VZCZCXRO4914
PP RUEHGR
DE RUEHKG #0097/01 0371353
ZNR UUUUU ZZH
P 061353Z FEB 09
FM AMEMBASSY KINGSTON
TO RUEHC/SECSTATE WASHDC PRIORITY 7268
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
INFO RUCNCOM/EC CARICOM COLLECTIVE

UNCLAS SECTION 01 OF 03 KINGSTON 000097 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/CAR (BPREMONT, ACADIEUX, VDEPIRRO, WSMITH) 
WHA/EPSC (MROONEY, FCORNEILLE) 
EEB/ESC (MMcMANUS, DMONOSSON) 
EEB/TRA/OTP (BJSILER) 
OES/EGC (GTHOMPSON) 
 
TREASURY FOR ERIN NEPHEW 
 
E.O. 12958:  N/A 
TAGS: ENRG ECON SENV EFIN EINV ETRD TRYS IADB IBRD PGOV
KGHG, IMF, OECD, EUN, GM, JM, XL 
SUBJECT: JAMAICA: ENERGY SECTOR DEVELOPMENTS; 
    PUSH FOR DIVERSIFICATION 
 
REF: 08 STATE 134385 (241630Z DEC 08) 
 
Summary 
------- 
 
1.(SBU) Jamaica is exploring a wide range of initiatives in hopes of 
diversifying its energy use, including: 
 
-- a successful roll-out of E10 ethanol; 
 
-- conversion of power stations from heavy fuel oil to coal and/or 
compressed natural gas; 
 
-- expansion of the WIGTON wind farm and development of an 
island-wide wind map; 
 
-- a plant to manufacture solar photovoltaic panels and solar water 
heaters; 
 
-- net metering legislation; 
 
-- energy efficiency ventures for the National Water Commission, 
hospitals, and schools; 
 
-- Waste-to-Energy Electricity Generation Plants. 
End Summary. 
 
Diversification Strategy 
------------------------ 
 
2.(SBU) EmbOffs and USAID Act. Director met with the Government of 
Jamaica (GoJ)'s Minister of Energy, Clive Mullings, on February 4 to 
discuss recent developments in the energy sector and ongoing 
initiatives with renewables. 
Mullings said the Ministry was in the process of developing a matrix 
of energy projects and possible sources of funding; once this matrix 
was in place, the next step would be to beef up the technical 
capacity, including the requisite information technology software to 
manage the projects.  He also confirmed that Marubeni (majority 
owners of the local electricity monopoly, Jamaica Public Service-- 
JPS) is in talks with a prospective investor, TAQA, the national 
energy company in Abu Dhabi, to purchase 40 percent of the company. 
TAQA is interested in converting one of the company's power stations 
from heavy fuel oil (HFO)-fired generators to coal.  The Minister 
said, as part of the diversification strategy, he is still 
considering compressed natural gas (CNG) for another power station, 
and hopes to meet with OPIC to collaborate on geothermal energy 
possibilities. 
 
Successful Ethanol Roll-Out, Wind, Solar 
---------------------------------------- 
 
3.(SBU)  Mullings told EmbOffs that the recent roll out of ethanol 
at the pumps has surpassed expectations, with over 100 stations 
offering E-10, up from ten in early November; consumption has moved 
to almost 10,000 barrels a day.  He said feedstock continues to be 
imported from Brazil for conversion to ethanol, but the end game was 
to develop the local sugar industry to produce the feedstock.  Most 
investor interest continues to be in wind, and in particular the 
government-owned and operated WIGTON wind farm.  Nine turbines are 
to be sourced from VESTAS of Denmark at a project cost of between 
USD 40 to 50 million, adding a further 18 MW to the existing 20.7 
MW.  The Minister acknowledged that WIGTON currently is unprofitable 
because of low tariff rates, but said this would be addressed.  He 
also said a 60-70 MW hydro project also would be viable once the 
price of oil goes beyond USD 50 a barrel. 
 
4.(SBU)  Regarding the issue of data required to attract interest by 
the private sector in renewable projects, Mullings confirmed that he 
was currently working out a protocol with the Jamaica Meteorological 
Service to collect data at various sites.  University of the West 
Indies Professor Anthony Chen, one of the author's of the Climate 
Change Report, also has been contracted to develop a wind map.  The 
Minister also told EmbOffs that some solar projects have been 
approved under the PETROCARIBE Fund.  He concluded by asserting that 
the net metering legislation required to provide an incentive for 
new private sector players to enter the market definitely will be 
effected this year. 
 
PETROCARIBE Fund for renewable and energy-efficiency projects 
--------------------------------------------- ------- 
 
KINGSTON 00000097  002 OF 003 
 
 
 
5.(SBU)  In January, the Permanent Secretary in the Ministry of 
Energy, Dr. Jean Dixon, reported that the GoJ was awaiting a final 
decision on the USD 160 million approved by the PETROCARIBE Fund for 
13 renewable and energy-efficiency projects.  The PETROCARIBE 
Agreement was signed in 2005 and allows Jamaica to covert 40 percent 
of daily oil purchases up to 23,500 barrels from Venezuela into a 
long-term soft loan.  Jamaica also is allowed to barter goods and 
services, including tertiary education, for oil, under the 
agreement.  The meeting to finalize whether the funds will be 
provided as soft loans or grants was postponed in December; a new 
date has not yet been set.   Included among the projects is an 
ambitious program to shift Jamaican schools to solar power.  The 
projects are broken down into two categories - energy saving and 
renewable energy.  Chief among the energy saving projects are energy 
efficiency ventures for the National Water Commission, hospitals, 
and schools.  Renewable energy projects include, inter alia: (a) the 
18 MW expansion at WIGTON Wind Farm; (b) a plant to manufacture 
solar photovoltaic panels and solar water heaters; and, (c) net 
metering legislation.  These projects are intended to support 
Mullings' ambition to increase the use of renewable energy from the 
current 5.6 percent to 10 percent by 2010 and 15 percent by 2015. 
 
Waste-to-Energy Electricity Generation Plants 
--------------------------------------------- 
 
6.(SBU)  Following support from the Embassy, the Petroleum 
Corporation of Jamaica (PCJ) published a new Request for Proposal 
(RFP), seeking partners to develop two waste-to-energy electricity 
generation plants.  Under the proposal, slated to close April 30, 
the PCJ plans to retain a 30 percent equity stake in the plants 
expected to generate anywhere from 20 to 35 MWs of electricity.   A 
number of companies have been in dialogue with the GoJ regarding 
waste-to-energy projects, but to date only one company, the 
U.S.-based Red Energy Group, has established an office in Jamaica. 
Red Energy hopes to construct a 3.5 WM waste-to-energy plant, 
producing bio-diesel as a by-product.  The company operates an 
identical plant in Washington State.  According to Hopeton Heron of 
the PCJ, waste disposal sites received 940,000 tons of waste in 
2006, and this is expected to grow to 1.2 million tons by 2010. 
Almost 25 percent of domestic waste is uncollected.  Heron told 
EmbOffs that he has gotten a number of verbal statements of 
interest, and some companies already have submitted written queries 
to which they currently are providing answers.  A waste-to-energy 
deal will be a welcome development for Jamaica, particularly given 
the attendant effects of frequent outbreak of fires at the waste 
disposal site located in the Kingston Metropolitan Area. 
 
7.(SBU)  Additional initiatives underway include the following: 
 
(A) Prior to the release of the RFP, Post worked with the U.S. Trade 
and Development Agency (USTDA) to send three participants from 
Jamaica on a Waste-to-Energy orientation visit to the United States. 
 This visit provided Jamaica with the background information 
required to develop the RFP and was followed by a visit from a USTDA 
contracted consultant. 
 
(B) In 2008, the U.S. Embassy supported Jamaica in its submission of 
a proposal to the OECD-based Partnership for Democratic Governance 
(PDG) requesting five-to-six on-site technical experts in renewables 
to assist the Ministry of Energy for a two to three year period. 
Jamaica was chosen as a top priority country for PDG work. 
 
(C) Post also has been monitoring progress on the U.S./Brazil 
bio-fuels agreement, under which Jamaica will receive a USD 150,000 
to 250,000 grant to pursue bio-fuels policies and projects. 
 
(D) Post also has applied to the Science Fellow's Program, and 
succeeded in finding a scientist to help Jamaica develop its 
bio-fuels program.  The candidate is Dr. Clifford Louime of Florida 
A&M University.  Energy Ministry Permanent Secretary Dr. Jean Dixon 
considers Dr. Louime's CV impressive, and has said his expertise 
would be invaluable in ensuring the sustainability of the country's 
bio-fuels program. 
 
(E) Dr. Dixon also advises that, with the support of UNECLAC, the 
country is preparing a bio-fuels policy, and has set April, 2009 as 
the deadline for its implementation. 
 
8.(SBU)  Jamaica's push for renewables could not have come at a 
better time, as the Office of Utilities Regulation (OUR) has 
 
KINGSTON 00000097  003 OF 003 
 
 
disclosed that the country will need to increase its power capacity 
by 75 percent or 600 MW within a decade, of which 10 percent should 
be from renewable sources.  The additional generating capacity will 
be required to compensate for increased demand and retirement of 
inefficient, oil guzzling generators.  The first block of 60 MW is 
the subject of a RFP requiring that the entire capacity be 
commissioned by 2010 with a preference for at least 20 MW by 2009. 
The country currently has a capacity of 817.7 MW, most of which is 
supplied by the JPS.  The OUR has made it clear that, although oil 
prices have moderated considerably, oil is still not the preferred 
option for generation.  Instead, the OUR is leaning towards 
technologies based on coal and/or natural gas, and more importantly 
renewables.  However, the OUR continues to express disappointment in 
the interest in renewable technologies and has attributed this to: 
(a) the lack of data on wind speed and river flow; (b) the lack of 
protocols regarding the utilization of garbage for energy; and, (c) 
unavailability of land to grow feedstock for biomass. 
 
9.(SBU)  At the same time, Jamaica has not ruled out the possibility 
of finding oil in its territorial waters; in addition to exploratory 
work being undertaken by Finder Exploration, the government has 
penned a three-month seismic operation with Norwegian firm, 
Wavefield Inseis, to explore for oil and gas resources.   The 
exploration will be conducted to source data for sale to multiple 
parties and will cost in excess of USD 8 million and last for three 
months.  The GOJ is hopeful that the survey will be successful 
enough to initiate a bidding process later this year. 
 
No Position on IRENA 
-------------------- 
 
10.(SBU) In response to EmbOff's inquiry, Mullings confirmed that 
the GoJ has not formulated any position with respect to the 
International Renewable Energy Agency (IRENA)(reftel); to his 
knowledge, Jamaica had not been represented at the recent launch in 
Bonn, and had not yet been approached regarding IRENA. 
 
WEHRLI