Minister Hill defends actions at COTED meeting
MINISTER of Industry, Investment and Commerce Senator Aubyn Hill has shot back at claims that a delegation he led to the last meeting of the Caribbean Community (Caricom) Council on Trade and Economic Development (COTED) did little to preserve a common external tariff (CET) waiver on the importation of lithium-ion batteries. Lithium-ion batteries are used to store the excess power produced by solar photovoltaic systems.
Speaking to the Jamaica Observer last Friday following a press briefing held at Kingston Wharves Limited in conjunction with the European Union, Hill said he challenged COTED’S decision when he attended the meeting.
“I was there; I pushed back when Minister [of State in Foreign Trade and Business Sandra] Husbands from Barbados raised the issue. I raised the issue that the technical team representing Barbados…did not raise the issue. I raised the issue and objected,” he asserted.
Documents submitted to the Business Observer reveal that at the COTED meeting held November 27-28, 2023, in Georgetown, Guyana, the Jamaican delegation submitted a “Request for Approval of the Suspension of the CET on a Priority List of Renewable Energy and Energy Efficient Technologies”, citing the need to increase the penetration of renewable energy sources and greater adoption of energy efficiency measures in order to reduce the country’s carbon emissions.
The application for the rollback on the 20 per cent charge would apply to compact fluorescent lamps, vapour absorption refrigeration systems, thermal storage air conditioning systems, rechargeable batteries for renewable energy systems (photovoltaic systems), among others. The council however refused to approve the suspension of CET on lithium-ion batteries, nothing that “Barbados indicated its ability to supply 240,000 lithium-ion batteries… as requested by Jamaica, for the period 1 January 2024 to 31 December 2025”.
The documents did not identify the name of the Bajan company that has offered to supply the Caricom Single Market with the batteries, but checks have revealed that Meritsun Power is the only supplier of that type of energy storage unit in the Eastern Caribbean island.
However, according to Alex Hill, president of the Jamaica Renewable Energy Association (JREA), “The Ministry of Science, Energy, Telecommunications and Transportation (MSETT) is choosing to protect the name of the company in Barbados instead of sharing it with stakeholders in the sector. This company formally approached COTED and stopped our local tax incentives and therefore should not be protected by our Government. Their name should be publicly available so that importers in Jamaica can contact them and make orders from them. After all, they are now the preferred supplier for the region.”
QUESTIONS ARISING
The decision of COTED and what was deemed the inaction of Minister Hill and his team have been met with ire by both the JREA and the Opposition People’s National Party.
Noting concerns being raised in the renewable energy industry, Opposition spokesman on investment trade and global logistics Anthony Hylton questioned why a last-minute submission by Barbados was allowed to block Jamaica’s request for CET exemption.
Moreover, he underscored, “It is the practice that a request for suspension is not denied without prior evidence resulting from an investigation by the Secretariat technical staff that the Caricom producer satisfies at least 75 per cent of the product demand in Caricom.”
In an e-mail to the Business Observer, JREA President Hill, who is the son of Minister Aubyn Hill, argued, “We know that this company cannot do what they purport to do because Barbados does not have known lithium deposits, industrial lithium processing or commercial manufacturing facilities for lithium batteries. As a point of reference, Jamaica imported approximately 11,000 lithium-ion batteries for renewable energy purposes between 2021 to 2022.”
He added: “The Jamaican delegation that attended this past COTED meeting should have vehemently rejected any suggestion by the Barbadian delegation that a single company could supply the needs of Jamaica without first reviewing the technical aspects of their product offerings, their manufacturing capability and standards. That is what the stakeholders in the renewable energy sector expect from their Government, to protect our local industry players and the Jamaican citizens who have spoken with their wallets and are purchasing lithium-based battery energy storage systems en masse. These taxpaying citizens should not bear the brunt of a 20 per cent tax because a no-name company, without a track record, or even a website, makes an erroneous claim that they can supply the needs of the Jamaican market.”
The JREA president further pointed out, “It has been reported that the Trinidadian Government has chosen not to implement the 20 per cent tax as the company in Barbados has not yet been able to substantiate their claims.”
With this is mind, he questioned why the Government has quickly implemented the CET in an “unplanned manner” and what timeline MSETT has in mind to request a revocation of the CET. This question was posed on Friday to Minister Hill.
NEXT STEPS
In his response, the minister said his portfolio ministry has alongside MSETT investigated the claim made by the Barbados company of its capacity to supply lithium-ion batteries to the region.
“A position is coming out very shortly,” he told the Business Observer, adding: “What we were arguing is that they’re not manufacturers of [lithium-ion] batteries.”
Based on COTED rules, a company’s market share can be protected with the application of a CET on similar products imported from outside the region once it can prove that it can adequately supply the Caricom Single Market. Additionally, the entity must show that it is engaged in the manufacturing of the product with most of the raw materials originating from the region.
Highlighting that he has written to the Caricom Secretariat to object to the CET, Minister Hill explained that the objection is accompanied by a request for the exemption to the tariff to be reinstated for the period January 1, 2024 to December 31, 2025. Additionally, he said that his ministry will present its findings to the Caricom Secretariat by latest next week.
Notwithstanding, the younger Hill, who is the managing director of IREE Solar, noted what he called a “condescending lack of communication” from MSETT.
“It is only exacerbated because the JREA was preemptive in requesting planning meetings with the MSETT team and, as such, the MSETT team had clear data and a plan going into this last COTED meeting to have the incentives extended. Furthermore, this decision was arrived at during the November 2023 meeting of COTED, but all stakeholders were informed of the decision by a newspaper article on the 28th December, 2023; a mere three days before the tax was to be applied. There was no proper communication with investors, project developers, importers or purchasers, and no planning period given to the industry. This cannot be the proper manner in which to conduct business in the energy sector in [2024],” he stated.
He continued: “In conclusion, it is evident that whatever regulations and rules that are currently being used to govern objections to incentives at COTED, and the application of CET to energy, efficient and renewable energy items is flawed, ineffective, and needs to be overhauled immediately. No company from any Caricom nation should be allowed to object without formally submitting specific data surrounding their ability to manufacture on scale, their product/s’ technical specifications and other pertinent business details. There must also be punitive measures applied against that single company and/or the government representing said company if their claims are untrue and fall short of their stated intent. Millions of Caricom citizens should not be expected to bear the burden of a tax during the deliberation stage of these incentive negotiations. That is unfair and illogical.”
In June 2022, after much agitation from the JREA, Jamaica’s Minister of Finance and the Public Service Dr Nigel Clarke announced the removal of both GCT and CET on lithium-ion batteries – the latter being due to an approval from COTED. However, when contacted by the Business Observer last week, he clarified that matters under COTED are handled by the Ministry of Industry, Investment and Commerce. Additionally, he outlined that once COTED has reached a decision, it is binding on all Caricom member states and so the tariff on lithium-ion batteries will have to be reinstated.
Another insider from the JREA has indicated that the Ministry of Foreign Affairs and Foreign Trade will also submit a request to COTED for the reversal of the decision to impose the tariff.