JAMAICA ENERGY MINISTRY: PLANNING AND CHANGING, AGAIN

UNCLAS SECTION 01 OF 02 KINGSTON 000626

SIPDIS
SENSITIVE

STATE FOR WHA/CAR (VDEPIRRO) (WSMITH) (JMACK-WILSON)
WHA/EPSC (MROONEY) (FCORNEILLE)
EEB/ESC/IEC (GGRIFFIN)
EEB/ESC/IEC/EPC (MMcMANUS)
INR/RES (RWARNER)
INR/I (SMCCORMICK)
SANTO DOMINGO FOR FCS AND FAS
TREASURY FOR ERIN NEPHEW
EXPORT IMPORT BANK FOR ANNETTE MARESH
USTDA FOR NATHAN YOUNG AND PATRICIA ARRIAGADA
OPIC FOR ALISON GERMAK

E.O. 12958: N/A
TAGS: ENRG EINV ENV ECON ETRD EIND EMIN PINR IADB IBRD
IMF, TRSY, XL, JM
SUBJECT: JAMAICA ENERGY MINISTRY: PLANNING AND CHANGING, AGAIN

REF: A) KINGSTON 294
B) KINGSTON 601
C) KINGSTON 427

1. (SBU) SUMMARY: Marcia Forbes, the Permanent Secretary (PS) in
the Ministry of Energy, resigned on August 20 after serving only
four months. She became PS when Minister James Robertson took over
the portfolio in April from then-Minister Clive Mullings (reftel A).
The PS position has yet to be filled, but the job was offered to
former Financial Secretary Sharon Crooks (Reftel B). Jamaica's
energy sector is in dire need of improvement and sound guidance; a
pattern of changing leadership will only further delay desperately
needed reform. Forbes worked aggressively to publish Jamaica's
National Energy Policy (NEP) 2009-2030 in July (Reftel C),but will
no longer be there to implement it. END SUMMARY.

PS Saw New Post As Conflict of Interest
--------------


2. (SBU) Robertson had brought Forbes, a dedicated and talented
technocrat, from the Ministry of Telecommuniations to assist at the
Ministry of Energy. Given the range of challenges facing the energy
sector and the extensive amount of reform that is needed, it is
surprising that the Jamaica Labour Party (JLP)-led government would
undergo another leadership change at the PS level, particularly as
the PS recently released the NEP outlining future plans and goals.
Forbes told Emboff that she was to be transferred to the Office of
the Prime Minister to serve as Director General for Information,
Telecommunications and Special Projects. Forbes and her husband own
a large multi-media company in Jamaica; she viewed the new posting
as a direct conflict of interest. She resigned instead of taking
the job.

Who Will Fill PS Job?
--------------


3. (SBU) Crooks does not have a technical background related to
energy and is likely to decline the PS position. There is
speculation that she may be seeking a position abroad with a
multilateral institution. Another possible candidate for the
position is Hillary Alexander, Chief Technical Director of the
Public Sector Modernisation Division (PSMD) in the Office of the
Prime Minister.

National Plan
--------------


4. (SBU) The 90-page NEP includes an overview of Jamaica's energy
sector and outlines seven major goals, but offers few specifics. In
substance, the stated policies closely mirror those from the
2006-2020 Jamaica Energy Policy "Green Paper." Notable changes from
Green Paper include a decision to pursue developing liquefied
natural gas (LNG) infrastructure and imports, and openness to
small-scale nuclear power when it becomes feasible. In this 2009
publication, Robertson has demonstrated the ability to mobilize his
planning staff and stakeholders to identify the major long-term
goals for Jamaica's Energy Sector while supporting his short-term
agenda.

Energy Sector Dependent on Oil
--------------


5. (SBU) Jamaica is almost completely dependent on imported
petroleum and nearly a third of the country's installed capacity is
nearly 40 years old (Reftel C). The electricity tariff allows all
fuel costs to be passed on to the consumer, resulting in
disincentives for production efficiency and source fuel
diversification (Reftel C). The high import bill resulting from the
oil prices of 2008 for the first time eclipsed export earnings.
Jamaica's Greenhouse Gas Intensity has been among the highest in the
hemisphere, credited largely to bauxite/alumina--a sector that has
nearly collaped during the current economic downturn.
NEP's Goals
--------------


6. (SBU) In light of this background and with and the United Nations
Climate Change Conference in Copenhagen on the horizon, the
published energy sector goals of the Government of Jamaica (GOJ)
are:

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-- Goal 1 - Conservation and efficiency: estimates 12 percent of
gains by 2020 through these measures;

-- Goal 2 - Modernize and expand energy infrastructure: 40 percent
of generation capacity is over 30 years old. Jamaica would like to
attract the necessary investment to improve production efficiency;

-- Goal 3 - Renewable energy: wind and hydro currently account for 5
percent of energy. By 2030, the goal is for renewables to account
for 20 percent;

-- Goal 4 - Long-term sustainable growth: through increased
diversification of fuel source and development of any indigenous
sources, Jamaica would like to improve energy security and see
natural gas contributing 25 percent to the energy supply by 2020
(versus zero today);

-- Goal 5 - Governance/regulatory structure: general agenda as
needed to support long-term policy. Hedges progress on net-metering
legislation by calling for further study;

-- Goal 6 - Government leads by example: the GOJ has made progress
in this area by conducting some energy audits of public buildings,
and now would like to follow-up and implement the recommendations.
(NOTE: The GOJ signed a USD 350,000 grant with the Intern-American
Development Bank on August 21 to finance programs to reduce
government spending on energy in the public sector END NOTE);

-- Goal 7 - Industrial eco-efficiency: A broad-based goal to improve
energy utilization in the private sector;


7. (SBU) COMMENT: Although probably not the goal of the high-level
publication, Robertson has set a relatively low bar for specific
items for which he can be held accountable. Where the plan does get
into specifics, there appear to be some conflicts, based on
discussions Emboffs have had with Robertson. For example, in
private meetings he indicated that Net Metering, a common policy
critical to fostering distributed generation which has been talked
about here for at least three years, was a "done deal;" yet, the
report calls for more study. Oddly, to support the goal of
increasing renewable energy, renewable energy plants that generate
less than 15 megawatts are called for on a not-to-compete basis,
with only those generating more than 15 megawatts requiring a
competitive process, through the independent Office of Utility
Regulation (OUR). Such a provision probably only serves to benefit
the state-owned Petroleum Corporation of Jamaica (PCJ),which owns
the existing Wigton Wind Farm (Reftel C).

8. (SBU) With a large share of the energy demand related to tourism
and the increase of eco-minded tourists, it was surprising the
policy did not lean more heavily on that sector through efficiency
improvements, sustainable construction minimum requirements, and
no/low-carbon transportation. Additional, unmentioned opportunity
exists to support "green jobs." Energy auditors have expressed
frustration at the unwillingness of businesses to value their
services. There are qualified auditors on the island, and their
projects make financial sense, but the business community is not
willing to pay for such services because they are not acquainted
with the technology and do not realize the financial gains that
could be derived. This knowledge gap could be exploited by
Robertson to create awareness and help reduce energy consumption.
9 (SBU) Robertson has been in his post since April, and will soon
need to show some solid deliverables. His predecessor, Clive
Mullings, was able to successfully implement an island-wide roll out
of E-10 ethanol blend (a 10 percent ethanol and 90 percent gasoline
blend) at gas stations, but as impressive as this was, it was not
enough to allow him to keep the portfolio. Robertson's task will be
made even more difficult, as the new PS, once appointed, will take a
few months to get up to speed in the Ministry. Time is of the
essence for the Minister and for Jamaica's beleaguered energy
sector.
PARNELL