Jamaica power company facing dire threat from electricity theft

(Jamaica Observer) KELLY Tomblin yesterday reiterated the dire financial state of the Jamaica Public Service Company (JPS), and expressed disappointment that two State-owned sugar companies in Clarendon and Westmoreland allowed residents of neighbouring communities to steal electricity amounting to more than $100 million.

“We have about 230 people, we are spending a lot of money each year working on preventing theft. Those people are out in the community, serving my customers, helping to figure out how to get smaller payment frameworks and doing other customer service, improving reliability,” Tomblin told a news conference at the JPS head office in New Kingston.

“What happens when theft of service occurs. For JPS, it may very well be the death knell. Last year, we were fined by the OUR $30 million, that’s two-and-a-half times our total profit and we again submit that there is no business in Jamaica that can lose two to three million dollars a month and still be viable,” she said, adding that the company is facing bankruptcy as it has broken several covenants with its lenders.

“So for us it has reached a very critical point. This has led to us being in breach of our financial covenants. We have been in breach since last year and we continue to be in breach. What that means is that there is a covenant in our loan agreement with our lenders that said we would maintain a specific EBITDA (earnings before interest, taxes, depreciation and amortisation) to debt ratio and we haven’t met that, and we haven’t met it for a year,” Tomblin said.

She said that the company’s lenders have been granting it waivers, but JPS is not earning enough to meet its debts.

“That is a violation of our agreement, and now we have a lender that has not given us a waiver,” she said.

“So in the US, we call it a financial cliff; we call it a precipice here, but the fact remains that JPS cannot be viable in the current framework.”

Tomblin spoke to the electricity theft issue affecting the sugar estates in an interview with the Jamaica Observer after the news conference.

“It shocks the conscience,” she said, “because if you drive around right now you see it [electricity theft] everywhere. We [Jamaicans] have become very immune to it and I think that is what has gone on here.”

Yesterday’s Observer lead story reported Agriculture Minister Roger Clarke as saying that the Government will have to fork out $200 million to remove illegal connections set up at the sugar plantations.

Disconnecting the illegal connections, Clarke said, was the “only outstanding matter” in negotiations with the new owners of the factories, Pan Caribbean Sugar Company, to invest in a US$100-million sugar refinery.

For years, residents in neighbouring communities were allowed free access to electricity and irrigation water which cost the sugar company $100 million in additional costs annually. The $200 million is being sought to pay for a regularisation programme for the affected communities.

Yesterday, Tomblin did not say whether the regularisation process had started, or if the Government had paid any portion of the regularisation costs.

She, however, bemoaned the debt the Government had incurred for electricity, and said the State will have to pay up if the JPS is to remain viable.

“We certainly have difficulty collecting from the Government, and of course the Government has had its woes,” Tomblin said. “But remember, we bill the Government in Jamaican dollars and we have to pay most of our suppliers, including Petrojam, in US dollars. So the longer they take to pay us, the more detrimental it is to JPS.

“So we really do need to get everyone to be current, and for the Government to repay JPS what it owes us,” she said.

In the meantime, Tomblin said that new measures are to be implemented to detect electricity theft by major organisations which, she said, is harder to detect than those set up by ordinary citizens.

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