JAMAICA: MAY ECONOMIC REVIEW 2009

UNCLAS SECTION 01 OF 02 KINGSTON 000445 SIPDIS SENSITIVE STATE FOR WHA/CAR (BPREMONT) (VDEPIRRO) (WSMITH) WHA/EPSC (MROONEY)(FCORNEILLE) EEB/ESC/IEC/EPC (MMcMANUS) INR/RES (RWARNER) SANTO DOMINGO FOR FCS AND FAS TREASURY FOR ERIN NEPHEW USTDA FOR NATHAN YOUNG AND PATRICIA ARRIAGADA OPIC FOR ALISON GERMAK E.O. 12958: N/A TAGS: ECON ENRG SENV EFIN EAIR EMIN ASEC SOCI ETRD TRSY OPIC, AID, OAS, IBRD, XL, JM SUBJECT: JAMAICA: MAY ECONOMIC REVIEW 2009 REF: A) KINGSTON 315 B) KINGSTON 269 C) KINGSTON 245 D) KINGSTON 223 E) 08 KINGSTON 755 ¶1. (SBU) SUMMARY: -- Plans for large-scale casinos face delays from tightened credit markets and a slow legislative process. -- Ministry of Energy will rewrite its 2006 National Energy Policy to reflect changes needed in the sector with an eye to reducing dependence on oil imports. -- The sugar estate divestiture hits another snag as assets may be divided among several different investors. -- Carlos Hill, the former head of failed ponzi scheme Cash Plus, received a two week reprieve from being evicted from his home, but will still face fraud charges in July. -- The Government of Jamaica (GOJ) confirmed on June 1 that there were two cases of the H1N1 virus in Jamaica, but both patients have recovered. End Summary. Casino Delays -------------- ¶2. (U) In April 2008 Prime Minister (PM) Bruce Golding announced plans to bring three major casinos to the north coast. The global economic downturn dried up interest in major construction projects and the GOJ has yet to take the proposed legislation to Parliament that would provide for regulating the casino industry and providing the legal framework for issuing of casino licenses. Golding said the legislation should be introduced by June. ¶3. (U) The Gleaner newspaper reported on May 27 that Celebration Jamaica, which signed a deal with the GOJ to develop a 2,080 room hotel and casino, is having difficulty in securing financing, although Dennis Constanzo, the President of Celebration, told reporters the project would go forward. Harmony Cove, the casino project to be built by the private equity group Tavistock Group, is said to be proceeding. It has plans for 4,500 rooms as well as villas and an arts and entertainment complex (reftels). Energy Plan Rewritten -------------- ¶4. (U) Marcia Forbes, the Permanent Secretary in the Ministry of Energy, announced on May 5 that the GOJ would rewrite the 2006 National Energy Policy. She said there is substantial amount of work to do because the policy is very outdated, but a six-week timeline would be set for completing the report. The review of the policy will highlight the need to include renewable energy and carbon trading. The finalized document will be presented to Parliament for debate and final approval. Sugar Divestiture - Ethanol Impact -------------- ¶5. (U) The GOJ's efforts to sell off the Sugar Company of Jamaica's (SCJ) assets and land as a single entity have failed. The GOJ had hoped the loss-making parastatal could be sold in whole to an ethanol producer. Brazil-based Infinity-Bio energy made multiple attempts to raise the USD 125 million in requisite funds to close the deal, but was unsuccessful (reftel E). After the first failed attempt by Infinity, the GOJ issued a second request for proposals. ¶6. (SBU) According to the Gleaner Newspaper, the SCJ's assets, which include five state-owned sugar factories, may be divided and sold to various investors. A joint bid from the Hussey family and unnamed U.S. investors are interested in the Long Pond and Hampden Estates in Trelawny; U.S. based Energen Corporation is interested in the Petrojam Ethanol facility and Bernard Lodge, Innswood, and Monymusk estates in Clarendon; an Italian entity Eridana Sadam is seeking Frome estate in Westmoreland for production of granulated sugar; and local investor Fred Jones, in partnership with Seprod Limited, may purchase the Duckenfield estate in St Thomas. ¶7. (SBU) Splitting up the SCJ assets has been under discussion since the Infinity deal fell through in December. COMMENT: Dividing the assets may lose the economies of scale to enable major domestic ethanol production on the island. The SCJ divestiture has gone through many stages, so it is likely that this deal is far from KINGSTON 00000445 002 OF 002 done. END COMMENT. The potential investors will still undergo due diligence reviews by the GOJ and terms of each specific purchase will need to be negotiated. Ponzi Scheme Boss, Spared Eviction -------------- ¶8. (SBU) The Observer newspaper reported on June 2 that Carlos Hill, the former head of the failed ponzi scheme Cash Plus, will be spared eviction for two weeks. Court appointed trustees and liquidators along with bailiffs and police sought to evict Hill and take possession of the property. Hill, claiming he would be homeless if evicted, was able to secure an injunction "on humanitarian grounds" to temporarily stay in the house. The upscale home has been put up for sale along with some of the other assets held by Hill and Cash Plus, in order to recover some of the millions of dollars owed to depositors and creditors of the scheme. Hill, his brother Bertram, and chief financial officer Peter Wilson were arrested last year and face fraud charges. They have since been released from jail on bond and are to appear in Court in July. H1N1 Virus: Two Cases Confirmed -------------- ¶9. (U) The Minister of Health Rudyard Spencer told a press briefing on June 1 that there was no cause for concern after two cases of the H1N1 virus had been confirmed in Jamaica. He said the two persons who had arrived from New York on May 19 had since recovered. No other cases have emerged, and the Ministry said it has adequate supplies of anti-viral drugs. The GOJ said as a precaution, it is checking airline passengers that arrive for evidence of flu-like symptoms. HEG