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Treatment Plant (WTP) in Content, St. Catherine. The finalisation of the WPA and the requisite approvals will be sought by the NWC.

b. Schools Energy Efficiency and Solar Project

A preferred bidder has been identified for the Schools Solar Project. The private investor is to undertake the financing, installation and maintenance of photovoltaic generation systems and energy efficiency retrofits in 30 select secondary schools as part of a pilot project. It is expected that negotiations will be concluded during the 2019/20 financial year to facilitate commencement of the project during FY 2020/21.

c. Jamaica Ship Registry

The Maritime Authority of Jamaica (MAJ) is to develop the Jamaica Ship Registry (JSR) and its related activities. Cabinet gave approval for the MAJ to proceed to the transaction phase for the management, operation and promotion of the JSR by way of a restricted bidding tender methodology. The transaction phase is expected to commence by the second quarter of the 2020/21 financial year.

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June 12, 2021


Page 210

Public Bodies Ministry of Science, Energy and Technology

Petrojam Limited _____________________________________________________________________________________________

Public Bodies, FY 2021/22 Page 207 Ministry of Finance and the Public Service

Petrojam Limited

Introduction

Petrojam Limited was incorporated in October 1982 as a wholly owned subsidiary of the

Jamaica">Petroleum Corporation of Jamaica (PCJ). In 2006 49% of the Company’s shares were sold to

Petroleos de Venezuela S.A (PDVSA), with PCJ retaining controlling interest. Consequent on

the passage of The Compulsory Acquisition (Shares in Petrojam Limited) Act 2019, effective

February 22, 2019 the Government of Jamaica, through the Accountant General, acquired the

49% shareholding held by PDVSA.

The Company operates the only petroleum refinery in Jamaica which processes crude oil into

various finished products including liquefied petroleum gas, auto diesel oil, turbo fuel, heavy

fuel oil, asphalt, and unleaded gasoline. Petrojam sources crude supplies primarily from Brazil,

Ecuador and Columbia, while finished products are imported mainly from the open market.

There are two additional profit centres, shipping and bunkering, which are complementary to the

refining operation of Petrojam.

Summary Corporate/Operational Plan

Petrojam plans to improve the operating efficiency of its aging plant and technology through the

continued refurbishing of its holding tanks; replacement of pipelines; the regeneration of its

catalyst and replacement of its power-former furnace to maintain the quality of its fuel

production. These activities are to be facilitated through planed capital expenditure of US$12.41

million (US$5.96 million – 2020/21). The Company projects that these activities will be

managed within a scheduled downtime of 49 days at the plant.

Petrojam plans to also focus its strategic priorities on:

a) Installing a waste water treatment plant to improve compliance with the National

Environment and Planning Agency’s standards;

b) Continuing the renovation of the Ambient Air Monitoring Station to improve the

management and containment of air emissions.

The global crude oil market is projected to remain fairly stable with increased production by

major oil producers and marginal increases in demand for petroleum products, against the fall off

during the 2020/21 financial year due to the impact of the Covid-19 pandemic. As a result,

Petrojam’s performance is projected to remain stable during the year with no significant

fluctuations in price anticipated.

Petrojam is projecting a net profit of US$6.10 million (2020/21: US$10.02 million deficit).

The Company plans to increase its staff complement to 272 permanent and 27 temporary

employees (2020/21: 267 permanent and 26 temporary).

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June 12, 2021


Page 111

Ministry of Finance and the Public Service Fiscal Policy Paper 2021 Part 1 | Page 111

Rationalisation of Public Bodies The GOJ continues the Public Bodies’ Rationalisation programme aimed at reducing the number of public bodies. The consolidation of public bodies, which may take the form of mergers, closures, divestment or reintegration, is expected to reduce risks to the Central Government budget through, inter alia, curtailing losses, reducing operational costs and minimizing overlapping functions. As at September 2020, the programme resulted in savings for the Government in excess of $1,000.0 million. Public Private Partnerships7 PPPs are often a preferred means of executing major investment projects, as the Government partners with a private entity which takes on a portion of the project cost and risk. Nonetheless, if PPPs are not appropriately designed and monitored, the GOJ might face unplanned costs. This concern has been addressed by the enhanced fiscal rules which were adopted under the Financial Administration and Audit (FAA) Act, and the PBMA Act in 2014. The Development Bank of Jamaica (DBJ) and the PPP Unit within the MOFPS are charged with ensuring that PPP transactions are consistent with the criteria established in the PPP Policy. PPPs are assessed on project viability, value for money, marketability and fiscal responsibility to ensure that project operations will not undermine the GOJ’s fiscal position. Transactions are also subject to sensitivity analysis to test the Government’s capacity to absorb worst case scenario losses, without derailing the fiscal programme. In the event that either party desires adjustments to a PPP contract, the transaction may enter a renegotiation stage in the absence of competitive pressure. This could result in private parties seeking to improve their positions in a way that worsens the Government’s position. To treat with this, the GOJ: limits renegotiations to cases in which there will likely be improved value for money, consults specialised advisors, and establishes competent and experienced teams to lead the process of renegotiation. PPPs in Progress The following PPP transactions are currently in progress:

Rio Cobre Water Treatment Plant

7 A public private partnership is a long-term procurement contract between the public and private sectors, in which the proficiency of each party is focused in the designing, financing, building and operating of an infrastructure project or providing a service, through the appropriate sharing of resources, risks and rewards (GOJ Policy and Institutional Framework for the Implementation of PPPs, 2012).

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June 12, 2021


Page 112

Ministry of Finance and the Public Service Fiscal Policy Paper 2021 Part 1 | Page 112

The National Water Commission (NWC) is pursuing the development of a 25-year Water Purchase Agreement (WPA) for the financing, construction, operation and maintenance of a 15 MGD8 Water Treatment Plant in Content, St. Catherine.

Schools Energy Efficiency and Solar Project Cabinet approved the final terms of the Energy Savings Contract with the preferred bidder and financial closure for the project is anticipated by the second quarter of financial year 2021/22. The private investor is to undertake the financing, installation and maintenance of photovoltaic generation systems and energy efficiency retrofits in 30 select secondary schools as part of a pilot project. The installation of the panels is expected to commence as soon as financial closure is achieved.

Jamaica Ship Registry The Maritime Authority of Jamaica (MAJ) is to develop the Jamaica Ship Registry (JSR) and its related activities. Cabinet gave approval for the MAJ to proceed to the transaction phase for the management, operation and promotion of the JSR by way of a restricted bidding tender methodology. Judicial Awards Legal claims against the GOJ might have costly and unexpected implications if judgements are made in the favour of plaintiffs. Judicial awards pose a risk to the Government’s fiscal position, as an unplanned increase in expenditure could crowd out planned expenditure, resulting in new revenue measures, or necessitating additional borrowing. The MOFPS collaborates with the Ministry of Justice (MOJ) to monitor the progress of current and pending cases against the GOJ. Close monitoring ensures that proper expenditure planning is executed, and included in the budget should there be a ruling against the Government. Other Specific Risks Wage Settlements The public wage bill can pose a risk to GOJ expenditure in the event that wage settlements exceed budget and/or are not concluded in time for the budget. The Government’s current wage contract will come to an end in March 2021. As such, it is critical that the GOJ completes wage negotiations in order to avoid any settlements contrary to budgeted wage allocations. In the third quarter of FY 2019/20, the Government contracted a consulting firm to undertake a review of public sector compensation in order to determine the way forward. The review has been completed and recommendations have been made. The Government is currently in discussion with the unions.

8 MGD – million gallons of water per day

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June 12, 2021


Page 45

Public Bodies Ministry of Economic Growth & Job Creation (Selected) National Water Commission _____________________________________________________________________________________________

Public Bodies, FY 2020/21 Page 44 Ministry of Finance & the Public Service

National Water Commission Introduction The National Water Commission (NWC), a statutory organisation was established in 1980 through the amalgamation of the Kingston and Commission">St. Andrew Water Commission and the rurally focussed, National Water Authority. The NWC is mandated to contribute positively to national development by providing high quality potable water and sewerage services, to residential and commercial customers in a cost effective and sustainable manner. In this regard, the NWC supplies over 70% of the population with piped water and 15% with sewerage service, through over 1000 water supply facilities (including wells, water treatment plants, pumping stations), and more than 11,000 kilometers of water mains, as well as over 68 sewerage treatment plants islandwide.

Operational and Financial Overview The NWC will continue the implementation of selected business strategies and capital projects that are expected to improve operational efficiency and service reliability during the budget year. The Kingston and St Andrew (KSA) non-revenue water (NRW) programme is expected to be completed by September 2020 and is forecast to result in a reduction in NRW in the KSA from 59% to 30%. To expand the benefits derived from the KSA project, the NWC plans to replicate this performance-based contracting modality to reduce NRW in other areas including the northern parishes and St. Catherine. The NWC will remain committed in its efforts to improve the aged infrastructure and expand the coverage of its network to enhance service delivery and ensure revenue sustainability. The Commission’s capital programme will include the Spanish Town mains replacement project which has been identified as one of the projects required to increase the distribution of water in Kingston and the Port Royal distribution main replacement and sewerage treatment plant which is required to support the development plans for Port Royal. Effective metering, billing and collection are of paramount importance to the sustainability of the NWC’s operations. Accordingly, the replacement of aged meters, metering of un-metered accounts and the installation of more accurate meters will continue during the year. In recognition of the importance of technology in the improvement of operational efficiency, the Commission has embarked on a programme to modernize its information and communication technologies to transform the way it does business. The Commission projects a surplus before tax of $1,339.99 million (2019/20: $5,262.79 million deficit).

The NWC projects a staff complement of 2,197 employees (2019/20: 2,234).

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June 12, 2021


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