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RATING DRIVERS

 Supporting Factors:

• Exclusive rights to transmit and distribute electricity in Jamaica
• Regulatory environment supports revenue stability and growth
• Good financial performance underpinned by continued profitability
• Good operating efficiency of the generation assets supported by ongoing investments in maintenance and asset modernization

Constraining Factors:

•  Significant system losses due to high levels of energy theft
• Significant risk retention via self-insurance of T&D assets

Rating Sensitivity Factors

Factors that could individually, or collectively lead to an improvement in the ratings and/or Outlook include:

• An improvement in the credit rating of the Government of Jamaica over the next 12 – 15 months
• Continued improvement in the economic conditions in Jamaica over the next 2 years, thereby leading to increased demand for energy consumption

Factors that could individually, or collectively lead to a lowering of the ratings and/or Outlook include:

• A deterioration in the credit rating of the Government of Jamaica over the next 12 – 15 months
• Failure to satisfy any existing debt covenants
• At least 2 consecutive years of declining operating profit by 10% or more

COMPANY BACKGROUND

Jamaica Public Service Company Limited (JPS or the Company) is an integrated electric utility company incorporated and domiciled in Jamaica. Its registered office is located at #6 Knutsford Boulevard, Kingston 5, Jamaica. The Company is engaged in the generation, transmission, and distribution of electricity in Jamaica, and purchases power from 9 independent power producers. JPS currently has over 680,000 customers who are served by a workforce of approximately 1,300 employees^[1]. The Company owns and operates 5 power stations, 9 hydroelectric plants, and 1 wind farm.

In 1892, Jamaica became one of the first countries in the world to receive electricity with the establishment of the Jamaica Electric Light Company, which produced and supplied electricity to Kingston using a small coal-burning steam generator. In 1897, the West India Electric Company was established, and using a 3-unit hydroelectric plant on the Rio Cobre River, electricity service was expanded to other areas. In 1907, the Jamaica Electric Light and Power Company leased its licenses and property to the West India Electric Company and several small electricity companies were formed by other towns around the island. On May 25, 1923, JPS was established and subsequently acquired the assets of West India Electric Company and by 1945 the small electricity companies were sold to JPS. By 1970, the Government of Jamaica (GOJ) acquired a controlling interest in JPS and in 1978, JPS was awarded an exclusive 39-year All-Island Electricity License.  This license was amended in 1995 to facilitate the liberalization of the power generation sub-industry and gave JPS the exclusive license to transmit and distribute electricity in Jamaica.   

In 2001, in an effort to improve the profitability and operating efficiency of the Company, the GOJ sold 80% of its shareholding in JPS to Mirant Corporation, a company incorporated in the United States that owned and operated several electric utilities in the United States, Asia, Latin America and the Caribbean. The GOJ maintained a 19.9% shareholding with the balance remaining shares held by a group of minority shareholders. In August 2007, Mirant sold its interest in JPS to Marubeni Caribbean Power Holding Incorporated, a wholly-owned subsidiary of Marubeni Corporation of Japan. 

In April 2011, Marubeni Corporation entered into a Purchase and Sale Agreement with Korea East-West Power (EWP) Company Limited, for joint ownership of majority shares (80%) of JPS. The Company is now 40% owned by MaruEnergy JPSCO 1 SRL^[2] and 40% owned by EWP

Analytical Contacts:

Musa Abdullah

Tel: 1-868-627-8879 Ext. 233

E-mail: mabdullah@caricris.com

 Anelia Oudit

Tel: 1-868-627-8879 Ext. 226

Mobile: 1-868-487-8364

E-mail: aoudit@caricris.com

Website: www.caricris.com

Email: info@caricris.com

Disclaimer: CariCRIS has taken due care and caution in compilation of data for this product. Information has been obtained by CariCRIS from sources which it considers reliable. However, CariCRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. No part of this report may be published / reproduced in any form without CariCRIS’ prior written approval. CariCRIS is also not responsible for any errors in transmission and especially states that it has no financial liability whatsoever to the subscribers/users/ transmitters/ distributors of this product.

CariCRIS reaffirms ‘good creditworthiness’ ratings assigned to Jamaica Public Service Company Limited (JPS)

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