01 Feb Opposition cautions against timing of proposed divestment of Government Stake in JPSCO
The latest proposal by the Government of Jamaica to divest itself of the 19.9% stake in the Jamaica Public Service (JPS) as alluded to in recent public remarks by Finance Minister, Audley Shaw is ill-advised and untimely.
The transaction at this time would deprive the country of the opportunity to maximize the expected increase in value of the JPS assets when the modernization and energy diversification of the company is completed and the value of the full programme is being realized.
While the timelines for the divestment project and method of sale have not yet been disclosed, the JPSCo, which has assets of nearly US$1 Billion and revenues of some US $760 million as at end of 2015, is now being positioned to increase its asset base, achieve energy efficiency and significantly grow its revenues. The ongoing investment of over US$230M to build-out new generating capacity and the use of LNG as generating fuel underscores this fact. Further, the current provisions, including the 20 year 190MW power purchase agreement enjoyed by the JPSCo reinforces our position that it would be foolish to proceed with the divestment at this time.
While we recognize and appreciate the fact that that the divestment would serve to broaden the ownership base of assets in the country, we urge the Government not to squander the country’s assets on the whim of expediency, but to be guided by the cost-benefit analysis of the divestment.
Importantly also, despite our reservations with respect to that divestment, we strongly recommend that in the event of a decision to divest, that every effort be made to ensure that Jamaicans are given the opportunity to acquire the publicly held shares in the company.