Nightmare 2030

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Dwellings in the heart of Montego Bay

The cost of solar generated electricity has crashed and solar powered schools are economically viable and can be financed by the state. The parliamentarians have known this for years but choose to spend tens of millions of USD on fossil fuel produced electricity. This has impoverished schools and the consequences are what we see today: substandard education which exacerbates poverty and hopelessness, not to mention the ongoing state of emergency which has no endgame.

The government must pay to power schools so do it prudently: Instead of using taxpayers money to indefinitely pay electricity bills, schools should service fixed term loan agreements to pay for their own electricity generating facilities. The repayments would be substantially lower than bills so schools would immediately have more money to spend whilst owning an asset that could earn revenue.

The UN’s latest project to save the planet, Vision 2030 and the 17 Sustainable Development Goals (SDGs), is overseen by the resident UNDP. The PM said the following: “Jamaica is naturally and irrevocably aligned to the Sustainable Development Goals and at every opportunity we reaffirm our commitment to achieving them.” Nothing could be further from the truth.

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Quality education is SDG4. It is the key to eradicating poverty and the success of the SDGs. But the report submitted to the UN in July contains no plans of how to increase educational funding and quality education costs a significant amount of money. Every year. State owned solar powered educational institutions, public buildings and streetlights would have a significant impact on funding education. However, a solar solution is conspicuous by it’s absence.

Using numbers
The parliamentarians paint a picture that we’re too broke to invest by spending parsimoniously on solar in schools. However, economics shows the opposite: it is foolish not to invest.

Our electricity is one of the most expensive in the world. I have an estimate for a 201kW solar facility at Montego Bay Community College with a payback period of 4 years: monthly bills averaged USD10k and the estimate was USD475k.

If the college had a loan agreement of 20% over 10 years it’s monthly repayments would be USD4,750 (475k x 1.2/120 months). Today, that agreement would make the college over USD5k better off (10k – 4750) every month.

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MBCC: rising electricity bills – 5% & 10% inflation – versus fixed rate 20% interest loan repayments of $4,750 over 10 years

Ardenne High recently acquired partial solar power and estimates payback figures under a year! Their monthly $4m bills have been reduced 30% and they’re now struggling to raise JMD25m (USD200k) to remove the school completely off the grid. The numbers are astounding but Holy Trinity High School also reported payback figures under a year.

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According to Ardenne a total investment of JMD40m (USD320k) would save them JMD4m per month

An extortionate 100% interest loan repaid over 2 years has repayments around JMD2.1m (50m/24 months). Today, that agreement would make Ardenne over JMD700k better off (0.7 x $4m – $2.1m). It is gross negligence for Ardenne to be still on the grid and the people are oblivious to this waste. Schools would have millions to spend on education but all our schools are on the grid.

Minister Reid (ruel.reid@moey.gov.jm) and his ministry did not reply to my queries.

Education designed to fail
The high school budget for the 2018-19 academic year is an embarrassing 1.2% of the national budget, JMD8.39 billion. We have around 325 high schools. If average bills are JMD12m per annum then almost 50% of the budget will be spent on electricity. There are over 1000 other educational institutions on the grid.

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A basic school in Mocho, Clarendon

So how much is the annual high school electricity bill? JMD8 billion? More? Hopefully there is only one Ardenne! We need to know the figure to determine what needs to be done. JPS could query their billing database and deliver it within a of couple minutes. This is not only unsustainable financial lunacy, it is an evil policy that exacerbates poverty. Tens of millions of taxpayers USD earmarked for children is going to JPS shareholders.

It is easier to get blood from a stone than to get information from the government. In this report it is stated that public sector accounted for 15.5% of total electricity sales in Jamaica in 2015. That year the energy supplier JPS stated that they earned operating revenues of USD760 million so the taxpayer parted with USD118 million. That figure probably excludes high schools and definitely universities since they are responsible for their own bills.

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No financial officer would run their company finances like this and keep their job. Their mission would be to urgently find financing.

Financing

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The IMF Mission Chief Uma Ramkrishnan recently said that Jamaica can now draw down on USD226 million if needed under the present cycle for a total available credit of USD1.2 billion. So “draw down” on that cash. It can be justified – education increases growth, cuts poverty etc. – and if necessary the schools could make repayments.
If more money is needed borrowing should not be an issue. Lenders lend when the debtor has the means to service the debt. Schools miss payments and suffer disconnections because of the size of the bills. They would not renege on significantly smaller loan repayments. Options:

  • Use the recently received USD248m World Bank loan and postpone the unsanctioned projects.
  • Create an arrangement for schools to borrow government backed loans from national financial institutions. So smaller fixed term loan repayments would replace indefinite astronomical electricity bills. Banks would be actually doing good whilst making money and a more prosperous country is good business for them.
  • Create green educational bonds: 10 year 10% fixed income SDG4 bonds backed by the treasury? Investors are divesting from fossil fuel so environmental educational bonds would be excellent ethical alternatives. The USD40m donating diaspora and pension funds as markets?

None of the options would cost the taxpayer a dollar: loan repayments would replace electricity bill payments. But free solar radiation is ignored as a solution towards the SDGs.

Impact of solar on the SDGs

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Here is a gem from the report: “The main challenge for Jamaica is implementing policies that will trigger fast and sustained progress towards the goals in a context of limited fiscal space.” A state owned solar powered schools policy WOULD “trigger fast and sustained progress towards the goals“:

  • Free secondary school education leaves more money in parent’s pockets, less stress etc. ‘Auxiliary fees’ are fees and fees impose hardship. SDGs 1-3 & 10.
  • No bills would equate to more money for IT equipment, security, transportation, meal programs, infrastructure etc. and better education. 4, 8-10.
  • All schools would have electricity which is essential for IT literacy and quality education. Quality education leads to growth and only growth can repay debt with dignity. 4, 8 & 9.
  • The possibility of expansion, supplying energy to the grid and generating revenue. 7 & 13.
    The fossil fuels that power schools would remain underground. 13 & 15.

Without doubt, solar powered educational institutions, public buildings and streetlights would be the best investment this country could make and Vision 2030 should be based around solar power. It can be financed. However, the parliamentarians allocated a paltry JMD120m from the 2018-19 national budget to taking schools off the grid. What good is USD925k? It paints a picture that the country is a charity case and they are trying. But in the “limited fiscal space” the governor general was allocated almost twice as much for a car and elevator, MPs JMD190m for cars and USD20m for a new parliament building. This spending whilst homes and businesses burn to the ground because we have a handful of functioning fire trucks, there are more Porsche SUVs on the roads than ambulances, towns continuously flood because of underfunded refuse collection…….. resulting in death.

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UNDP informed me via Facebook messenger that they are satisfied with the SDGs. In regards to my findings I was told “Send it and we will pass it to the programmes team for further discussion with Planning Institute of Jamaica. PIOJ is in the lead for SDG implementation in Jamaica.” I have not received any feedback and subsequent queries have gone unanswered. Elizabeth Emanuel, the programme director of the PIOJ recently said, quote: “There should be greater use of strategic environmental assessments in decision making as an important step towards effective policy formulation.” It is all words and no action.

The report submitted to the UN is a joke. The participants appear to be incompetent and out of their depth. Goal 7 is entitled “Renewable Energy” but includes information about investing in LNG power stations and oil exploration!

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The reality
The parliamentarians have allowed schools to be disconnected. We’re supposed to have free high school education but ‘auxiliary’ fees are charged to help pay bills. Minister Ried accused several schools of corruption and extortion by forcing parents to pay “exorbitant auxiliary fees“. The temerity! Fees are a result of government policy and the public knows where to point when it comes to corruption. He has not replied about Ardenne. I offered to sponsor two underprivileged children through 6th form but when he realised I was the benefactor he ceased communication.

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Gleaner headline: Ruel Reid The Subject Of A Criminal Investigation, Police Commissioner Reveals

The parliamentarians admit to the existence of “educational apartheid“. Regardless of ability, rural poor children have no option but to attend neighbouring substandard schools because the cost of commuting and fees put the better schools out of reach. Conversely, if an urban child cannot get into a local school they may have to commute to a rural school and paedophiles have taken advantage of desperation: “So not every day she can go school, but because she wants to go, a little taxi man down the road use that opportunity to exploit her and take her to school each day, and later you find that she is pregnant for him.” To make matters worse, some schools refuse to accept young mothers. That is the reality of their policies. Children miss school because of poverty and girls because they cannot afford sanitary products.

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It was recently revealed that 68% of teachers in early learning centres are unqualified. Some centres have no electricity, no running water and pit toilets. I read this outside one rural centre: “January 8 2018. School reopen. There is place for new registration.” What hope is there for the rural poor? It is no surprise that our school leavers are considered too dunce to work in call centres.

I contacted bodies responsible for investigating corruption and mismanagement of the public purse – the National Integrity Action, and the offices of the Public Defender and Contractor General – but got nowhere.

Explanations are needed

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There is no room for hypocrisy in politics

The parliamentarians’ must explain their school energy policy. That includes their private ownership scheme which is a dastardly financing scheme to further enrich the rich. The graph below shows potential rewards to investors for a school like Ardenne. If the goal was to cut costs by 40%, every year the investor would receive JMD28.8m on a single outlay of JMD40m. A 72% annual return forever.

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Ardenne High: 20% interest repayments and potential payments to investors. Scenario 1 is 30% payments (70% savings for the government), 2 is 40% payments…

Small solar facilities do not need operators or management. Investors would own the facilities and schools would continue to indefinitely pay for power.

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It is unnecessary – investors will invariably have to borrow to finance the project so it would make more sense for the schools to be the borrowers and owners. Why not draw down on the USD226 million and own energy generating assets? This must be stopped.

The UNDP, IMF and PIOJ need to explain why a solar powered schools solution is not in the SDGs and why over USD68b for the national identity card system NIDS will deliver a better economic return.

 

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What a liberty! You can say whatever you want when no one challenges you. The deficit is in moral leadership.

The PM also said this in regards to the SDGs: “Furthermore, Jamaica will play its part in regional and international fora to promote attainment.” More meaningless words and hypocrisy of the highest order. In this video he implored the people to take action – “Do sumn! Do sumn!” Meanwhile, he and the rest of the parliamentarians do as much as possible to maintain the status quo.

3 thoughts on “Nightmare 2030

  1. Pingback: Journalism in Jamaica | Using Renewables to fund education

  2. Pingback: The UN and the IMF: wolves in sheep’s clothing | Using Renewables to fund education

  3. Pingback: Submission to the Integrity Commission | Using Renewables to fund education

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