We are not clear about Marubeni's endgame in its decision to sell 50 per cent of its Caribbean power business to the Abu Dhabi National Energy Company (TAQA), for things are not always as they are said to be, or as obvious as they seem. Moreover, in this case Marubeni has not said much about its long-term strategic interest in the Caribbean and could be having second thoughts about its foray into the region, and particularly into Jamaica.

In that regard, the decision announced on Wednesday might well be the first step of a retreat, a mere year and half after it arrived. Jamaica, after all, is not an easy place to do business, especially, as Marubeni has discovered, when part of your operations involves the transmission and distribution of electricity.

Stolen electricity

Each year, about 13 per cent of the electricity generated in Jamaica is stolen while being transmitted by Jamaica Public Service Company (JPS), Marubeni's Jamaican subsidiary. That is a costly business, sucking from the company hundreds of millions of dollars in earnings.

This problem, in terms of its size and scope, Marubeni's Caribbean boss Tomofumi Fukuda has lamented, is peculiarly Jamaican. To fix it is not only expensive but potentially dangerous.

It would seem to us, too, that it is not only Jamaica's business and cultural environment that Marubeni may have underestimated when they acquired JPS as part of Mirant's Caribbean assets. It would appear from our perspective that the Japanese company's due diligence may not have been as rigorous as might have been expected. There is a sense that Marubeni was taken aback by the state of the power generation plants they inherited and the level of investment that will be required to replace its aged base units and to allow for supply growth over the next decade.

Any such concerns might have been exacerbated by the loss that JPS is likely to return for 2008 on the back of currency depreciation and the high cost of oil. Then there is the company's ongoing quarrel with regulators over what it was not allowed to recover from consumers for hurricane damage to its plant and distribution system.

Partnership

In any event, whether Marubeni is on its way out or has merely sought a partner to help shoulder the burden of the capital investments required in Jamaica and elsewhere, TAQA, on the face of it, appears a good choice. Supposing the latter is the case, both firms should understand each other, being partners in electricity and water desalination projects in the United Arab Emirates, although in those ventures Marubeni is the junior partner.

Should it be, though, that Marubeni is seeking to extricate itself from the Caribbean, and specifically JPS, TAQA, especially after the experience with Mirant, is the kind of company that we wouldn't mind seeing in control of the Jamaican assets. It has deep pockets, with a strong cash flow and healthy profits. TAQA, with assets of around US$18.5 billion, has been returning strong profit - more than US$2 billion in 2007.

From a Jamaican perspective, of interest is, also, its upstream involvement in oil and gas, which fits in with the Government's stated policy intention of moving to LNG as an energy source. Hopefully, the Jamaican Government, which still has 20 per cent of JPS, has taken note of this and is ready to engage TAQA.

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