Paulwell... $10 billion efficiency upgrade part of attempts to meet the country's energy needs.
Robert Hart, Parliamentary Reporter
PETROJAM IS set to announce a $1.55 per litre increase in gas prices today, delivering another blow to Jamaicans hit by a developing oil crisis that has led to sharp increases in fuel costs over recent months.
Phillip Paulwell, Minister of Commerce, Science and Technology, revealed in the House of Representatives yesterday that the national oil refinery had been faced with yet another increase in per barrel oil costs.
"Last week the world market oil prices reached US$40 per barrel and, I have just been advised, Petrojam has purchased at US$43 and, in fact, they will be announcing a further increase of $1.55 on the price of petroleum products at the pump tomorrow (today)," Paulwell told the House. The Minister with Cabinet responsibility for energy, was making his contribution to the 2004/2005 Sectoral Debate.
At the start of the year, petroleum prices hovered about $22 per litre but, since the recent increases, have jumped to around $34.
BILLION-DOLLAR UPGRADE
The Minister also pointed to a proposed $10 billion efficiency upgrade at the soon-to-be-divested Petrojam refinery as part of Government's attempts to meet the country's energy needs. "Upgrading Petrojam and increasing its throughput to 50,000 barrels per day will be a central policy objective," he said.
He added that: "The upgrade is expected to cost US$160 million and there will be no provision of Government guarantees." The Petrojam upgrade will be pursued through a lead investor/private financing-type arrangement and would most likely be a 'build, own and operate scheme'.
According to the Commerce Minister, approximately 45 per cent of the refinery's production is heavy fuel oil with the remaining 55 per cent being clean products such as gasolene and diesel. As a result, there is now a deficit of high-value products such as gasolene, which has to be imported.
"Upgrading of the refinery, enabling it to supply the full range of finished petroleum products to the local market and to be in a position to take up anticipated export opportunities must be the preferred option," he said.
Paulwell, whose presentation highlighted the much-talked about world oil crisis, warned that Jamaica must brace itself for sustained increases in oil prices. He noted that a host of initiatives would be undertaken by Government as it attempts to improve efficiency and cut the energy bill.
He said: "It is totally unsatisfactory that only 10 per cent of the economy's total energy requirement and five per cent of the electricity are provided by renewable sources." During his opening of the 2004/2005 Budget debate, Finance and Planning Minister Dr. Omar Davies had warned that there was a need for the country to start serious talks regarding the energy bill, which he projected would reach $1 billion if not contained.
According to Dr. Davies, if oil prices average US$33.40 per barrel for this year, it could lead to oil imports costing an additional US$69 million, which would move the current account deficit to US$950 million, and 10.6 per cent of gross domestic product (GDP).
Government initiatives to combat energy woes
The establishment of an Energy Efficiency Unit.The appointment of an Energy Co-ordinators Committee. Implementation of a 20-megawatt wind farm in Manchester, at a cost of US$26 million.Continued research on commercial fuel wood production through a demonstration project at Font Hill.Distribution of over 220,000 compact fluorescent lamps (CFLs).Provide training on energy efficiency and conservation to several Corporate Area schools.Establish a revolving Energy Trust Fund. Establish a $70 million Energy Efficiency Fund. Promoting public awareness of the need for behavioural change to bring about more efficient use of energy and conservation.Introduction of new legislation to make energy efficiency mandatory in the building code.Develop a 1.2 MW hydropower project at Laughlands Great River, St. Ann.Promoting wider use of solar water heaters, with a target of 25,000 installations over the next five years.Finalising the development programme for the upgrading of Petrojam.
