Nov. 15, 2017


Ansord Hewitt

Jamaica

Ansord Hewitt

Director General, Office of Utilities Regulation (OUR)

“Our major concern with water is that access still needs to be expanded; however, the National Water Commission (NWC) loses almost 70% of the water it produces.”

BIO

Ansord Hewitt has been working with OUR since the year 2000 in various capacities, including stints as economic analyst, regulatory affairs manager, and secretary to the office, among others. He had previously worked as an economist with the Fair Trading Commission and the Jamaica Bauxite Institute in the 1990s. He has been a member of the Jamaican Bar since 2012, and has also lectured in the Department of Government University of the West Indies MSc Programme. He holds many academic certificates, from universities such as London School of Economics, University of London, and the University of the West Indies.

Can you tell us about your role within the Jamaican economy?

OUR is what we call in regulatory jargon a multi-sector regulator; we regulate a number of sectors: telecommunications, electricity, water, and sewage. It is vital for OUR to operate in a way that boosts the confidence of investors, ensures that the interest of utility consumers are protected, and that there is fair and transparent decision-making consistent with the legal framework in which we operate. As a country moves to more of a market economy, it also needs to provide consumers with the assurance that someone is watching and that they are not being taken advantage of; OUR has also played that role. At the same time, we see ourselves first as a facilitator of investment, protector of the interests of the public, and an agency that is critical to the provision of an atmosphere in which the utilities may develop to become more efficient, modern, and keep pace with technology while enhancing the economic environment.

Could you highlight the important projects in the energy sector in light of Vision 2030?

For a long time, Jamaica has had the problem of employing predominantly old generating capacity in the electricity sector. The urgent need was therefore for the modernization of generation set and more efficient fuel conversion. It was recognized that if we could reduce the cost of electricity, then clearly Jamaica would become a more attractive place for investment and consumer welfare would increase. There was a long, winding, and dare I say noisy debate about what the source of fuel should have be. Indeed at one point we had a coal faction and an LNG faction, which presented a problem. Every time we embarked on an LNG initiative, those in support of coal would get upset and vice versa. We have had notable successes in the last few years however. In the area of renewables, OUR has had responsibility for procurement through a competitive bidding process. In the first round of the process we were looking for 115MW of capacity; however, we received just about 80MW. There were three major proposals: two wind and one solar, named Wigton, BMR wind farms, and Content Solar. That 80MW of capacity came online last year which coincided with the conversion of the fuel source for a 120MW generation plant at Bogue. Previously the plant ran on ADO and this was converted to natural gas through an initiative impelled by the OUR. The OUR took the view that that there would be significant benefit to consumers if the conversion was done. Therefore, a provision was made in the tariff in 2015 tariff review to address the capital cost associated with the conversion. In other words, we added an increment in the rate to provide financing for this conversion facility. It is now evident that as anticipated when this particular plant runs on natural gas, the fuel costs are lower and there are also environmental benefits associated with it. Interestingly, this project has become a catalyst for greater fuel diversification in Jamaica. Since then, the single buyer, JPS, has opted to use natural gas as the source for a new 190MW plant it is presently constructing and which scheduled for completion in 2019. At the same time a company called New Fortress has led the way in bringing natural gas for electricity generation to the country for the first time. New Fortress took a long-term view of the regional gas market by investing in a facility to supply the Bogue Plant and then leveraging this as its entry point into the domestic market. It constructed a modern state of the art terminal facility in Montego Ba which has the potential to serve other proximate industries such as the refrigerating business and transportation activities.

What have been the major changes in the telecom landscape?

Since 2000, there has been a transformation in the telecommunication and ICT sector. This has been a global trend; however, the decisions taken in the 1990s to liberalize the sector and increase competition to encourage investment was pivotal to the transformation in Jamaica. Out of that has come the transition from a monopoly, which was the situation when Cable & Wireless dominated the sector, to one in which Digicell emerged as a major entity, Claro also entered the market, and there has also been the advent of Flow as a competitor. Intense competition has since ensued with some resulting consolidation, where Digicell absorbed Claro and Cable & Wireless purchased Flow. So there are now two major competitors. Around 2004 Hurricane Ivan laid bare the vulnerability of Jamaica's international telecommunication links. We essentially had one submarine link cable that linked us to North America and that was severed during the hurricane. Consequently, telecommunication traffic to the island was disrupted for a couple of days. The government was therefore spurred into encouraging diversification of the external telecommunication network. The OUR was therefore directed to hold a tender for two international subsea cable licenses. Eventually, two companies succeeded and one, Columbus Communications, built alternative links. Later on there was a company going through Venezuela to Cuba and were passing Jamaica so it added more links. The result of that is that the island is now well diversified in terms of its links and has reduced its vulnerability. This has in turn given confidence to international investors. There is greater capacity in the market and telecom rates have gone down.

What are the challenges in the water sector?

Our major concern with water is that access still needs to be expanded; however, the National Water Commission (NWC) loses almost 70% of the water it produces. For almost a decade we have financed the NWC to help it make the network investments to reduce losses. The company has failed to move at the speed we anticipated; however, we see encouragement in certain initiatives that are underway especially in respect of the engagement of private contractor by NWC to spearhead its loss reduction effort. The OUR sees the possibility of a virtuous cycle whereby with reduced losses there is more water to distribute, more revenue to get, and the network can be further expanded and made more efficient. Notably, the OUR has also facilitated private investment in the water sector in response to government policy. Se we have about a dozen small providers who supply water and/or sewage services in designated areas. This means that if an investor decides to build houses in a particular area, but there concerns whether NWC is able to provide reliable supplies, this can be addressed by private provisioning. The other major area for opportunity in the water sector is in sewage as we do not have great sewage infrastructure and there are many pits where people dispose of effluent, which creates a problem in the water table. We need central sewage systems that work well and OUR is thus pushing the government to look at PPP arrangements for the water and sewage sector to facilitate the types of investments that will resolve these issues, increase access to sewage services, and generally improve environmental conditions. As a whole the prospects for the provision of utility services in Jamaica are great and the OUR is committed to its mission of contributing in a significant way to national development.

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