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Honourable Minister Clive Mullings, MP Minister of Energy- Sectoral Presentation 2008

Mr. Speaker, we do not produce oil and our refinery must buy the commodity at world prices. We have all seen the effect of this on the prices at the pumps, especially diesel. This reflects a growing world demand for diesel as consumers rely more on this fuel.

 

The demand, Mr. Speaker, is driven by the fact that a gallon of diesel carries you much farther than a gallon of gas. It is not the dollar it is the distance.

 

Mr. Speaker, I am using this opportunity to formally advise this Honourable House that the Government concluded the joint venture arrangement with the Government of Venezuela for the ownership and expansion of our refinery. The upgrade will move the refinery from a capacity of 35,000 to 50,000 barrels per day. We will be using a delayed coker technology to produce more diesel and other finished products of a high quality for our transportation sector. Petcoke, a by-product of this process, will be used as a fuel for power generation.

 

There is a joint Jamaican and Venezuelan engineering team working with Canadian consultants to complete the engineering design by January of next year. Thereafter we will speedily complete the project.

 

We don’t just talk, we do it!


Electricity Sector

The Electricity Sector Mr. Speaker is another essential area that impacts our lives daily and is gravely affected by this crisis of crude. I need not remind this Honourable House of our almost total dependence on fuel oil.

 

Many of us must choose which of the bills we pay in any given month. The greatest challenges we face in this regard are the prices that we all have to pay for the use of electricity. These prices are affected by a number of factors:

 

  • Cost of fuel
  • Age of plants
  • State of transmission and distribution system
  • Theft of electricity.

 

Let’s talk about solutions to these challenges, and I want to begin with the cost of fuel. I spoke earlier about the rising cost of oil and as we are all aware the fuel used to generate electricity is passed through directly to us. In short, we, and not the electricity companies pay for the fuel. This has always been the case and is not an unusual practice worldwide. In an environment where oil is cheap, consumers reap the benefit of low electricity rates.

 

What options do we have as a people to address this challenge?

 

Mr. Speaker, cheaper sources of fuel exist and we will diversify our fuel mix. We have looked at coal, natural gas and renewable sources but there are practical elements to consider; the availability of the fuel, infrastructure required and electricity demand to ensure viability.

 

For us to change the configuration of the system requires rigorous analysis, including examination of the risks involved. We have done this analysis taking into account the profile of our electricity system, which is as follows:

 

  • Installed capacity is 880MW generated from relatively small scale units
  • Peak demand is 630 MW
  • Age of plants ranging from 6 to 30 years
  • Location of power generation units – Old Harbour, Hunts Bay and Montego Bay
  • Fuel types – heavy fuel oil, diesel, renewables
  • Power generation is liberalized
  • Number of entities generating electricity – 5
  • Transmission, distribution – JPS
  • Growth rate – 4% per annum.

 

I am to remind Mr. Speaker, that the authority rests with the OUR to regulate the RETIREMENT of generation plants and PRICING of electricity.

 

What has our analysis revealed?

 

Coal can viably be introduced with small scale units delivering 100 -150 MW of electricity. This is suitable to the requirements of our power system and the retirement schedule for old inefficient plants.

 

Global coal reserves are extensive and available in the region in North America, Columbia and Brazil, among other places.

 

Technologies also exist to make coal an environmentally safe fuel. In Japan, coal-fired power plants currently achieve a level of emission which is as clean as gas plants. The design of any local plant will have to meet stringent environmental standards and coal will be no exception!

 

Mr. Speaker, in discussions with key players in the bauxite alumina and power sectors, they have indicated their willingness to install coal plants. I am encouraging them to share in the cost of developing a single coal receiving facility, which would have the effect of lowering the price at which electricity can be supplied to the grid and for use in their own operations.

 

Mr. Speaker, LNG is a possible fuel type but international experience, has shown that for it to be viable there needs to be a demand in excess of 600MW. The high cost of infrastructure would require that nearly all the generation capacity of the country be converted at the same time to use LNG. We cannot afford to rely on anyone fuel type Mr. Speaker. The risk would be too great.



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