Jamaica - 2010 - Promoting improvements in electricity services

Promoting improvements in electricity services

Project start-up: 2010

Financing: $60.5M senior loan

Partner: Jamaica Public Service Company

 

Context
 
Households in Jamaica have one of the highest electricity bills in Latin America and the Caribbean (16% of GDP per capita), despite the fact that the power sector is well-structured with a high penetration rate (97% of Jamaicans have access to electricity) and independent institutions. This particular situation can be explained by the fact that Jamaica is a relatively small island and it has not developed a diversified mix of generation assets.  
 
The Government of Jamaica privatized the electricity sector in 2001 when it sold 80% of the shares in the state-owned fully integrated energy company – Jamaica Public Service Company (JPS).. Further, the power generation sector has been open to competition since 2004 (today, JPS holds 76% of the country's energy production assets, the rest are developed by independent power producers). Jamaica's power generation industry has a capacity of 818 MW, 95% of which is thermal based.
 

The country's power sector will need to face considerable challenges in the future:

- Ageing fleet assets (need to install 400 additional MW by 2019),

- Rising international energy prices: this will have a strong impact on electricity bills, which are already high, 

- The need to diversify power supply sources on an island which has few natural resources. 

 
Project objective  

With a serious national economic crisis and the financial markets' low interest in Jamaica, PROPARCO has fully played its countercyclical role. PROPARCO's financing for JPS aims to support Jamaica's power sector, particularly renewable energies, and to help improve the energy efficiency of assets.

 

Project description

PROPARCO has allocated a $60.5m senior loan to finance part of JPS' investment expenditure in 2010-2011. This loan includes sub-participations from other donors (AFD, EFP-European Financing Partners). PROPARCO is coordinating an additional $25m loan provided by OFID and is operating alongside IFC.

JPS’ investment program mainly focuses on:

- Upgrading/renewing energy generation infrastructure, as well as power transmission and distribution grids, in order to improve their energy efficiency;

- An ambitious plan to reduce power losses, which currently stand at 23%.

One of the aims will also be to diversify Jamaica's energy mix by developing generation capacities using renewable energies in order to limit the country's dependence on fossil fuels. A new 6.5 MW hydropower plant and a 23 MW wind farm will be built.

 

Impacts

The project to support JPS' investment expenditure - in which PROPARCO has played a major role - will help improve the quality of electricity services in Jamaica by:

·  Renewing and upgrading the ageing power generation fleet;

·  Increasing the share of renewable energies in Jamaica's energy mix;

·  Improving energy efficiency in JPS' activities;

·  Reducing power losses on the JPS network.

The investment program will also reduce greenhouse gas emissions by 410,000 tons every year.

 

> Download the press release