IDIOTS like us buy oil, said Chrisopher Levy president of Jamaica Broliers Group about the island's dependence on that commodity which totalled US$1.62 billion ($137 billion) in imports last year.
He wants the Government to fast-track the implementation of alternative fuel sources into the energy grid. Levy's company is a large poultry producer and ethanol manufacturer.
Cheaper energy remains the island's most "pressing issue" but his speech also warned government to avoid a tax/duty reduction proposal which he said would decimate the local agriculture industry similar to Haiti.
"No developed country in the world runs on heavy oil. They run on coal, nuclear, natural gas or some other geological advantage they have whether hydro or geothermal and so on," he said whilst addressing the 2011/12 Post Budget Forum produced by the Jamaica Chamber of Commerce, PricewaterhouseCoopers and Scotiabank Group on Friday at the Jamaica Pegasus Hotel in Kingston. "England who has oil (reserves) but burns coal because idiots like us will buy oil and not burn coal."
Global oil price hikes were imminent but the island failed to plan to mitigate its effects, he said.
"Nobody in this room — five years ago — would say that they didn't know that oil was going above US$100... and we sat down as a nation and did nothing. We spoke about it. We opined about it, but did nothing," he said.
The value of petroleum product imports in 2010 totalled US$1.62 billion, which was 18.8 per cent higher than in 2009 according to the Planning Institute of Jamaica in its annual Economic and Social Survey 2010. The highest import bill was in 2008 at US$2.7 billion when oil momentarily hit US$140 a barrel but waned with the onslaught of the global recession.
"I do not think there is a more pressing issue," he continued. "The issue we face in energy is real. It makes our businesses uncompetitive, it makes our lives uncompetitive. It is not that difficult to solve. Nations around the world have addressed this issue."
Last yesterday, Finance Minister Audley Shaw tabled a raft of tax-reform measures, including plans to effect changes to the General Consumption Tax, lower personal and corporate income tax rates, implement a new tax at the ports while lowering common external tariffs on hundreds of items, and implement a new minimum business tax. Levy said on Friday that lowering taxes on agricultural imports would kill the local industry.
"This is the destruction of the agricultural industry," he said about the 'green paper' policy proposal which seeks commentary from stakeholders prior to becoming a final 'white paper'. "Haiti had a very vibrant agriculture industry and in 1986 and 1987 they reduced duties from pressure from the World Trade Organisation to twenty per cent across the board. In two years all their agricultural industries ended," he said. "The challenge that we face as a country is that we have a responsibility to protect our industries... It is the backbone of any nation. And it should not be played with or tampered with like this."
Earlier this month, Digicel Chief Executive Officer Mark Linehan warned that continued increases in the charge for electricity could force many local companies to shut their doors in another five years.
The telecoms company boss cited the manufacturing and hotel sectors, as well as his own Digicel, as examples of businesses that are especially affected by high energy costs.
In early 2010, energy minister James Robertson announced his administration's intention to diversify the island's energy sources via the establishment of a floating regasification unit to process imported liquefied natural gas (LNG). He said then that the change would save approximately US$350 million on the country's annual oil bill. A consortium comprising local consultant company Caribbean LNG Jamaica, Belgian company Exmar and Colombian gas distribution firm, Promigas, was given the nod to implement the million-dollar project. However, in late 2010, the project was transferred to the Office of the Prime Minister from Robertson's direct portfolio. But, Robertson said he would still be involved in the project.
In January 2011, Robertson defended the findings of a leaked report on the feasibility of the much-deliberated Liquefied Natural Gas (LNG) project. The People's National Party (PNP) called the report "damning" stating that pricing and supply concerns remained.
In February 2011, the Government planned to "re-engage" the consulting services of global-based investment bankers Taylor DeJongh for the liquefied Natural Gas (LNG) project. The sole source contract valued at US$630,000 ($54.1 million) would provide "financial consulting services" according to released January posting by the Office of Contractor General. The contract was endorsed by the National Contracts Committee but awaited Cabinet approval. It followed a December contract for LNG consulting to overseas-based Ernest Megginson for a three-month period valued at US$105,000. That contract was reportedly criticised by Opposition spokesman on mining Philip Paulwell who requested full disclosure.
