Published: Wednesday | June 24, 2009
WITH NO wish to appear ungrateful, the Jamaican Government ought to welcome Prime Minister Patrick Manning’s decision to make it “a national priority” of Trinidad and Tobago to supply liquefied natural gas (LNG) to Jamaica. On the face of it, Mr Manning’s unilateral declaration of intent substantially resolves an important issue for Jamaica - a long-term supplier of LNG, which the Golding administration has decided will be the fuel of choice for energy generation in Jamaica. Over time, therefore, natural gas will replace oil at power plants. Natural gas is cheaper, more efficient and, critically, environmentally cleaner than oil.
However, at the risk of appearing to be looking the proverbial gift horse in the mouth, we would advise the Jamaican authorities against becoming over-excited about the offer and suggest that they, respectfully, demand of Mr Manning a fuller explanation of his idea.
A fundamental stake
Moreover, we believe that the entire Caribbean Community (CARICOM), a single-market arrangement, has a fundamental stake in this matter. It is about energy as a critical cost factor in regional production and its pricing within a seamless economic space.
To begin with, this declaration of intent by Trinidad and Tobago to supply LNG to Jamaica is not new. And nor are the issues which we believe should be placed on the agenda.
Earlier this decade when Jamaica first talked of converting its power grid from oil to gas, Trinidad and Tobago was its first port of call as a supplier.
In retrospect, Jamaica’s strategy of so heavily linking the conversion initiative to the planned expansion of the Alcoa alumina refinery in Hayes, Clarendon, may have been counterproductive. It diminished Jamaica, and its legitimacy as a CARICOM state to demand its assumed rights, and gave the impression that a benefit was to be derived for a non-CARICOM multinational.
Nonetheless, the political problem that this may have posed to the Government did not then, and nor does it now, obviate the fundamental question of how gas sold by Trinidad and Tobago to a CARICOM partner ought to be priced. Jamaica felt that it should be afforded ‘national treatment’ - that is, it should pay the same price as a consumer in Trinidad and Tobago, plus the cost of liquefaction and transportation.
Left high and dry
The Trinidadians, however, rejected the national treatment construct. They insisted that LNG was a different product than natural gas and was, therefore, subject to a completely different pricing mechanism. In the end, even though Mr Manning and then Jamaican Prime Minister P.J. Patterson signed a supply agreement, Trinidad and Tobago pulled out of the deal, saying it did not have the LNG to supply because of existing contracts and a lag in the development of offshore gas trains. Jamaica was left high and dry!
In the face of that unhappy episode, Mr Manning, whose new declaration of intent had the tone of charitable benevolence, needs to speak with greater clarity on the terms on which he now plans to supply.
More important, Mr Manning’s initiative should be the basis of a CARICOM energy policy which, significantly, is among the proposals by the experts who drafted a framework for deepened integration between Trinidad and Tobago, St Lucia, Grenada and St Vincent. Such a policy would not only be about grabbing Trinidadian oil and gas, as some seem to fear.
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