Hedging funds to get dedicated account
All of the money that is to be collected from the additional $7 per litre of specific Special Consumption Tax on fuel will not go towards hedging against high oil prices.
Of the additional $7 per litre that has been recently imposed, only $5 per litre will be used to purchase a hedge contract should future oil prices move above a certain level.
The remaining money is to go into the consolidated fund.
But Dr Peter Phillips, the country's finance minister, is pledging that the amount to be used for hedging will flow into a dedicated sub-account in the Bank of Jamaica, which will be administered by the Development Bank of Jamaica in conjunction with the Ministry of Finance.
"These resources will be made available to service the costs of implementing the initial hedge transaction, any future hedging, as well as a number of possible energy stabilisation initiatives, where the resources permit," Phillips told Parliament on Wednesday.
He said that a ministry paper outlining the relevant governance arrangements for an Energy Stabilisation Fund, including reporting and transparency arrangements will shortly be tabled in Parliament.
"We also intend to bring legislation, in the not too distant future, which will establish in a binding and transparent way the energy stabilisation purposes for which these resources may be utilised," the minister said.
"Simply put, we intend to establish a transparent binding covenant with taxpayers regarding the use of their tax dollars for the purposes for which we have asked them to contribute," Phillips added.