Nearshore Americas

Energy Shortage Plagues Caribbean’s Manufacturing Sector

High energy costs are holding back several Caribbean countries from stimulating the proliferation of export-oriented manufacturing plants, according to a new study by the Economic Commission for Latin America and the Caribbean (ECLAC).

The UN agency has suggested that the countries involve private companies in generating electricity, expressing concern that ministries or national commissions in most of the countries control most of the energy efficiency programs.

According to the report, Trinidad and Tobago is the only country in the Caribbean with sufficient energy supply to support its manufacturing sector. Here,  ArcelorMittal, the world’s largest steel maker, produces billets and a wide range of wire rods, with a total capacity of 2.7 million tons. Taking advantage of the very low cost of gas, the steel maker is exporting 90% of its production through its own dedicated port in the island nation.

But lack of fuel is leaving several other countries in the region helpless. Most of the Caribbean nations are dependent on petroleum products to generate electricity.

The UN agency is asking the countries to create agencies to supervise energy efficiency programs. In the past five years, Grenada, Jamaica and Trinidad & Tobago have enacted laws to create such agencies.

ECLAC says there has been a significant improvement in energy saving habits, although there still need to be more —and better— public policy guidelines on energy efficiency.

Another concern, according to ECLAC, is that the region has very few enterprises managing energy demand in a systematic manner. Encouraging consumers to save energy could mitigate several supply issues.

“Latin America and the Caribbean are rich in energy resources including hydrocarbons, hydroelectricity and biofuels. But this wealth is unevenly distributed,” says the nter-American Development Bank, which is funding several energy projects in the region.

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Across the region, according to the IDB, approximately 34 million people lack access to modern electricity services, and fuel imports consume a growing percentage of smaller countries’ budgets.

The bank recently lent Guyana about $64 million to help boost the efficiency and reliability of its power system.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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