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Introduction
Although the Energy,
Electricity and Water sector recorded the lowest production level it showed a
0.9 per cent growth in real value added for 2008 of J$7 197.4 million compared
to J$17 043.8 million in 2007. This performance was due mainly to an increase
in electricity generation which compensated for the negative effects of a
reduction in water production. The overall contribution of the sector to real
Gross Domestic Product (ODP) remained at 3.4 per cent for the fourth
consecutive year. The total labour force in the sector was 7,850 persons in
2008 or 325 less than the previous year. The number of persons employed in the
sector in 2008 was 7,600 and the employment rate was 96.8 per cent.
Electricity generation grew by 1.2 per cent to 4,123.3
gigawatt hours (OWh) for 2008 compared to 4,075.5 OWh. This was due to an
increase in electricity generation during 2008. Preliminary figures showed
that the total sales of electricity during 2008 declined by 1.1 per cent to
3,130 gigawatt hours. Despite this decline in sales the revenue for 2008
increased to J$71. 7 billion compared to the J$54.3 billion attained in 2007.
Water production fell by 1.5 per cent to 288,063.6 megalitres compared with
approximately 292,320.1 megalitres in 2007. Due to plant downtime attributed
to turbidity and power outages, a total of 9067.4 megalitres were consumed
which was 9.2 per cent below consumption levels for 2007. Despite the down
turn in water production and consumption; the National Water Commission (NWC)
increased the number of connections to 437,226 in 2008 from 428,213 in 2007.
Performance of Sub-Sectors
Energy
The increasing demand for oil on the international market
resulted in an increase in supply of 86.6 million barrels (mb) per day or a
1.2 per cent increase. Production from the Organization for Economic
Corporation and Development (OECD), contributed the most to this high supply
with 47.5 mb in 2008. Non-OCED states such as China and Latin America utilized
38.2 mb. Total world oil supply was more than demand as a result of a 4.5 per
cent increase in supply by the Organization of Petroleum Exporting Countries
(OPEC). Oil trade on the international market averaged US$96.99 per barrel
compared to US$71.12 per barrel in 2007. The price was fuelled by a
combination of demand and supply factors such as:
- declining stocks and
supply disruptions,
- geopolitical concerns,
- low inventories along with
bottlenecks,
- uncertain climatic
conditions,
- depreciation of the US
dollar
- increasing demand due to
economic growth.
Increased pressure on prices during the period was as a
result of OPEC's indecision to raise production growing demand for light crude
oil to produce the ultra low sulphur diesel for transport fuel resulting in an
increase in cost for the product.
Petrojam reported that Jamaica imported 8.3 million
barrels of crude oil in 2008, down from 8.4 mb in 2007. Other petroleum
products which were imported included Bunker C, refined products and heavy
fuel oil. Venezuela continued to be the main source of most of Jamaica's
imports under the Petro-Caribe Agreement on Energy Cooperation with an average
cost per barrel ofUS$93.38. In terms of refined products and crude oil,
approximately US$2.7 billion was paid for oil imports compared to US$2.0
billion in 2007. The increase in the oil bill was as a result of the softening
in crude oil prices in the second half of 2008.
As a result of the increased demand for oil and its
products in Jamaica, sales of petroleum products such as Unleaded 87, Unleaded
90, Kerosene/Turbo, Automotive Diesel Oil (ADO) and Fuel Oil increased. A
decline in sales was seen for LPG and Asphalt. Kerosene Turbo recorded the
highest volume of sales as a result of an increase in demand from the
transportation industry.
The higher price of oil negatively impacted the average
billing price of all petroleum products in Jamaica. As a result of this, ADO
increased by $21.23 to $69.90 per litre, Kerosene increased by $20.40 to
$69.55 per litre. Unleaded 87 and 90 increased by $11.54 and $11.26 to $63.32
and $64.57 per litre at the end of 2008. In November 2008, the new ethanol
blend of gasoline, E10 was introduced and sold at $50.12 per litre.
Energy Consumption
Total energy consumption measured in barrels of oil (BOE)
stood at 26.4mb or 27.4 per cent lower than 2007. This reduction is as a
result of lower consumption of alternative energy and petroleum based
products. The petroleum based products that shows a reduction in demand were
ADO, gasoline, turbo fuel and fuel oil. Higher consumption was recorded
however for LPG, Kerosene and ADO Bunker. Bauxite and Alumina was the only
economic sub-sector which registered an increase in consumption of 9.39 mb in
2008 compared to 8.80 mb in 2007. In manufacturing the output of cooking and
lighting increased by 2.2 per cent to 931,853 barrels.
The Government of Jamaica tried alternative energy
sources, with ethanol blend gasoline E-10 being the main one. Other
alternative energy sources included the expansion of the current wind farm (Wigton
Wind farm) with the approved purchase for nine wind turbines and plans are
underway for the development of the Laughlands hydro-plant in St. Ann. In
terms of the public sector energy efficiency programme, the projects carried
out by the government targets the health sector with projects such as:
- the installation of solar water heaters in the Port
Antonio, Cornwall Regional and Annotto Bay hospitals; and
- the installation of photovoltaic lighting systems in
the Princess Margaret and St. Ann's Bay hospitals. (Photovoltaic is a
technology which uses a device to produce free electrons when exposed to
light resulting in the production of an electric current).
In relation to the energy efficiency programme, a public
education seminar was conducted in March 2008 to educate the public on energy
efficiency conservation with the theme "Promoting Energy Efficiency in the
Public Sector".
Electricity
There was a reduction in electricity production for the
first six months of the year, but a positive out-turn was seen in
July-December quarter. This inconsistency was due to reduced demand which was
evident from the falloff in sales and disruptions caused by Tropical Storm
Gustav. Despite minimal damage to JPSCo's infrastructure from the impact of
Gustav, 70 per cent of the customers experienced inconvenience due to power
outages prior to and after the storm. This resulted in damages to some
transmission and distribution lines.
Increased production in electricity for 2008 was largely
as a result of increased generation from the company's low speed Diesel Unit
and Gas Turbines. These units recorded increases of 73.8 per cent and 4.7 per
cent respectively. There was a 1.4 per cent fall in non-JPSCo's energy sources
which contributed to a 30.5 per cent fall in overall output in 2008. Total
fuel consumption declined by 3.1 per cent while total fuel cost increased by
42.8 per cent to $37.7 billion reflecting higher crude oil prices on the
international market. During 2008, JPS recorded the first decline in sales to
consumers since 2004, a contraction of 1.1 per cent.
Consumers accounted for 75.9 per cent of total
electricity generated while line losses and unaccounted for net generation
stood at 23.7 per cent and the remainder was company use. Sales to large power
increased to 590.6 GWh while sales to residential consumers declined to 1,032
GWh. The JPS customer base stood at 586,138 in 2008, an increase of 1.6 per
cent. The number of residential customers was 523,728, general service was
60,530 and 126 were in the category large power. Depreciation in the exchange
rate, price adjustment for inflation and higher user charges were the main
contributors to the increase.
Water
The growth in numbers of connections resulted from an
increase of26, 333 in other parishes while Kingston and St. Andrew and St.
Thomas declined by 17,920. There was a 35.4 per cent overall increase in
revenues by the NWC to J$12.97 billion up from J$9.58 billion in 2007. This
increase is as a result of higher revenues from Kingston, St. Andrew and St.
Thomas of J$5 286.2 million and J$7 691.8 million in the other parishes. The
revenue of NWC is also reflective of adjustments in water rates and an
increase in the number of customers.
Policies, Programmes and Other Developments in the
Sector
Significant strides were made in 2008 in an effort to
ensure universal access to potable water by 2010. The Rural Water Supply
Limited (RWSL) worked assiduously to ensure access to potable water and teamed
up with the Ministry of Water and Housing to begin work on the Rural Water
Master Plan. The Office of Utilities Regulation (OUR) continued to facilitate
the promotion of private sector partnership in the provision of potable water
as part of government policy. Dynamic Environment Management Limited was also
granted another licence to provide service to one more community bringing to
eight the number of licences issued to private partnerships.
The new Jamaica Energy Sector Policy 2006-2020 went
through all the initial phases and is expected to be tabled in Parliament in
the fiscal year 2009-2010 in preparation to move from green paper to white
paper. This particular paper details the government's objectives and
strategies for the sector. Activities are still under way in terms of the
Centre of Excellence for Renewable Resources (CERE) which focuses on
assessment, design and implementation of renewable energy projects. In terms
of Other Developments, the Petroleum Coke Power Generation Project is a
collaborative effort between Petrojam and JPS. The draft memorandum was being
developed and reviewed. The partnership involves the construction of a 120MW
cogeneration at the Hunts Bay Plant in Jamaica. This is to operate on petcoke,
a by/product of crude oil.
Source: Economic and Social Survey Jamaica updated
October 2008
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