Jamaica Energy Policy 2006-2020, Green Paper

GREEN PAPER
THE JAMAICA
ENERGY POLICY
2006 - 2020
GREEN PAPER:
THE JAMAICA ENERGY POLICY

2006 - 2020
Organization of Document
1.0 Introduction 1
1.1 Country Profile 1
1.2 Economic Overview 1
1.3 Energy and the Economy 1
2.0 Global Energy Situation 2
3.0 Review of 1995 Energy Policy 4

3.1 Background 4
3.2 Power/Electricity 4
3.3 Petroleum Sector 5
3.4 Renewable Energy 6
3.5 Energy Conservation and Efficiency 6
3.6 Environment 7
4.0 Policy Issues and Recommendations: 2006 – 2020 7

4.1 Energy Supply and Security 8
4.1.1 Policy Issue: Security of Energy Supply 8
4.1.2 Policy Issue: Diversification of Energy Types 9
4.1.3 Policy Issue: Need to pursue Oil and Gas Exploration 9
4.2 Petroleum Industry 10
4.2.1 Policy Issue: Maintain a Competitive Petroleum Industry
with Industrial harmony 10
4.2.2 Policy Issue: Need to ensure appropriate behaviour in
a Competitive and Deregulated Environment 10
4.2.3 Policy Issue: Need for Intervention in Time of Disasters 11
4.2.4 Need to prevent Mergers and Acquisitions that could
Impair Competition 11
February 20, 2006 ii

4.2.5 Policy Issue: Petroleum Refining Capacity 11
4.2.6 Policy Issue: Need for a relevant Petroleum Reference
Price 12
4.3 Petroleum Tax 12
4.3.1 Policy Issue: Use of a Petroleum Tax Regime to enhance
Efficiency and Conservation 12
4.3.2 Policy Issue: Need for Sustainable Source of Funds to
Support Road Maintenance 13
4.4 Electricity Sector 13
4.4.1 Policy Issue: Need for a Transparent and Well-Regulated
Electricity Market 13
4.4.2 Policy Issue: There are concerns regarding responsibility
for the development of a least cost expansion plan (LCEP)
for electricity within the context of a privatized electricity
sector and liberalized generation market 14
4.4.3 Policy Issue: Need for Heat Rate to be Consistent with
International Standards 14
4.4.4 Policy Issue: Need for Prescribed Protocols for the supply
of Electricity to the National Grid 15
4.4.5 Policy Issue: Need to Optimize Efficiency in Transmission
and Distribution of Electricity 15
4.4.6 Policy Issue: Need to Ensure Accuracy of Meters and
Billing Systems 16
4.5 Rural Electrification Programme (REP) 16
4.5.1 Policy Issue: There is a need to provide Electricity to
Remote Communities and Marginalized Groups 16
4.5.2 Policy Issue: Transfer of Assets Owned by the REP 17
4.5.3 Policy Issue: Need for more Competition in the Electricity
Market 17
4.6 Transport Sector 17
4.6.1 Policy Issue: Need for Small Engine Size Vehicles 18
4.6.2 Policy Issue: Need for more Diesel-powered Engines
versus Gasoline 18
4.6.3 Policy Issue: Octane Enhancement of Fuel 18
4.6.4 Policy Issue: Introduction of Biofuels 19
4.6.5 Policy Issue: Need for increased use of Flexi and
Hybrid Vehicles 19
4.6.6 Policy Issue: Need for Greater use of Public Transportation 19
4.7 Development of Renewable Energy Resources 19
4.7.1 Policy Issue: Need to increase use of Renewable Energy
to complement Fossil Fuel 20
4.7.2 Policy Issue: Need for Institutional Focus for Development
of Renewable Energy 21
4.7.3 Policy Issue: Need to expand use of Solar and other forms
of Renewable Energy at the Household Level 22
4.8 Energy Conservation and Efficiency 23
February 20, 2006 iii

4.8.1 Policy Issue: Need to Conserve on, and Improve Efficiency
of, energy use in the Domestic Economy 23
4.9 Energy Fund 24
4.9.1 Policy Issue: Need for a Dedicated Energy Fund to Finance
Energy Conservation, Efficiency, Renewable and related Projects 24
4.10 Institutional Arrangement 24
4.10.1 Policy Issue: There is need to rationalize the Institutional
Arrangements for Policy Development and Implementation,
Regulation and Monitoring Functions for the Energy Sector 24
4.10.2 Policy Issue: Need for timely and reliable Information and
appropriate Analytical Tools to support Policy
Development and Planning 25
4.10.3 Policy Issue: Financing the Energy Investment 25
Appendix
Tables 1 – 12
Figure 1
References
The following documents were used as reference material in the preparation of this draft:
• The Cabinet Office – The Jamaica Energy Policy 2005

• India – Draft Integrated Energy Policy PUT for Public Debate, December 2005
• Jamaica Energy Sector Policy – 1995. Project to Conduct a Review of the Electricity
Least Cost Expansion Plan Submitted by Jamaica Public Service Company – Final
Report. Acres Management Consulting, Ontario, October 2005
• ECLAC ‘Energy Sustainability in Latin America and the Caribbean Study’ October 2003
• Renewable Energies Potential in Jamaica June 2005. MCST, UNECLAC, GTZ.
• The Draft Electricity Bill 2004
February 20, 2006 iv

GREEN PAPER: THE JAMAICA ENERGY POLICY 2006 – 2020
1.0 INTRODUCTION
1.1 Country Profile

Jamaica with an area of 10,990 km2 and a population of 2,636 thousand (2003 Est.) is the
largest English speaking island in the Caribbean. The GDP per capita (2003) is estimated
at US $2,728 (Table 1).
1.2 Economic Overview

Jamaica operates an open economy in which the major sectors include tourism, mining,
manufacturing, agriculture and financial and insurance services. Over the past two
decades Jamaica has implemented a programme of economic liberalization, stabilization
and structural reform that has made it more open to trade and financial flows. The
liberalization programme covered trade, exchange controls, the removal of subsidies and
price controls. The liberalization measures were also applied to the energy sector.
The economy was marked by high inflation in the early 1990s but strong measures were
taken in recent years to bring inflation under control.
The Jamaican economy has recorded four (4) consecutive years of positive GDP growth
with rates for the years 2001, 2002, 2003 and 2004 being 1.7%, 1.1%, 2.3%, and 1.2%
respectively. This growth has taken place despite disruption in recent years due to natural
disasters.
1.3 Energy and the Economy

Jamaica has one of the highest energy intensity rates in Latin America and the Caribbean.
This is largely due to the high energy use of the bauxite and alumina sector. In 1987,
when both the bauxite and non-bauxite sectors are taken into consideration, it took 3.59
barrels of oil equivalent (boe), to generate US$1000 GDP, whilst in 2003 it took 5.39 boe
or 50% more energy as is shown in Table 2. The energy intensity without the bauxite and
alumina sector is approximately 30% lower (Table 3).
For most of the Caribbean, excluding Trinidad and Tobago, per capita consumption and
energy intensity have remained relatively stable over the last 10 years. For example, in
2001 the per capita consumption of energy in Jamaica was 9.71 boe while in St Lucia it
was 3.6 boe.
In 1975 the per capita energy consumption in Jamaica was 8.4 boe. Energy conservation
and efficiency measures introduced after the oil shock of the 70s contributed to a
reduction of the per capita energy consumption to 6.9 boe by 1980. However, over the
period 1987 to 2003 the per capita consumption of energy worsened, increasing from 5.6
to 10.31 boe.
Petroleum imports for 2000-2004 by volume and value are presented in Table 4. Over
the period there has been an increase of 6.5% in volume, equivalent to 1.6 million barrels
oil. This increase in consumption has not been reflected in GDP growth. In the same
February 20, 2006 1

period, oil import value ballooned by 37% or US $255 M. The oil bill which accounted
for 24% of merchandise exports in 1998 increased to 66% in 2004, resulting in an
increased share of export earnings being used to cover the cost of energy; from every
dollar of merchandise exports, we now need 66 cents to meet the oil bill (Figure 1). This
has serious implications for the balance of payments account and exchange rate stability.
Bauxite alumina processing (36.6%), electricity generation (24.7%) road transportation

(23.5%), and shipping and aviation (7.7%) account for approximately 93% of petroleum
consumption (Table 5). It is estimated that energy demand will grow by about 3% to 4%
per annum over the medium term.
The main characteristics of energy and its relationship with the Jamaican economy can be
summarized as follows:
• excessive dependence on imported primary energy;
• low energy supply self-sufficiency due to a lack of indigenous energy resources, and
low utilization of available sources, namely wind, hydro, solar and biomass;
• high petroleum consumption that is concentrated in alumina, power generation and
transport sectors (per capita energy consumption has increased by 50% since the
early 1990s);
• rising share of oil products in the import energy supply mix relative to crude oil (the
latter share has fallen from 42.5% in 1990 to 23.5% in 2004);
• low levels of the refinery utilization, operating below 60% since 1983; and
• high systems losses in the electricity industry, which has been deteriorating since
2001 and which reached 20% in 2004.
There has been rising per capita energy consumption from 1,157 kilogram of oil
equivalent (Kgoe) in 1990 to 1,406 Kgoe in 2003 and a worsening of the energy intensity
from 642 Kgoe/US$1000 GDP to 734 Kgoe/US$1000 GDP.
2.0 GLOBAL ENERGY SITUATION
The recent surge in oil prices on the international market beyond US$50 per barrel marks
the fourth ‘wave’ of increases since 1973. The first, was in late 1973, when the
Organisation of Petroleum Exporting Countries (OPEC) which is a dominant supplier
(>40% of world total), quadrupled prices. Prices, using Arabian Light crude as a
benchmark, moved from US$2.48 per barrel in 1972 to US$11.58 in 1974. This was the
first full year of the OPEC effect.
The second was a consequence of the Iranian Revolution of 1979 when the average
Arabian Light crude price moved from US$13.60 per barrel in 1978 to over US$30 per
barrel between 1979 through 1982 and about US$28 per barrel during 1983-1985.
The third was the First Gulf War that saw prices of the Arabian Light crude rising from
under US$15 to approximately US$20 in the early 1990s.
February 20, 2006 2

Notable about these first three ‘waves’ is that whilst in nominal terms there was no return
to the pre 1973 OPEC prices, in the intervals between them, prices either rose gradually
or dropped.
For example, between 1974 and 1978 they ranged between US$11.58 and US$13.60 per
barrel; between 1986 and 1989, US$14.32 and US$18.23 per barrel; and after the First
Gulf War ‘wave’ between US$15.82 and US$25.02 per barrel.
It was in this context, therefore, that OPEC in its ‘toughened stance’ set a price range of
between US $22 to US $28 per barrel, which it would support. This policy meant that if
prices were trending to below US $22 per barrel, production would be cut to ensure that
they did not fall below that level; and if they were trending over US $28 per barrel
production would be increased.
However, this fourth ‘wave’ of increase is driven mainly by heightened demand for
energy by the rapidly expanding economies of China and India, the uncertainties
revolving around the reliability of supplies from some key oil producing areas, shortage
of refining capacity within the United States, the increased frequency of natural disasters,
the slowed rate of discovery of new oil fields and the increased risks associated with
terrorist attacks. These factors are of particular concern to oil importing countries and
especially countries like Jamaica that are almost totally dependent on imported fuel.
Forecasters, including the International Monetary Fund (IMF), expect global energy
demand over the next fifteen years to average 2.1% per annum driven by continued
strong yearly growth in the global economy, which is predicted to be between 2.5% and
3%. Natural gas is predicted to be the growth leader with annual growth of 2.6%,
followed by coal with annual increase of 2% and oil at 1.9%. The developing countries’
share is predicted to increase to account for 55% of the rise in the world energy demand.
On the other hand, unrest in the major oil producing regions will continue to undermine
security of supply and influence prices in the global market.
In 2006, world oil reserves were estimated to be 1,292 billion barrels. Natural gas
reserves were estimated to be 6,112 trillion cubic feet. Estimates of world coal reserves in
2003, stood at 1 trillion short tons or over 490 billion tonnes of oil equivalent. (Table 6).
Consumption trends indicate that world oil demand increased by 27% between 1980 and
2003 to reach an estimated 80 million barrels of oil per day in 2003. The consumption
trends for four selected countries between 1980 and 2003, is presented in Table 7.
Consumption of petroleum products globally has fuelled environmental concerns

particularly as they relate to climate change. Several international conventions such as
the Kyoto Protocol, are attempting to secure voluntary commitments to reduce global
emissions from energy related activities. In parallel, there have been important
technological advances designed to minimize adverse environmental impact.
February 20, 2006 3

3.0 REVIEW OF 1995 ENERGY POLICY
3.1 Background
In 1995 an energy policy was promulgated, the objectives of which were to:
• ensure stable and adequate energy supplies at the least economic cost in a
deregulated and liberalized environment;
• diversify the energy base and encourage the development of indigenous energy
resources where economically viable and technically feasible; and ensure the
security of energy supplies;
• encourage efficiency in energy production, conversion and use with the overall
objective of reducing the energy intensity of the economy;
• complement the country’s Industrial Policy recognizing the importance of energy as

a critical input to industrial growth and stability;
• minimize the adverse environmental effects and pollution caused by the production,
storage, transport and use of energy, and minimize environmental degradation as a
result of the use of fuel wood; and
• establish an appropriate regulatory framework to protect consumers, investors and

the environment.
Jamaica has achieved several of the objectives established under the 1995 Energy Policy
but weaknesses remain in the areas of diversification from fuel oil and expansion of
renewable energy. Further, it has proved difficult to achieve sustained improvements in
the area of conservation. The main achievements are summarized below:
3.2 Power/Electricity Sector

JPSCo was privatized with 80% ownership transferred to an overseas investor, Mirant
Corporation of Atlanta, USA and operate under a new All Island Electricity License of
2001.
Since privatization of JPSCo, the company has erected 120MW of new combined cycle
power generation capacity at Bogue in St. James.
Independent power providers now account for 30% of electricity generation. The
generation side of electricity was fully liberalized in 2004.
The Office of Utilities Regulation was established in 1997 as a multi-sector regulator for
electricity and other utilities.
February 20, 2006 4

Under the Rural Electrification Programme, 7,000 km of low voltage distribution lines
were constructed and approximately 70,000 rural homes electrified. Approximately 90%
of households island-wide now have access to electricity.
Electricity prices now reflect true cost. However, Government’s policy continues to
provide a lifeline rate, which benefits monthly consumers of less than 100kWh per
month. This cross-subsidy is provided by those consumers using more than 101kWh per
month.
3.3 Petroleum Sector

In the 1990s the petroleum market was liberalized in two phases. Price controls were
removed on fuel prices, and new marketing companies were allowed to access petroleum
products at the refinery’s Industry Loading Rack. The market is now a liberalized and
competitive one.
Liquid petroleum gas (LPG) has replaced fuel wood as the primary household fuel in
84% of Jamaican homes, improving the standard of living and easing the rate of
deforestation for fuel supplies.
The stamp duties were removed, making it easier for new traders to enter the market to
import petroleum products into the country. The deregulation of petroleum imports has
partially achieved its objectives, creating more competition between the marketing
companies.
Since the 1970s the Government has benefited from a series of oil accords. Jamaica
benefits from the San Jose Accord that was originally signed in 1980 and has been
reviewed annually since then providing for 160,000 barrels per day from Venezuela and
Mexico split between 11 Central American and Caribbean countries as purchasers. The
Accord allows Jamaica to access 14,000 barrels per day with 20% of the payment due on
each shipment available as long-term loans for development projects. While this Accord
offers no commercial benefits to the refinery, other than providing a secure supply base,
benefits accrue to the wider economy in terms of low cost development financing.
The Caracas Agreement was signed between the Governments of Jamaica and Venezuela
in 2000, and was renewed annually, providing for 7,000 barrels/day. In August 2005 the
PETROCARIBE Agreement replaced the Caracas Accord. Within the framework of the
PETROCARIBE Agreement, Venezuela, a member of OPEC, will extend credit facilities
to countries of the Caribbean on the basis of a bilateral fixed quota; there are no price
concessions.
Under the PETROCARIBE Bilateral Agreement that Jamaica entered, a quota of 21,000
barrels of oil per day may be accessed under special financing terms. Where the unit
barrel price is US $40 or greater, 60% of the cost is to be paid within 90 days and this
amount attracts interest at 2% for the 60 – 90 day period. The remainder of 40% attracts
a 1% rate of interest and is repayable within 25 years. At a price of US $50/barrel for the
February 20, 2006 5

next 12-month period, the soft loan benefit is estimated to be US $176 million, at an
interest rate of 1%.
Should the price of oil fall below US $40 per barrel, the schedule for the qualifying
volume is prorated downwards, the applicable rate of interest increases to 2% and the
repayment period for the long-term loan is lowered to 17 years. Similarly, should the
price increase above US $100 per barrel, the qualifying volume would increase to 50%,
but all other conditions would remain as for US $40 per barrel. The bilateral agreement
is renewable on an annual basis.
Government reviewed the experiences of the 1980s oil exploration and updated the
analysis of exploration data using new technology. As a result of this review the
Government issued a number of licences to overseas prospectors for both onshore and
offshore exploration.
3.4 Renewable Energy

Overall the share of renewable energy in the gross energy supply mix increased to an
estimated 12.2% in 2005 from 10.5% in 20031.
A total of 23.2 MW of cogeneration capacity was brought on stream of which 12.2 MW

was produced by Jamaica Broilers and 11 MW by Jamalco. Subsequently, the Jamaica
Broiler’s production was suspended and Jamalco reduced its available export capacity to
approximately 6 MW as a result of the expansion in production capacity of 250,000 tons.
A 20.7 MW publicly owned wind farm was commissioned in 2004 at Wigton,

Manchester costing US$26 million. This system averages 7 MW due to variation in wind
speed. Also, a small 225 KW wind system was introduced at Munro College in 1996,
initially selling to JPSCo; however this system has since encountered technical problems
and no longer provides supplies to the grid.
Government rehabilitated six of the mini-hydro plants, which were privatized to the
JPSCo, and now account for 22 MW of capacity to the system.
Two demonstration photovoltaic schemes supplying non-grid electricity to 45 homes in

deep rural Jamaica have been established; these communities are Middle Bonnet in St.
Catherine and Ballymony in St. Ann.
In 2005, a US$10 million ethanol plant was commissioned and re-commenced production
and export of fuel ethanol to the USA, using Brazilian feedstock.
3.5 Energy Conservation and Efficiency

The demand side management and energy efficiency programme introduced in 1996 has
had some positive impact on the residential lighting market. A study commissioned by
the World Bank in 2005 to determine the impact of the demand side management
1
Source: ECLAC ‘Energy Sustainability in Latin America and the Caribbean Study’ October 2003.
February 20, 2006 6

programme showed an estimated 28 MWh/year reduction in demand for electricity,
eliminating the need for 6 to 8 MW of peak capacity.
A draft Energy Building Code to guide energy efficiency and conservation in building
designs has been prepared and will now be subjected to review by the relevant
stakeholders before promulgation.
Government approved an initial allocation of US$10 million to establish the energy fund
to finance energy conservation and efficiency projects.
3.6 Environment
Jamaica has phased out lead from gasoline and established a new set of vehicle emission
standards. This has significantly reduced greenhouse gas emissions.
The Government has taken a decision to phase out MTBE as an octane enhancer and to
replace it with 10% ethanol. This phasing out will commence in the third quarter of
2006.
4.0 POLICY ISSUES AND RECOMMENDATIONS: 2006 – 2020
Many of the objectives and related policy prescriptions articulated in the 1995 energy
policy remain relevant today. Among the significant accomplishments emanating from
the 1995 policy, are those related to changes in market structure; a liberalized and
deregulated petroleum sector and a privatized electricity sector in which the power
generation component is liberalized.
The current challenge is to formulate new policy prescriptions that preserve a highly
competitive and efficient energy sector particularly in light of the new ‘wave’ of oil price
increases and within the context of the structural changes in the local market.
It is established that the economy is energy intensive and highly dependent on imported
supplies. For Jamaica to attract foreign direct investment and for locally based industries
to participate successfully in the globalized market environment, supplies must be
secured at the most competitive prices. This policy, while embracing the relevant
elements of the policy promulgated in 1995, seeks to advance that agenda.
The objectives of this energy policy are similar to those prescribed in the 1995 policy but
with greater emphasis on energy efficiency, fuel sources and energy use in transportation.
The main objectives of this energy policy are as follows:
• ensure stable and adequate energy supplies at the least economic cost in a
deregulated and liberalized environment to enhance international competitiveness
and to improve quality of life of householders;
February 20, 2006 7

• provide an appropriate environment conducive to private sector participation in
electricity generation;
• make electricity available to the remaining areas of the island, especially in deep
rural areas and at affordable rates to lifeline customers;
• diversify the energy base and encourage the development of indigenous energy
resources where economically viable and technically feasible; and ensure the
security of energy supplies;
• protect the economy from the volatility in energy prices which has been
experienced with petroleum fuels and which will continue as oil supplies become
more limited;
• encourage efficiency in energy production, conversion and use with the overall
objective of reducing the energy intensity of the economy;
• complement the country’s Industrial Policy recognizing the importance of energy as

a critical input to industrial growth and stability;
• minimize the adverse environmental effects and pollution caused by the production,
storage, transport and use of energy, and minimize environmental degradation as a
result of the use of fuel wood; and
• establish an appropriate regulatory framework to protect consumers, investors and

the environment.
4.1 Energy Supply and Security
4.1.1 Policy Issue: Security of Energy Supply

Supply security is threatened by diminishing global oil reserves, rapid economic
growth in China and India and uncertainties in regard to reliability from some key
oil producing areas. Shortage of refining capacity, the impact of natural disasters
on oil and gas-producing facilities, declining rate of discovery of new oil fields
and the vulnerability of energy facilities to possible terrorist attacks also influence
security and feed speculation in oil markets.
Jamaica traditionally imports petroleum supplies from Venezuela, Mexico,

Trinidad and Tobago and Ecuador and, as necessary, purchases on the spot market
(Table 8). The oil reserves in the Latin American and Caribbean Region are
estimated at 103 billion barrels while the reserves of natural gas and coal are 250
trillion cubic feet and 22 billion short tons respectively (Table 6).
Over the years, Jamaica has benefited from government to government energy
agreements which form an important part of the energy security strategy and
February 20, 2006 8

involve access to crude and refined products under favourable financing
agreements.
Unexpected interruptions in the petroleum supply chain, external or within the

country, as well as disaster events such as hurricanes can cause short-term
disruptions in the market and this risk must be carefully managed.
Policy Recommendations
The Government’s foreign trade policy will seek to strengthen bilateral
relationships with energy supplying countries within and external to the region
and especially with Venezuela, Mexico, Trinidad and Tobago, Ecuador and
Brazil, as well as with North/West Africa and Middle East energy producing
countries.
It is important for the country to preserve benefits negotiated under various

bilateral energy agreements.
The Government will revise existing regulations to make provisions that will
ensure adequate inventory levels exist to cushion any short-term disruption in
supply.
4.1.2 Policy Issue: Diversification of Energy Types

Taking account of the reserves for the various energy types and with advances in
technology, energy sources such as natural gas, coal and renewable energy must
be considered in the fuel mix for the Jamaican economy.
Policy Recommendation
The Government will promote diversification of energy types to reduce reliance of
the energy intensive sectors of the economy such as bauxite, electricity generation
and transport on a single fuel type. Natural gas, coal and renewable energy
sources are among the alternatives which will be explored.
4.1.3 Policy Issue: Need to pursue Oil and Gas Exploration

As world fossil fuel prices increase and with advances in oil exploration
technologies, reserves, which were once uneconomic to exploit, could become
viable. Against this background, there is the need for Jamaica to assess its oil and
gas potential with a view to developing these if feasible.
Further, with developments in analytical techniques applicable to oil and gas

exploration data, a decision was taken to re-evaluate exploration data gathered
over the last 20-30 years from various locations in Jamaica. From this analysis,
there are indications that Jamaica could have some commercial quantities of oil
and gas reserves. Accordingly, the Government has been encouraging companies
to undertake further exploration work.
February 20, 2006 9

The Government will encourage the exploration and commercial development of
oil and gas resources in Jamaica. This will be done within a framework that
protects sovereign rights, protects the environment, provide opportunity for
participation by local investors and which is mutually beneficial to prospectors
and the local economy.
4.2 Petroleum Industry
4.2.1 Policy Issue: Maintain a Competitive Petroleum Industry with Industrial

Harmony
Jamaica is the only CARICOM member state with a liberalized and deregulated
petroleum industry. Local and international marketing companies operate in the
distribution and retail sectors and a number of independent dealers operate under
franchise and other licensing arrangements. The Government participates as a
player in all segments and is committed to maintaining this structure.
Within this structure, there are concerns about the abuse of dominant positions by
some players. The resulting tension between marketing companies and retailers
often causes disruption of supplies for the domestic market which adversely
affects normal economic activity. Efforts to correct these weaknesses through
moral suasion and within the existing regulatory framework have not yielded
sustained results.
The Government has resisted the promulgation of regulation over the years
hoping that self-regulation and good business practice would be adequate.
The Government will use instruments of policy, legislation, regulation and
licensing to maintain a competitive and deregulated petroleum industry and to
facilitate relative peace and industrial harmony.
4.2.2 Policy Issue: Need to ensure appropriate behaviour in a Competitive and

Deregulated Environment
Legislation exists that governs operations within the sector: landing and storage,
conveyance and quality. Provisions in the Weights and Measures Act address
areas such as the retailing of products to protect the consumers. However,
attempts to regulate measurements related to fuel transfer between marketing
companies and retailers using the provisions of the Weights and Measures Act
have been met with legal challenges.
The provisions in existing legislation that governs trading in, and handling of
kerosene and LPG need revision.
Elsewhere in this document, reference is made to disruptions that occur in the

country when there are interruptions or any perception of interruption of
February 20, 2006 10

petroleum supplies. Clear protocols that address resolution of conflicts should be
established.
The Government will amend existing legislation and regulations or promulgate
new ones where necessary to ensure responsible market behaviour and promote
industrial harmony.
4.2.3 Policy Issue: Need for Intervention in Time of Disasters

Jamaica is prone to natural disasters, especially hurricanes that create dislocations
in energy supplies.
In cases of disaster the Government will be empowered to intervene in the energy
sector, if necessary, for a specified time to bring order and ensure that national
priorities are met.
4.2.4 Policy Issue: Need to prevent Mergers and Acquisition that could Impair
Competition
There are several modes of conduct that could compromise competition in the
marketplace. Existing legislation can deal with informal modes. On the other
hand, mergers and acquisitions in small economies such as Jamaica could
undermine competition. Other jurisdictions legislate against anti-trust practices.
The Government will promulgate legislation and establish protocols to safeguard
against mergers and acquisitions which could be anti-competitive.
4.2.5 Policy Issue: Petroleum Refining Capacity

The state-owned refinery, which operates in a fully liberalized and deregulated
market, contributes 2% to gross domestic product. The Government is committed
to preserve the value-added benefits from the refinery. There is need, however, to
increase capacity and modernize to improve efficiency of the refinery that now
supplies approximately 55% of local demand including the bauxite sector (Table
4).
The Government will maintain local efficient refining capability as an important
contributor to the country’s GDP, to ensure energy security, facilitate access to
benefits under bilateral energy arrangements and enhance stability in the local
petroleum market.
The Government will invite broader participation in the ownership of the

upgraded refinery.

4.2.6 Policy Issue: Need for a relevant Petroleum Reference Price
Internationally, the price of petroleum is influenced by trading activities in
commodity markets. Within this region, the US gulf reference price is the basis
that is used to price petroleum and consequently, this is the reference price that is
used in Jamaica.
Jamaica needs to adopt a suitable internationally accepted reference-pricing

model that reflects the regional market conditions.
The Government will maintain an import parity price basis for products that
reflects regional market characteristics for petroleum.
4.3 Petroleum Tax
4.3.1 Policy Issue: Use of a Petroleum Tax Regime to enhance Efficiency and
Conservation
Petroleum and petroleum products, like all other imports, are subject to border
taxes. However, imported finished products are sourced largely from Trinidad
and Tobago, and do not attract Common External Tariff (CET).
Petroleum products sold in the domestic market attract a special consumption tax
(SCT) fixed on a volume basis. There is provision for an ad valorem tax but in
1999 a policy decision was taken to freeze this. Therefore, the level of tax as a
percentage of gasoline prices in Jamaica is relatively low (Table 9) even when
compared with oil producing countries such as Barbados and Trinidad and
Tobago. In other jurisdictions, an ad valorem tax is generally applied.
However, LPG, used in 84% of households (mainly as a cooking fuel) and as well
as in commercial and industrial enterprises, attracts a minimal level of taxation
(Table 10) and now stands at J$0.04 per litre. There is no significant difference in
the levels of taxation between the other fuel types, which is not the case in many
countries (Table 9).
The Government will undertake studies and conduct consultations with
stakeholders on taxation levels for petroleum fuels (such as gasoline, diesel,
kerosene, natural gas) with a view to instituting a system designed to enhance
efficiency and conservation. This system will be consistent with regional and
international trends and best practices.
The tax rate on LPG will remain low as an important strategy to encourage its
use as a convenient household fuel and to reduce harvesting of wood for fuel.

4.3.2 Policy Issue: Need for Sustainable Source of Funds to Support Road
Maintenance
Many countries have established a “user-pay” principle towards meeting the costs
for the upkeep of the road infrastructure through motor vehicle levies and user
fees.
Jamaica has one of the most dense road networks in the world totaling
approximately 20,000 km in an area of 10,990km2. The country has a recurrent
experience of extensive damage to the road network during the rainy season.
Following the rainy season and damage to the road network, there is often
increased public outcry, sometimes manifested in civil disobedience to draw
attention to the need for urgent road repairs. The cost of maintaining this
extensive road network has been a burden to the general taxpayer and a
sustainable source of funds is needed to supplement budgetary allocation for this
activity.
The Government will undertake studies and conduct consultations with a view to
the possible introduction of an ad valorem tax on transportation fuels and the
dedication of this increased revenue to the Road Maintenance Fund with about
20% provided to the National Energy Fund to support conservation, efficiency
and renewable energy projects.
4.4 Electricity Sector
4.4.1 Policy Issue: Need for a Transparent and Well-Regulated Electricity

Market
The JPSCo was privatized and operates under the All Island Electricity Licence
2001, which expires in 2021. In keeping with the provisions of the licence, the
power generation side was liberalized in 2004 and several independent power
producers now supply electricity to the national grid. JPSCo retains the
exclusivity for transmission, distribution and retailing. These are to be closely
regulated by the Office of Utilities Regulation (OUR) under a price cap incentive
regime.
The main legislative instruments regulating the electricity sector are:

• The 1890 Electricity Lighting Act
• The 1958 Electricity Development Act
• The Office of Utilities Regulation Act
• The Natural Resources Conservation Act
• The 2001 All Island Electricity Licence
Effectively, the provisions of the JPSCo’s licence now set the framework for the
regulation of the electricity sector. Work is well advanced for the promulgation
of a new electricity lighting act.

The Government will continue to honour the provisions of existing licences.
Subsequently the industry will be regulated through harmonized legislation
designed to maintain a modernized industry.
4.4.2 Policy Issue: There are concerns regarding responsibility for the
development of a least cost expansion plan (LCEP) for electricity within the
context of a privatized electricity sector and liberalized generation market
There is a need to ensure that the country has an adequate supply of electricity
over the long run. Considering that the lead-time from planning to
implementation of power plants can take several years, it is critical that a system
for proper planning and timely approval be instituted. The installation of
adequate generation, transmission and distribution capacity on a timely basis is
important to ensure reliability of supply and an adequate reserve margin. This is
important if the country is to avoid power outages that could cripple the
productive sector and inconvenience the residential consumers.
Internationally, the development of a least cost expansion plan (LCEP) establishes

a balance between capital investments that flow into the sector and the price to the
consumer. To protect the long term interest of the country, and to ensure that
conflict of interest among the competing firms in the sector can be effectively
managed, the state should have responsibility and control over the development of
the LCEP as this has important policy implications.
Under the present licence, the JPSCo is empowered to be responsible for the
preparation of the LCEP. The JPSCo also has authority to prepare tenders, invite
bids and evaluate the bids for new generation capacity. Potential bidders for
generation capacity have expressed concern with this arrangement since there is a
potential conflict of interest as JPSCo can also bid. The moral hazards associated
with this arrangement are high since bidders would have revealed confidential
financial and technical information, which could compromise their negotiating
position with JPSCo.
While the Government has the authority to approve the LCEP, administratively
this has proven to be quite difficult.
A system for the proper planning and timely approval of a least cost expansion
plan for electricity will be instituted consistent with the harmonized legislation.
4.4.3 Policy Issue: Need for Heat Rate to be Consistent with International
Standards
On average, the electricity sector constitutes approximately 25% of petroleum
products consumed in the country. It is critical to have high levels of efficiency

in generation; fuel cost is a “pass through” in pricing electricity and underpins the
competitiveness of the productive sector.
Between 1995 and 2003, the level of generation efficiency (rate at which heat in
the fuel is converted into electricity) ranged from a low of 25.3% in 1995 to a
high of 28.4% in 1998. The newer generation plants have higher heat rates and
therefore as new generation capacity is added, the more efficient plants should be
dispatched first.
The Government will establish efficiency standards for each generating unit with
a schedule for phased replacement of inefficient plants. The phased replacement
will take account of the most appropriate and modern technology.
The Government will make provision in the new electricity act for an independent
and transparent system for merit order dispatch. In this regard, it might be
necessary to “grandfather” relevant features of existing licences.
4.4.4 Policy Issue: Need for Prescribed Protocols for the supply of Electricity to
the National Grid
As a matter of policy, the Government expects to have renewables contributing
more significantly to the electricity capacity. To enable the development of this
market, barriers to entry for energy from renewable sources and from
cogeneration must be minimized. Among the key issues to be addressed will be
appropriate protocols within which contractual arrangements are governed;
timeliness in finalizing supply contracts, wheeling and net metering are among the
issues.
The Government will establish appropriate protocols to guide contractual
arrangements between independent power producers on the one hand and on the
other, any dominant player(s) in the industry. These protocols will include
arrangements for conventional planned generation, cogeneration, wheeling and
net metering, among other features.
4.4.5 Policy Issue: Need to Optimize Efficiency in Transmission and Distribution

of Electricity
There is need to reduce the current level of technical and non-technical losses in
transmission and distribution of electricity, estimated to be approximately 18% in
2003 and allocated equally among the two categories. Since privatization, there
has been an increase in total system losses from 16.3% in 2001 to 20% in 2004.
Losses are absorbed by paying customers.
Reduction in system losses is in the national interest. However, it is recognized

that the high cost of capital is a constraint to timely investments to improve
efficiency.

It is of note that Jamaica is vulnerable to hurricane disasters which often cause
extensive damage to the transmission and distribution system.
The Government will establish standards, to be rigorously enforced, for technical
losses in transmission and distribution of electricity as well as quality of service
standards.
There will be a programme for a phased modernization of transmission and

distribution systems to minimize technical and non-technical losses.
The Government will encourage the service provider(s) to obtain financing

through bilateral and multilateral sources to introduce programmes designed to
reduce system losses.
The new electricity act will make appropriate provisions for penalties for illegal
tapping of power lines.
In keeping with advances in technology related to size and type of power units
and demand requirements, there will be strategic placement of generating plants
to optimize efficiency and reliability.
In selected areas, over the long term and to coincide with major infrastructure
development, power distribution lines are to be installed underground to reduce
vulnerability to natural disasters, improve the environmental aesthetics as well as
reduce non-technical losses.
4.4.6 Policy Issue: Need to Ensure Accuracy of Meters and Billing Systems
As customers react to conservation messages as well as increased electricity rates,
there is a higher level of sensitivity to service standards including accuracy of
meters, timely billing cycle and actual versus estimated bills.
The Government will establish quality of service standards and use regulatory
instruments to serve the best interest of consumers and investors.
4.5 Rural Electrification Programme (REP)
4.5.1 Policy Issue: There is a need to provide Electricity to Remote Communities

and Marginalized Groups
Electricity fosters development in rural communities, it reduces rural – urban drift
and improves overall quality of life. Private power producers will not extend
service to communities where the timeline for the return on investment is not
aligned with their business strategy.

The REP was established as an operating arm of the then state-owned JPSCo to be
the implementing agency for extending electricity supply to rural communities.
The REP remains state-owned and maintains its original mandate.
At this time, approximately 16,000 rural households remain to be electrified. And,

with the advent of urban renewal programmes, there are opportunities to
regularize arrangements for electricity supply in certain urban communities.
The Government will facilitate universal access to electricity within specified
geographic regions and in keeping with established standards.
The Government will make appropriate provisions, including technological

solutions to enable marginalized groups access to electricity at affordable rates.
4.5.2 Policy Issue: Transfer of Assets Owned by the REP

The Rural Electricity Programme (REP) now establishes the electricity
distribution infrastructure into communities which are uneconomic to the private
power company. Once constructed, these assets are to be transferred to the
authorized service provider.
The Government will establish clear protocols for the transfer of power lines and
any other infrastructure constructed by the authorized agency to service
providers. Valuation will take into consideration factors such as rate of return
envisaged in any licence and economic expected life of the assets among others.
4.5.3 Policy Issue: Need for more Competition in the Electricity market
In 1994 the Government adopted the first major change to the operation of the
electricity market by discontinuing the utility’s monopoly over the generation
capacity market and permitted a number of independent power producers and
self-generators to enter the bulk electricity market for the first time.
A generation market study was carried out and further examination is needed to
determine the appropriate level of competition that should be introduced.
The Government will explore the appropriate level of competition which should
be further introduced in the electricity market consistent with efficient operation
of the industry.
4.6 Transport Sector

Aspects of transportation that have a direct impact on energy demand are addressed in
this policy.

A White Paper entitled “National Transport Policy” was presented to Cabinet in October
2005. That document contains the detailed policy issues and proposed policy positions
on the various aspects of the transport sector.
4.6.1 Policy Issue: Need for Small Engine Size Vehicles

With the rising cost of fuel and the attendant foreign exchange costs to the
country, it is important to implement policies that will serve to conserve fuel for
transportation.
In the early 1980s restrictions were put on vehicles with engine size over 2800
c.c. for gasoline vehicles and 3000 c.c. for diesel units. Additionally, the duties
on gasoline engine sizes below 2000 c.c. and diesel units below 2200 c.c. were
reduced from 175% to 75%.
Presently there are no constraints on vehicle imports with respect to engine

capacity or fuel efficiency.
The Government will maintain a lower level of import duty on vehicles with
smaller engines than on vehicles with larger engine sizes.
4.6.2 Policy Issue: Need for more Diesel-powered Engines versus Gasoline
Fuel efficiency of diesel powered vehicles range between 15-20% greater than
that of the equivalent gasoline powered engines. In Europe, where policies favour
diesel engines, these constitute 35% of the cars and light duty vehicles market. In
Jamaica the most recent information available show that in 1997, 12% of the
rolling stock was diesel engines.
Efforts should be made to increase the proportion of diesel-powered vehicles in

Jamaica.
The Government will institute a data collection mechanism to track imports of
vehicles according to fuel type.
The Government will seek to implement a lower tax on diesel-powered engines

such that this will serve to increase the proportion of diesel-powered vehicles to
reach a target of 30% of the annual imports within 10 years.
4.6.3 Policy Issue: Octane Enhancement of Fuel

The cost of production of lower octane grade gasoline is less than for the higher-
octane grade and this is reflected in the price to consumers. With few exceptions,
there is no loss of performance in using the 87 octane for motor cars in the rolling
stock.

The Government will, by way of public education, encourage economy through
the use of appropriate fuel grades for motor vehicles.
4.6.4 Policy Issue: Introduction of Biofuels

MTBE, an octane enhancer in fuel, poses certain environmental hazards and is
being phased out in some countries such as the USA. Ethanol, a biofuel, is now a
common substitute as an octane enhancer. Importantly, the use of ethanol as a
fuel provides an opportunity for the expansion of the local sugar cane industry.
The present rolling stock of vehicles can use ethanol as an enhancer in gasoline,
without engine modifications.
Ethanol will be introduced as an octane enhancer to replace MTBE. Initially this
will be at 10% to be increased incrementally within five years to 15%.
4.6.5 Policy Issue: Need for increased use of Flexi and Hybrid Vehicles
Constraints to the use of electric vehicles have been overcome through the use of
hybrid vehicles. A hybrid vehicle integrates a gas engine and an electric motor to
provide power. Flexi vehicles use gasoline and biofuels, such as ethanol, in
various proportions.
The kilometer per litre performance of hybrid vehicles is approximately twice that
of comparable conventional vehicles. Hybrid vehicles are currently more
expensive but because of their lower operating cost, the cost per kilometer could
be lower over their economic useful life.
The Government will promote the wider use of hybrid and flexi vehicles through a
discriminatory tax regime that favours fuel diversification and fuel efficient
vehicles.
4.6.6 Policy Issue: Need for Greater use of Public Transportation

Land transportation accounts for approximately 23% of petroleum fuel
consumption. The 2004 annual transport statistics report classifies 10.5 % of the
rolling stock as public passenger transport and 74.8% as private (Table 11).
Private mode of transportation is inefficient and demands significant investments
for upgrading and maintaining road networks and the provision of expensive
urban land for parking.
A “balancing” between the public and private transportation modes is an
important step to improve energy efficiency in the transport sector and the 2005
white paper “National Transport Policy” offers policy remedies.

4.7 Development of Renewable Energy Resources
The price of fossil fuel, a traded and exhaustible commodity, is highly volatile and
responds sensitively to factors other than supply and demand balance. On the other hand,
the cost of harnessing energy from renewable sources is influenced largely by the initial
high capital investments as well as uncertainties with respect to constancy in availability.
As price of fossil fuels increases and, with significant technological advances in
harnessing the renewables, energy supply systems that complement fossil fuel
consumption with energy from renewable sources become more attractive.
There are significant collateral benefits associated with the use of renewable energy; it
can be harnessed and used in remote areas, recurrent expenses are low and they are
environmentally clean. Global concerns about climate change induced by the use of
fossil fuel and driven by international conventions such as the Kyoto Protocol, have
stimulated interest in bringing renewable energy projects on stream. Importantly, income
can be derived from the sale of carbon credits from some projects.
The initiatives to develop the renewable energy sector in Jamaica need to have focus and
will benefit from supporting policies.
4.7.1 Policy Issue: Need to increase use of Renewable Energy to complement

Fossil Fuel
Renewables now account for approximately 12.2% percent of the total energy
requirements, with about 6% for electricity.
A recent study published jointly by the Government and United Nations

Economic Commission for Latin America and the Caribbean (UNECLAC)
discusses the renewable energies potential of Jamaica2. It shows that the
potential for increased use in this sector exceeds by far, what is now realized.
Several investment opportunities exist to develop the renewable energy sector in

Jamaica such as wind farms and mini-hydro systems to generate electricity,
biogas generators for domestic and institutional application and for the harnessing
of solar energy. Excellent prospects exist for inclusion of solar water heating
systems in new construction developments as well as for small-scale commercial
applications in agro-industry. The capital cost for installing solar systems is
comparatively high; however payback can be realized in less than four years.
There are many public institutions such as hospitals and private dwellings that
now use electricity to provide hot water. The cost to produce this can be
significantly reduced by integrating solar panels as collectors into existing heating
systems; a reduction in the recurrent expenditure for energy at the institutional
and household levels would be significant.
2
Ministry of Commerce, Science and Technology, UNECLAC, GTZ, 2005; Renewable Energies Potential in
Jamaica

In light of the high electricity consumption by the National Water Commission,
adoption of these renewable technologies for the pumping and distribution of
water should be given serious consideration.
Early studies (CREDP3) identified several barriers to the wide scale adoption of
renewable energy systems in Jamaica; financing, cultural prejudices, the absence
of or weak fiscal and regulatory provisions are some. Possibly the largest barrier
to the development of a domestic renewable and cogeneration market is the
absence of appropriate protocols to facilitate contracts governing seller – buyer
relationships.
Contribution from renewable sources to the electricity sector will be increased
from the current level of 6% up to 10 % by 2010 and 15% by 2020.
Tax policies will be designed to encourage development of the renewable energy

sector.
The Government will encourage the local financial sector to provide funding.
The Government will encourage the development of a domestic industry for the
production of solar systems and biogas technologies.
Through existing national institutions, the Government shall facilitate low cost
funding for implementation of solar heating solutions at the household and
institutional levels.
The government will strengthen the legislative and regulatory framework and
establish appropriate protocols to facilitate the development of the sector and
govern trading relationships including a basis for premium pricing.
4.7.2 Policy Issue: Need for Institutional Focus for Development of Renewable
Energy
Several Jamaican institutions have over time, been engaged in research,
development and implementation of renewable energy technologies (RET). In
more recent times one commercial wind farm, with a capacity of 20.7 MW, was
commissioned at Wigton in Manchester. There are several privately owned mini-
hydro projects with a combined capacity of about 23 MW. On the other hand,
attempts to institutionalize the use of solar systems for water heating have not
been met with the desired results.
The local sugar industry is now being restructured and one important strategy is to
develop cogeneration systems, to satisfy steam and electricity requirements for
production and to sell excess electricity to the national grid. There is potential for
3
Final Report – Caribbean Renewable Energy Development Project (CREDP), January 2000, GTZ

the adoption of cogeneration technologies in other industries such as poultry and
bauxite-alumina production. Among the strategies to be pursued would be:
• the conduct of gap analyses and facilitating applied research projects to fill
these gaps;
• establishing databases to support development initiatives;
• fostering capacity building; and
• establishing a focal point for interaction with national and international
institutions.
The Government will establish a centre of excellence, to bring focus to the
development of the renewable energy sector in order to realize the objective of
increasing the contribution from these sources to the overall energy demand.
The Petroleum Corporation of Jamaica and other public sector agencies will
actively stimulate development of, and promote investments in this sector.
The relevant Government institutions, including educational facilities will engage

in research and development aimed at improving designs and efficiency and
provide technical assistance in support of these renewable energy sectors.
4.7.3 Policy Issue: Need to expand use of Solar and other forms of Renewable
Energy at the Household Level
While Jamaica has been making some progress in its use of solar energy,
principally for water heating, the intensity of use is still low. In Barbados for
example, there are 50,000 units for a population of 270,000 while Jamaica has
between 10,000 – 12,000 units. Use of solar energy needs to be employed on a
wider scale, particularly in the hotel sector.
The National Housing Trust (NHT) should provide loans for installing solar water
heaters and, in the circumstance, enable a beneficiary to secure more than one
loan. In addition, the NHT should incorporate solar water heaters as a part of the
schemes, which they finance.
The Government has proposed that the National Housing Trust provide loan
financing for solar water heating systems to NHT beneficiaries.
The Government will seek to create a competitive market for solar water heating
systems.

4.8 Energy Conservation and Efficiency
4.8.1 Policy Issue: Need to Conserve on, and Improve Efficiency of, energy use in
the Domestic Economy
In 2004, Jamaica spent approximately US $1.0 billion for the importation of
petroleum of which electricity, road transportation, bauxite and alumina, and
international transport account for 25%, 24%, 37% and 8% respectively (Table 5).
Conservation and efficiency initiatives must focus on the electricity and road
transportation sectors as the other two major sectors are not under domestic
control.
Data for 2004 show that the government used 192 million KWh of which the
National Water Commission (NWC) accounted for 47% (Table 12). Data for
2005 are still being compiled. However, conservation programmes between
January and November 2005 resulted in a reduction of 28 million KWh. The
NWC was not involved in the conservation initiative. The Government must
continue to improve energy efficiency and conservation in the public sector.
Policy recommendations to promote fuel efficiency in the transport sector have

been articulated elsewhere in this document. And, the National Transport Policy
contains several provisions to encourage energy savings.
The Government will implement a sustained energy efficiency and conservation
programme to reduce motor vehicle use and electricity consumption in the public
sector, with emphasis on major users such as the National Water Commission in
the case of electricity.
The Government will implement an extensive and sustained public education

programme that is cost-effective and designed to promote lifestyle changes in
order to encourage energy conservation and efficiency in the wider society.
It will be a requirement for all ministries and public sector entities, specified
energy intensive firms as well as publicly listed firms to publish prescribed energy
statistics.
Companies with gross revenue of over US $3 million will be encouraged to

include prescribed energy statistics with their annual reports.
Government funded post-secondary institutions will be required to include energy

courses in their programmes. Technical tertiary institutions will be required to
offer energy-related programmes to provide relevant professional skills.
The Government will establish equipment standards to encourage energy

efficiency.

The Government will facilitate the establishment of parking facilities at strategic
locations in support of a “park and ride” programme for urban centres to reduce
energy use.
The Government will promulgate energy efficient building codes to include

passive solar design as well as the incorporation of solar technologies and biogas
production systems.
4.9 Energy Fund
4.9.1 Policy Issue: Need for a Dedicated Energy Fund to Finance Energy
Conservation, Efficiency, Renewable and related Projects
Certain energy-type projects such as retrofitting of buildings to improve energy
efficiency and conservation do not now qualify for funding through traditional
development bank facilities. Also, commercial banks do not fund energy
conservation and efficiency-type projects to the level required to have any
meaningful impact on the nation’s energy bill. In an effort to accelerate lending
for energy conservation and efficiency, there is the need for a dedicated energy
fund.
This fund is not expected to finance all energy conservation and efficiency
projects. Once certain types of projects are established to be viable, it is
envisaged that the commercial banks will eventually expand their lending to such
projects. The fund is therefore intended to develop the market for such type of
lending. It is envisaged that the fund will also finance relevant developmental
initiatives in energy such as small renewable energy systems at community or
household levels.
The Government will establish a revolving energy fund to finance energy
conservation, efficiency, and general energy initiatives of a developmental nature.
The Government will also institute a system that will provide the fund with a
sustainable source of financial resources independent of the Consolidated Fund.
4.10 Institutional Arrangement
4.10.1 Policy Issue: There is need to rationalize the Institutional Arrangements for
Policy Development and Implementation, Regulation and Monitoring
Functions of the Energy Sector
The subject of energy requires national focus.
Under the present arrangement, aspects of the electricity sector are regulated by
the OUR, the Bureau of Standards and the portfolio ministry. In the case of the
petroleum sector, this is regulated by the portfolio ministry, and while there are

general provisions in the Weights and Measures Act administered by the Bureau
of Standards, regulations that flow from this are difficult to implement.
The institutional structure for the electricity is described elsewhere. For

petroleum, the industry is fully liberalized. The state and private enterprise, local
and multinational, operate in every segment of the market. The refinery is state
owned. The Government wishes to maintain a liberalized market.
The Government will, through the National Commission on Science and
Technology, formally involve the wider society in the process of energy policy
review.
The Government will further rationalize the institutional arrangements for the
regulation and monitoring of the energy sector, with the objective of establishing
an effective and efficient system.
4.10.2 Policy Issue: Need for timely and reliable Information and appropriate
Analytical Tools to support Policy Development and Planning
There are now significant delays in accessing reliable information on various
aspects of the energy sector. This has adverse effects on the ability to plan and
take decision on informed judgment. The relevant Ministries and state agencies
need to be empowered to collect reliable information, and on a timely basis to
inform the decision making process.
The designated Ministries and Agencies will collect reliable energy information
and related economic indicators, from all relevant sources and on a timely basis
to inform policy and planning processes, legislative review and formulation of
strategies to meet Government policy objectives.
The portfolio Ministry will maintain a national energy data-base and make non-
proprietary information readily available to stakeholders.
4.10.3 Policy Issue: Financing the Energy Investment

The investment analysis for the energy sector shows that over US $1.53 billon
will be needed for energy investments over the next six (6) years, in addition to
about US$250 million for the replacement of old electricity plants: the major ones
being capital to finance capacity expansion and conversion to natural gas; upgrade
the transmission system and to reduce system losses; for the oil refinery upgrade
and expansion; capital for the establishment of the LNG infrastructure and the re-
gasification plant and financing for renewable energy, end use energy efficiency
and rural electrification.

The Government will seek to encourage private investment to meet the investment
needs of the energy sector consistent with its policy liberalization within the
energy sector.

APPENDIX
APPENDIX
Table 1 - Economic Indicators for Jamaica: 1990 – 2003 3

Table 2 - Historical GDP and Energy Intensity Trends 4
Table 3 - Energy Intensity: 1999 – 2004 5
Figure 1 - Jamaica’s Oil Bill Compared to its Export Earnings 6
Table 4 - Total Petroleum Imports for Jamaica: 2000 – 2004 7
Table 5 - Petroleum Consumption by Activity: 2000 – 2004 8
Table 6 - World Proved Reserves of Oil, Natural Gas and Coal 9
(As at January 2006)
Table 7 - Petroleum Consumption by Major Users: 1980 – 2003 10
Table 8 - Total Petroleum Imports by Source: 2003 – 2005 11
Table 9 - Average Petroleum Product Taxes and Prices for Selected 14
Countries of the Caribbean: 2003
Table 10 - Average Prices on Kerosene and LPG for Jamaica and 15
Trinidad and Tobago: 2003
Table 11 - Distribution of Motor Vehicles 16
Table 12 - Government Electricity Consumption: 2004 17
February 20, 2006 2

TABLE 1: ECONOMIC INDICATORS FOR JAMAICA 1990 - 2003
GDP in Billion Per Capita GDP

Constant Current Population Current Constant
Years 1996 J$ J$ US$ Million (000 J$) (000 (000 J$)
US$)
1990 207.9 30.5 4.2 2,369 13 1.793 87.8
1991 209.8 44.9 3.5 2,387 19 1.464 87.9
1992 213.2 73.3 3.2 2,408 30 1.323 88.5
1993 216.8 97.7 3.8 2,431 40 1.565 89.2
1994 219.2 151.1 4.5 2,455 62 1.846 89.3
1995 224.6 189.3 5.3 2,483 76 2.145 90.5
1996 225.1 225.1 6.1 2,510 90 2.423 89.7
1997 222.7 246.1 6.9 2,534 97 2.729 87.9
1998 220.2 263.7 7.2 2,557 703 2.812 86.1
1999 222.1 282.1 7.2 2,575 110 2.785 86.3
2000 223.8 317.4 7.3 2,590 123 2.829 86.4
2001 227.1 349.7 7.6 2,605 134 2.906 87.2
2002 229.5 382.2 7.8 2,619 146 2.995 87.6
2003 234.7 436.6 7.2 2,636 166 2.728 89.0
Source: BOJ, STATIN, PIOJ
February 20, 2006 3

TABLE 2: HISTORICAL GDP AND ENERGY INTENSITY TRENDS
1987-2003
Current Constant Energy

GDP GDP Per Capita Per Capita Intensity
US$ 1990 US$ Energy GDP Energy BOE/US$1000
Year Billion Billion MBOE Pop. (mil) US$/Person BOE/Person GDP
1987 3.0 3.68 13.2 2.355 1,563 5.61 3.59
1988 3.5 3.79 13.6 2.358 1,607 5.77 3.59
1989 4.1 4.05 16.8 2.362 1,715 7.11 4.15
1990 4.2 4.27 20.1 2.369 1,802 8.48 4.71
1991 3.5 4.31 19.5 2.387 1,806 8.17 4.52
1992 3.2 4.75 19.8 2.408 1,973 8.22 4.17
1993 3.8 4.85 20.9 2.431 1,995 8.60 4.31
1994 4.5 4.89 21.2 2.455 1,992 8.64 4.34
1995 5.3 4.94 21.9 2.483 1,990 8.82 4.43
1996 6.1 4.89 23.1 2.510 1,948 9.20 4.72
1997 6.9 4.8 23.6 2.534 1,894 9.31 4.92
1998 7.2 4.79 24.3 2.557 1,873 9.50 5.07
1999 7.2 4.77 24.9 2.575 1,852 9.67 5.22
2000 7.3 4.8 25.3 2.590 1,853 9.77 5.27
2001 7.6 4.88 25.3 2.605 1,873 9.71 5.18
2002 7.8 4.94 26.3 2.619 1,886 10.04 5.32
2003 7.2 5.05 27.2 2.638 1,914 10.31 5.39
Source: Constructed from UN Data Base and MCST Energy Division Statistics.
Notes: Energy intensity is the amount of energy (bbl) consumed by the national economy per unit of GDP (US$
1000), Per capita energy consumption is the volume of energy consumed - BOE divided by the population.
The boe consumption for 1961 was 4.5 and 5.91 for 1971
February 20, 2006 4

TABLE 3: ENERGY INTENSITY 1999 – 2004
Unit 1999 2000 2001 2002 2003 2004

GDP Constant (1996) Prices J$b 222.08 223.77 227.07 229.54 234.73 237.62
Bauxite GDP Constant (1996) Prices J$b 12.06 11.94 12.25 12.66 13.27 13.69
National Energy Consumption Mboe 21.91 22.34 22.46 23.44 24.13 23.98
Bauxite Energy Consumption Mboe 8.74 8.20 8.04 8.58 8.93 8.84
Energy intensity with bauxite sector boe/J$1000 0.0987 0.0998 0.0989 0.1021 0.1028 0.1009
Energy intensity without bauxite boe/J$1000 0.0627 0.0668 0.0671 0.0685 0.0686 0.0676
Source: Energy Division, MCST
February 20, 2006 5

Figure 1
Jamaica's Oil Bill Compared to its Export Earnings
80.00%
70.00%
Oil Bill as Percentage of Export Earnings (%)
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
1998 1999 2000 2001 2002 2003 2004
Year
Oil Bill as Percentage of Total Export Earnings Oil Bill as Percentage of Merchandise Export
Source: Constructed from PIOJ and MCST Energy Division Data Bases
February 20, 2006 6

TABLE 4: TOTAL PETROLEUM IMPORTS FOR JAMAICA
2000 – 2004
% change
2000 2001 2002 2003 2004 2004/2000
Volume Value Volume Value Volume Value Volume Value Volume Value
(mbbl) (US$M) (mbbl) (US$M) (mbbl) (US$M) (mbbl) (US$M) (mbbl) (US$M) Volume Value
REFINERY
Crude & Spikes 7.73 218.67 7.55 167.99 8.45 204.51 6.30 178.51 5.51 189.75 (28.67) (13.23)
Refined Products 5.08 159.25 5.80 157.57 5.07 138.27 8.74 289.31 8.79 388.05 73.15 143.67
Sub – Total 12.81 377.93 13.35 325.56 13.52 342.77 15.04 467.82 14.30 577.81 11.68 52.89
BAUXITE COMPANIES
Bunker C 6.83 143.33 6.42 122.35 6.60 136.18 7.06 165.78 7.02 170.17 2.73 18.73
Low. Vanadium 1.71 36.58 1.75 30.90 1.87 40.21 1.96 46.55 2.11 52.07 23.11 42.34
Sub – Total 8.54 179.91 8.17 153.24 8.47 176.40 9.02 212.34 9.13 222.24 6.82 23.53
MARKETING
COMPANIES
Refined Products 3.03 120.06 3.08 100.25 3.00 103.35 2.92 122.33 2.55 133.94 (15.73) 11.55
Lubricants 0.10 10.18 0.18 16.95 0.24 18.21 0.11 10.65 0.09 9.46 (8.87) (7.07)
Sub – Total 3.12 130.24 3.26 117.20 3.24 121.56 3.03 132.97 2.64 143.39 (15.51) 10.10
NON - BAUXITE TOTAL 15.93 508.17 16.61 442.75 16.76 464.33 18.07 600.79 16.94 721.20 6.35 41.92
GRAND TOTAL 24.47 688.07 24.78 596.00 25.23 640.73 27.10 813.13 26.07 943.44 6.51 37.11
Source: Refinery Statistics; Marketing Companies’ Data; Bauxite Companies’ Data
Prepared by the Energy Division, Ministry of Commerce, Science and Technology (January 2005)
February 20, 2006 7

TABLE 5: PETROLEUM CONSUMPTION BY ACTIVITY
2000-2004
Million barrels
Percentage
Average Consumption
Consumption Usage
ACTIVITY 2000 2001 2002 2003 2004p 2000-2004 (%)
Road & Rail Transportation 5.692 5.715 5.883 6.071 5.895 5.851 23.52
Shipping 0.156 0.356 0.361 0.391 0.217 0.296 1.19
Aviation 1.640 1.452 1.617 1.620 1.793 1.625 6.53
**Cement Manufacture 0.183 0.133 0.085 0.051 0.105 0.111 0.45
Electricity Generation 5.890 6.031 6.136 6.471 6.226 6.151 24.73
Bauxite/Alumina Processing 8.763 8.595 9.168 9.546 9.454 9.105 36.60
Sugar Manufacturing 0.186 0.145 0.152 0.080 0.077 0.128 0.51
Cooking & Lighting 0.890 0.874 0.907 0.906 0.918 0.899 3.61
Petroleum Refinery 0.289 0.286 0.297 0.259 0.223 0.271 1.09
Other Manufacturing 0.081 0.056 0.073 0.142 0.136 0.098 0.39
Other 0.112 0.364 0.375 0.253 0.596 0.340 1.37
TOTAL 23.883 24.007 25.054 25.791 25.639 24.875

Source: Bauxite Alumina Companies; Caribbean Cement Company; Jamaica Public Service Company; Independent Power Producers; Refinery Statistics; Marketing
Companies Sales
Prepared by: Energy Division, Ministry of Commerce, Science and Technology, February 2005
February 20, 2006 8

TABLE 6: WORLD PROVED RESERVES OF OIL, NATURAL GAS and COAL
As at January 2006
% of Recoverable
Oil % of Natural Gas world Coal (Million % of
(billion world (trillion total nat. Short Tons) world
barrels) total oil cubic feet) gas total coal
Country/Region
Canada 178.792 13.83 56.577 0.93 7,251 0.72

Mexico 12.882 1.00 15.985 0.26 1,335 0.13
United States 21.371 1.65 192.513 3.15 270,718 27.05
Greenland 202 0.02
North America 213.046 16.48 265.075 4.34 279,506 27.93
Argentina 2.320 0.18 18.866 0.31 467 0.05

Barbados 0.003 0.00 0.005 0.00 -- -
Bolivia 0.441 0.03 24.000 0.39 1 0.00
Brazil 11.243 0.87 11.515 0.19 11,148 1.11
Chile 0.150 0.01 3.460 0.06 1,302 0.13
Colombia 1.542 0.12 4.040 0.07 7,287 0.73
Cuba 0.750 0.06 2.500 0.04 -- -
Ecuador 4.630 0.36 0.345 0.01 26 0.00
Guatemala 0.526 0.04 0.109 0.00 - -
Peru 0.930 0.07 8.723 0.14 1,168 0.12
Suriname 0.111 0.01 0.000 0.00 -- -
Trinidad and Tobago 0.990 0.08 25.880 0.42 -- -
Venezuela 79.729 6.17 151.395 2.48 528 0.05
Central & South America 103.364 8.00 250.838 4.10 21,928 2.19
Western Europe 14.989 1.16 189.255 3.10 36,489 3.65
Eastern Europe & Former
U.S.S.R. 79.224 6.13 1,964.090 32.13 279,778 27.95
Middle East 743.411 57.52 2,565.400 41.97 462 0.05
Africa 102.580 7.94 485.841 7.95 55,486 5.54
Asia & Oceania 35.936 2.78 391.645 6.41 327,264 32.70
-
World Total 1,292.550 100.00 6,112.144 100.00 1,000,912 100.00
Source: PennWell Corporation, Oil & Gas Journal, Vol. 103, No. 47 (December 19, 2005). Oil includes crude oil and
condensate. Data for the United States are from the Energy Information Administration, U.S. Crude Oil, Natural Gas,
and Natural Gas Liquids Reserves, 2004 Annual Report, DOE/EIA-0216(2004) (November 2005). Oil & Gas
Journal's oil reserve estimate for Canada includes 4.7 billion barrels of conventional crude oil and condensate reserves
and 174.1 billion barrels of oil sands reserves.
International Energy Annual 2003. Energy Information Administration.
For further details see www.eia.doe.gov
February 20, 2006 9

TABLE 7: PETROLEUM CONSUMPTION BY MAJOR ENERGY USERS
1980-2003
Thousand Barrels Per Day
Country United % of China % of India % of Japan % of World

States world world world world Total
total total total total
1980 17,056.0 27.0 1,765.0 2.8 643.0 1.0 4,960.0 7.9 63,107.6
1981 16,058.0 26.3 1,705.0 2.8 729.0 1.2 4,848.0 8.0 60,943.8
1982 15,296.0 25.7 1,660.0 2.8 737.0 1.2 4,582.0 7.7 59,543.2
1983 15,231.0 25.9 1,730.0 2.9 773.0 1.3 4,395.0 7.5 58,779.2
1984 15,726.0 26.3 1,740.0 2.9 824.0 1.4 4,666.0 7.8 59,829.6
1985 15,726.0 26.2 1,885.0 3.1 894.9 1.5 4,436.0 7.4 60,088.8
1986 16,281.0 26.3 2,000.0 3.2 947.4 1.5 4,503.0 7.3 61,832.6
1987 16,665.0 26.4 2,120.0 3.4 987.8 1.6 4,567.0 7.2 63,133.9
1988 17,283.0 26.6 2,275.0 3.5 1,083.8 1.7 4,849.0 7.5 64,995.0
1989 17,325.2 26.2 2,380.0 3.6 1,149.8 1.7 5,058.0 7.7 66,098.5
1990 16,988.5 25.5 2,296.4 3.4 1,168.3 1.8 5,218.1 7.8 66,576.0
1991 16,713.8 24.9 2,498.8 3.7 1,190.3 1.8 5,325.3 7.9 67,204.5
1992 17,032.9 25.3 2,661.6 3.9 1,274.9 1.9 5,492.6 8.1 67,451.1
1993 17,236.7 25.5 2,959.5 4.4 1,311.1 1.9 5,380.0 8.0 67,541.8
1994 17,718.2 25.7 3,160.6 4.6 1,413.3 2.1 5,673.3 8.2 68,845.7
1995 17,724.6 25.3 3,363.2 4.8 1,574.7 2.2 5,676.1 8.1 70,017.8
1996 18,308.9 25.6 3,610.1 5.0 1,680.9 2.3 5,785.4 8.1 71,620.3
1997 18,620.3 25.4 3,916.3 5.3 1,765.5 2.4 5,797.4 7.9 73,421.3
1998 18,917.1 25.5 4,105.8 5.5 1,844.4 2.5 5,577.2 7.5 74,091.8
1999 19,519.3 25.7 4,363.6 5.8 2,031.3 2.7 5,698.0 7.5 75,830.2
2000 19,701.1 25.6 4,795.7 6.2 2,127.4 2.8 5,607.0 7.3 76,945.9
2001 19,648.7 25.3 4,917.9 6.3 2,183.7 2.8 5,530.0 7.1 77,701.3
2002 19,761.3 25.2 5,160.7 6.6 2,263.4 2.9 5,464.6 7.0 78,457.7
2003 20,033.5 25.0 5,550.0 6.9 2,320.0 2.9 5,578.4 7.0 80,098.8
% Change in
consumption
since 1980 17.46 214.45 260.81 12.47 26.92
Source: International Energy Annual 2003, Energy Information Administration.

TABLE 8: TOTAL PETROLEUM IMPORTS BY SOURCE 2003-2005
2003
Avg.
Source Quantity(bbl) Cost ($US) price
Crude Mexico 2,063,853 59,405,337 28.78
Venezuela 1,085,000 31,161,522 28.72
Ecuadorian Crude 3,148,878 87,943,385 27.93
Total Crude 6,297,731 178,510,244 28.35
Avg.
Refined Product Source Quantity(bbl) Cost ($US) price
Refinery
MTBE Texas, USA 295,987 13,250,907 44.77
Asphalt 36,799 1,174,720 31.92
Jet Fuel Trinidad, Venezuela 680,856 24,861,242 36.51
Heavy Fuel Oil Trinidad, USA 3,126,088 83,288,832 26.64
Auto Diesel Oil Trinidad, Venezuela 2,085,589 73,968,509 35.47
Unleaded 87 Trinidad, Venezuela 1,578,102 59,943,188 37.98
Unleaded 90 Trinidad 249,574 9,471,575 37.95
LPG USA, Barbados 689,274 23,347,983 33.87
Kerosene - - -
Sub-total 8,742,269 289,306,956 33.09
Bauxite Companies Clarke Oil Trading 9,023,530 212,335,025 23.53
Marketing Companies Not Available 3,033,449 132,972,885 43.84
Total Refined Products 20,799,248 634,614,866 30.51
GRAND TOTAL 27,096,979 813,125,110 30.01

2004
Avg.
Crude Mexico 2,079,024 72,593,159 34.92
Venezuela 1,668,269 56,267,185 33.73
Ecuadorian Crude 1,420,076 50,430,085 35.51
Oriente 347,377 10,461,692 30.12
Total Crude 5,514,746 189,752,121 34.41
Avg.
Refinery
MTBE Texas, USA 49,556 3,187,811 64.33
Asphalt 47,661 1,631,955 34.24
Jet Fuel Trinidad, Venezuela 880,231 46,289,534 52.59
Unleaded 87 Trinidad, Venezuela 1,573,622 86,084,439 54.70
Unleaded 90 Trinidad 591,553 30,166,296 51.00
LPG USA, Barbados 648,233 26,690,242 41.17
Kerosene - - -
Sub-total 8,787,454 388,053,441 44.16
GRAND TOTAL 26,066,889 943,435,111

2005p January to June
Avg.
Crude Mexico - - -
Venezuela - - -
Ecuadorian Crude - - -
Oriente - - -
Total Crude** - - -
Avg.
Refinery
MTBE USA 68,520 4,429,337 64.64
Asphalt Panama 71,626 2,414,654 33.71
Jet Fuel Venezuela 564,949 35,441,121 62.73
Unleaded 87 Trinidad, Venezuela, USA 1,440,550 86,803,850 60.26
Unleaded 90 Trinidad - - -
LPG USA, Barbados 396,417 17,444,844 44.01
Kerosene - - -
Sub-total 7,479,179 365,825,605 48.91
GRAND TOTAL 12,826,707 551,131,641 42.97
Source: Refinery Statistics; Bauxite/Alumina Companies Statistics; Marketing Companies Statistics
**
The Refinery did not import crude oil for the period January to June 2005.

TABLE 9: AVERAGE PETROLEUM PRODUCT TAXES AND PRICES FOR SELECTED COUNTRIES OF THE
CARIBBEAN
2003
Country Regular Tax Tax as % Premium Tax Tax as % Automotive Tax Tax as a
Unleaded (USD per Price Unleaded (USD per Price Diesel (USD % Price
Gasoline gallon) Gasoline gallon) (USD per per
(USD per (USD per gallon) gallon)
gallon) gallon)
Antigua 2.96 0.91 30.77 2.78 0.91 32.79 2.55 0.68 26.79
Bahamas 2.87 1.14 39.68 n/a n/a n/a 1.87 0.59 31.71
Barbados 3.32 1.46 43.84 n/a n/a n/a 2.59 0.96 36.84
Dominica 3.00 1.41 46.97 n/a n/a n/a 2.55 1.09 42.86
Grenada 2.73 0.68 25.00 n/a n/a n/a 2.64 0.64 24.14
Guyana 2.37 0.73 30.77 2.82 0.86 30.65 1.82 0.36 20.00
Jamaica 2.14 0.59 27.66 2.32 0.59 25.49 2.00 0.55 27.27
St. Kitts/Nevis 7.42 1.18 15.95 n/a n/a n/a 2.14 0.36 17.02
St. Lucia 1.46 0.59 40.63 2.91 1.27 43.75 2.68 1.09 40.68
St. Vincent 2.59 0.59 22.81 n/a n/a n/a 2.14 0.32 14.89
Trinidad and Tobago n/a n/a n/a 1.75 0.90 51.43 0.79 0.25 31.65
Source: Energy Détente, various issues; Ministry of Commerce, Science and Technology, CEIS

TABLE 10: AVERAGE PRICES ON KEROSENE AND LPG FOR JAMAICA AND TRINIDAD AND TOBAGO
2003/4
Country Fuel Price (USD per gallon) Tax (USD per gallon) Tax as % Price
Kerosene
Jamaica 1.99 0.37 18.59

Trinidad and Tobago 0.91 0.16 17.58
LPG
Jamaica 2.14 0.003 0.14
Trinidad and Tobago 0.02 0.17 11.76
Source: Energy Détente, various issues

TABLE 11: DISTRIBUTION OF MOTOR VEHICLES
2004
% total motor
Vehicle Type Cars Trucks Other Total vehicles
Public 13,994 10,055 24,049 10.51
Private 138,296 32,857 171,153 74.80
CMC 813 27,648 28,461 12.44
Not Categorized 5,154 5,154 2.25
Total 153,103 70,560 5,154 228,817 100.00
% total motor
vehicles 66.91 30.84 2.25 100.00
Source: Annual Transport Statistics Report: Jamaica in Figures 2003-2004

TABLE 12: GOVERNMENT ELECTRICITY CONSUMPTION 2004
NWC TOTAL
NWC's %
Consumption Consumption consumption
(kWh) Cost (J$) (kWh) Cost (J$) of total
January 16,550,748 140,511,274 35,014,283 315,321,048 47.27
February 14,031,039 105,376,562 31,427,457 272,732,477 44.65
March 16,503,459 117,917,201 36,039,529 303,165,013 45.79
April 16,606,886 115,103,833 36,206,852 293,170,353 45.87
May 20,062,875 135,060,241 39,244,761 313,552,680 51.12
June 15,899,812 126,058,843 35,985,139 314,124,412 44.18
July 14,172,539 129,063,140 33,201,025 332,367,115 42.69
August 15,845,221 142,284,849 36,644,737 356,184,838 43.24
September 10,955,006 106,655,684 25,504,411 266,405,473 42.95
October 15,805,318 159,380,436 29,629,873 333,918,195 53.34
November 17,099,569 179,418,905 31,231,251 367,622,703 54.75
December 18,650,774 194,473,485 33,396,130 386,435,104 55.85
GRAND TOTAL 192,183,246 1,651,304,453 403,525,448 3,854,999,411 47.63

Compiled by the Energy Division, MCST

ENERGY POLICY & ME ENERGY CONSERVATION TIPS
THE ENERGY POLICY AND YOU: WHAT IS Here are some Energy Saving Tips: MINISTRY OF ENERGY, MINING
YOUR ROLE?
1. Turn off all non-essential lights and appliances

AND
The National Energy Policy outlines the country’s
strategic objectives in developing the energy sector. 2. Carpool. TELECOMMUNICATIONS
In so doing, the government of Jamaica has the
responsibility of putting mechanisms in place to 3. Walk or use public transportation.
achieve the desired results of the Energy Policy. 4. Shop by phone or you can use the internet.
The Energy policy illustrates the manner in which
the energy sector will be developed and managed. 5. Don't top off at the gas pumps.
But you also have a responsibility and that is to
scrutinize the development process and to become 6. Replace your car's air filter.
increasingly aware of what is happening in the sec-
tor.
Another responsibility you have is to conserve en-

ergy and to use energy efficiently. Energy conser-
vation will save you money on your utility bills and
also help the country import less oil to meet the
country’s growing energy needs. In so doing, you
will help to transform Jamaica from a culture of
waste, unaccountability and general inefficiency to
one of responsible, sustainable management and
proper use of energy resources.
WHAT ARE SOME OF THE POLICY RECOMMEN-

DATIONS FOR ENERGY CONSERVATION AND
EFFICIENCY?
⇒ Improve Energy conservation and efficiency

For further information, THE
including sponsoring, exhibition and
in the Public Sector
ENERGY POLICY
registration
⇒ Establish equipment standards
⇒ Promulgate Energy Efficient Building Code
Kindly contact:
⇒ Introduce Energy Conservation and Effi-
ciency in the School Curriculum
⇒ Promote lifestyle changes through public
The Energy Division
Ministry of Energy Mining and Telecommunications
2006-2020
education programmes Telephone: 929-8990-9
Facsimile: 960-1623
http://www.mct.gov.jm
& YOU
ENERGY POLICY TIDBITS ENERGY Q & A ENERGY Q & A
WHY DOES JAMAICA NEED AN WHAT ARE THE OBJECTIVES OF THE
ENERGY POLICY? Transportation
ENERGY POLICY? The demand for petrol in the transport sector is very
⇒ The Jamaican economy, is among the most high with energy consumption accounting for 40 per-
The policy seeks to, among other things:
energy intensive coun- cent of total energy consumption. Road transport ac-
tries in Latin America ⇒ Manage the energy supply, counts for the largest share of energy consumption in
and the Caribbean. ⇒ Diversify the energy base, the sector accounting for 22 percent.
⇒ Bauxite/alumina ⇒ Encourage conservation and efficiency in en-
processing (37% of The government, as outlined in the policy, is encour-
ergy production and use,
imports) inflates the aging the imports of small engine size vehicles, the
intensity by some 30%. ⇒ Make electricity available and affordable to use of fuel efficient diesel powered
(Energy intensity = bar- customers vehicles and the introduction of
rel of oil equivalent to generate US$1000) alternative fuel grades such as
⇒ Establish the regulatory framework to protect
⇒ Jamaica is not an oil producer and is required consumers, investors minimize environmental
ethanol blended gasoline that is
to import oil from other countries. more environmentally friendlier
effects and pollution.
than some other fuel grades. The
⇒ The issue of rising energy cost is a great con- Energy Policy also addresses the issue of increase
cern for everyone as it impacts the cost of usage of public transportation.
electricity and fuel consumed by both residen- WHAT ARE
tial and commercial entities. SOME OF THE Electricity
⇒ Our major Power Company can improve effi- PROPOSALS OF The issue of unreliable power supply is another major
ciencies (25% of oil imports for electricity) THE ENERGY concern of consumers who are inconvenienced and
POLICY? whose operations are severely hampered when there
⇒ The Energy Policy is of vitally important as it is low shedding. As such the government has set out
addresses issues pertaining to energy security and ⇒ The Energy in the Policy recommendation pertaining to optimizing
supplies, diversification of the energy mix, devel- Policy establishes efficiency in the transmission and distribution of elec-
opment of indigenous energy resources, energy a framework that will inform investment deci- tricity.
conservation and efficiency. sions in the energy sector
Jamaica needs an Energy Policy because of the ⇒ Enhances investors’ confidence in the energy Approximately 8% of the population is without electric-
population’s: sector ity. The government recognizes the need to provide
- Heavy Oil Dependence ⇒ Security of supply and provision of energy at electricity to remote communities and marginalized
- High demand for foreign exchange reasonable prices could be considered the communities. In this regard, the government is com-
- Underdeveloped indigenous energy most important pillars of this new policy. mitted to facilitating universal access to electricity at
sources affordable rates.
⇒ The elements dealing with electricity, trans-
- Inefficient use of energy
portation and the renewable energy sectors would Another issue outlined in the Policy is the need for
- Increasing pollution contributing to climate
be of specific relevance. more competition in the electricity market.
change
WHAT WILL THE ENERGY POLICY ACHIEVE?
WHAT IS THE BUSINESS CONTEXT OF THE
ENERGY POLICY? ⇒ Competitive energy sector
The Government has responsibility to create and ⇒ Security of supply
maintain an investment climate that facilitates
⇒ Reduced dependence on imports
competitiveness of companies – both at the local
and global levels. ⇒ Promotion of energy efficiency
Reliability/quality/pricing of energy are important ⇒ Appropriate regulatory framework that bal-
factors that inform investment decisions. ances the interests of all stakeholders
Energy Policy Web Commentary
THE PUBLIC SAYS…
A LOOK AT SOME OF THE PERCEPTIONS AND VIEWS OF PARTICIPANTS IN THE ENERGY
CONSULTATIONS
The Ministry of Energy, Mining and Telecommunications is currently conducting public

consultations for the “Green Paper: Jamaica Energy Policy 2006 – 2020” . The main aim of the
consultations is to sensitize the public about the existence of a proposed Energy Policy.
The public consultations further seek to garner feedback and suggestions from stakeholders in
the energy sector.
As a part of the island wide consultations, the Ministry team has so far visited
• Morant Bay, St. Thomas

• Portmore, St. Catherine
• Kingston and St. Andrew
• Northern Caribbean University in Mandeville
• University of the West Indies
• Golf View Hotel in Mandeville
• Savanna-la-mar
Some of the comments received from participants are listed below:
• Successive Governments have lacked the political will to ensure that a sustainable
energy policy is maintained.
• Not enough is being done to operationalise the abundance of local alternative

energy sources. Specific references have been made to the following;
o E10 roll out (ethanol in gasoline)
o Solar and photovoltaic equipment and technology; water heaters, house lighting,
street lights
o Biogas facilities
o Nuclear energy technology
o Converting solid wastes and effluents (garbage and sewage) into viable energy
sources
• The cost of energy is a crippling factor to growth and development.
Participants in the Consultations have been making their suggestions for the efficient use of
energy in Jamaica. Outlined below are some suggestions from participants:
• Targets for implementation should be explicit and maintained in order to meet

aims, objectives and recommended ‘policy prescriptions.
• The Government should provide incentives to persons who utilize alternate

sources of energy (tax exemptions, duty concessions, etc).
• The Government should mandate appropriate building codes for developers and architects to create
and utilize energy efficient building designs.

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GREEN PAPER

THE JAMAICA ENERGY POLICY

2.0 Global Energy Situation 2

3.0 Review of 1995 Energy Policy 4

4.0 Policy Issues and Recommendations: 2006 – 2020 7

February 20, 2006 ii

February 20, 2006 iii

• The Cabinet Office – The Jamaica Energy Policy 2005

February 20, 2006 iv

1.1 Country Profile

1.2 Economic Overview

1.3 Energy and the Economy

February 20, 2006 1

Bauxite alumina processing (36.6%), electricity generation (24.7%) road transportation

2.0 GLOBAL ENERGY SITUATION

February 20, 2006 2

Consumption of petroleum products globally has fuelled environmental concerns

February 20, 2006 3

• complement the country’s Industrial Policy recognizing the importance of energy as

• establish an appropriate regulatory framework to protect consumers, investors and

3.2 Power/Electricity Sector

February 20, 2006 4

3.3 Petroleum Sector

February 20, 2006 5

3.4 Renewable Energy

A total of 23.2 MW of cogeneration capacity was brought on stream of which 12.2 MW

A 20.7 MW publicly owned wind farm was commissioned in 2004 at Wigton,

Two demonstration photovoltaic schemes supplying non-grid electricity to 45 homes in

3.5 Energy Conservation and Efficiency

February 20, 2006 6

4.0 POLICY ISSUES AND RECOMMENDATIONS: 2006 – 2020

February 20, 2006 7

• complement the country’s Industrial Policy recognizing the importance of energy as

• establish an appropriate regulatory framework to protect consumers, investors and

4.1 Energy Supply and Security

4.1.1 Policy Issue: Security of Energy Supply

Jamaica traditionally imports petroleum supplies from Venezuela, Mexico,

February 20, 2006 8

Unexpected interruptions in the petroleum supply chain, external or within the

It is important for the country to preserve benefits negotiated under various

4.1.2 Policy Issue: Diversification of Energy Types

4.1.3 Policy Issue: Need to pursue Oil and Gas Exploration

Further, with developments in analytical techniques applicable to oil and gas

February 20, 2006 9

4.2 Petroleum Industry

4.2.1 Policy Issue: Maintain a Competitive Petroleum Industry with Industrial

4.2.2 Policy Issue: Need to ensure appropriate behaviour in a Competitive and

Elsewhere in this document, reference is made to disruptions that occur in the

February 20, 2006 10

4.2.3 Policy Issue: Need for Intervention in Time of Disasters

4.2.5 Policy Issue: Petroleum Refining Capacity

The Government will invite broader participation in the ownership of the

February 20, 2006 11

Jamaica needs to adopt a suitable internationally accepted reference-pricing

4.3 Petroleum Tax

February 20, 2006 12

4.4 Electricity Sector

4.4.1 Policy Issue: Need for a Transparent and Well-Regulated Electricity

The main legislative instruments regulating the electricity sector are:

February 20, 2006 13

Internationally, the development of a least cost expansion plan (LCEP) establishes

February 20, 2006 14

4.4.5 Policy Issue: Need to Optimize Efficiency in Transmission and Distribution