Mr. Matthews.
They also reported that the single most significant achievement during the year was the commissioning into service of the 80-megawatt Bogue facility in St. James in September last year. "This, complemented by an aggressive maintenance programme, ensured that the company could now provide not only a more efficient supply but, with a higher reserve margin, ensure greater reliability," they said.
The 80-megawatt facility at Bogue was the first phase of a 120-megawatt combined cycle generating plant and so far has moved the JPSCo's reserve margin from below 20 per cent to about 28 per cent. The company said the combined cycle plant would be one of the most efficient among its generating fleet. In the next phase, two heat recovery steam generators will use the heat from two gas turbines to create steam for generating an additional 40 megawatts of electricity. The new plant, being developed at a cost of more than US$100 million, is scheduled to be completed later this year.
The report said that JPSCo customers enjoyed more consistent electricity service during 2002, as the company continued efforts to improve the reliability of its generating plants as well as the transmission and distribution systems.
According to the report, while the JPSCo worked to install new capacity, it continued to invest in the maintenance of existing assets to ensure that they performed at their best for continued reliability of supply. It said the transmission and distribution systems were the focus of a major maintenance programme, which included the upgrading of substations, the changing of poles and transformers, as well as the re-routing of power lines.
The company also undertook what it described as a major initiative to upgrade its customer information system, thereby providing more informative bills to customers, greater internal controls and increased flexibility in closing transactions.
