Jamaican govt to divest electric company, airport
KINGSTON – The Government has confirmed that it will be selling its 19.9 per cent share in the Jamaica Public Service (JPS) company in the upcoming fiscal year.
The announcement was made during the annual Throne Speech presented by Governor General Sir Patrick Allen at the ceremonial opening of Parliament yesterday in which he outlined the Administration’s slate of programmes for the new fiscal period, which begins on April 1.
An enterprise team is to be set up to lead the process of privatising the Government’s remaining shareholding in the JPS which is the sole distributor of electricity in Jamaica.
“The Government will take steps to ensure that there is broad retail and institutional participation and Jamaican owners in the divestment process,” the governor general outlined.
The Opposition People’s National Party last month voiced concerns about the move to sell Jamaica’s stake in JPS, referring to indications made by Finance Minister Audley Shaw to that effect as “ill-advised and untimely”.
“The transaction at this time would deprive the country of the opportunity to maximise the expected increase in value of the JPS assets when the modernisation and energy diversification of the company is completed and the value of the full programme is being realised,” the Opposition complained, pointing to the light and power monopoly’s nearly US$1 billion worth of assets and revenues of close to US$800 million at end of 2015.
The party noted that with the company now being positioned to increase its asset base, and the ongoing investment of over US$230 million to build out new generating capacity, it would be “foolish to proceed with the divestment at this time”.
The other shareholders in the JPS are Marubeni Corporation and Korea East-West Power, which each hold 40 per cent, while the remaining less than one per cent share is owned by private shareholders. The partners signed a mutual cooperation ownership agreement in July 2011.
Meanwhile, the Government is also looking to get the Norman Manley International Airport (NMIA) off its books in 2017/18. The enterprise team which was set up to examine the operations of the airport has recommended the divestment in light of the significant State funding and resources being expended to run the airport. “The Government will, therefore, move to divest NMIA this year in keeping with its public sector transformation agenda,” the governor general said.
The Government is seeking to attract a private operator to fund those operations, as a previous tender for bids in 2015 was not successful since none of the entities which pre-qualified during the divestment process actually submitted a bid.
Now, the Development Bank of Jamaica, through a new public-private partnership unit, with the International Finance Corporation, a member of the World Bank Group, as its lead advisor is restructuring the transaction.
The entities which pre-qualified in the previous bidding process included China Harbour Engineering Company, Jamaica Producers Group Limited Cedicor SA (Aeropuertos Argentina 2000 SA), A-Port Chile SA, Korea Airport Corporation Latin America, Zurich Airport International AG, GK Capital Management, GBG Energy S de RL, DAA International Ltd, and Corporación Aeroportuaria del Este SAS (Punta Cana International Airport).
The NMIA is the island’s second-largest airport, and is owned by the Airports Authority of Jamaica and operated through its subsidiary, NMIA Airports Limited. (Jamaica Observer)