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Paulwell braces for battle - CARICOM states block Jamaica's bid to remove CET from solar water heaters imported from outside the region

Published:Sunday | May 17, 2015 | 12:00 AMRyon Jones
A housing development with solar water heaters on each unit.

Jamaicans are paying more for solar water heaters than they need to because CARICOM member states Barbados and St Lucia have repeatedly blocked efforts by the Government to remove the common external tariff (CET) imposed on those items imported from outside the region.

The duty on the water heaters imported from outside the region is now 20 per cent, up from five per cent last year, driving up the price of the units locally.

But with the Simpson Miller administration encouraging Jamaicans to cut their carbon footprint by offsetting the use of gas with solar systems, Energy Minister Phillip Paulwell is adamant that this should be changed.

Paulwell notes that under the CARICOM Single Market and Economy, Jamaica has to apply the duty to solar water heaters from non-member countries as a member country can supply these items.

"Jamaica has consistently taken applications to COTED (Council of Trade and Economic Development) for the removal of CET on solar water heaters, and every time we submit for that, it is blocked by both Barbados and St Luca, which are claiming that they have producers in the region that supply solar water heaters," Paulwell told The Sunday Gleaner.

"It is a serious issue we have been having because Jamaica has been pushing for it and they haven't relented. We have done so on at least three occasions before and we have not been successful," added Paulwell.

He said the Government would not give up and is in the process of applying once more for the tariff to be removed, having compiled data to show that Barbados and St Lucia cannot supply the Jamaican market.

"It is, in fact, causing increased costs to us because most of the water heaters coming into the region are extra-regional, which bears the CET, but they are actually coming in cheaper with the CET than what we are able to get them for in the region," said Paulwell.

"So we are going to be making another attempt to have the CET removed as it has really been blocked at the CARICOM level. If we didn't have that burden (CET), solar water heaters would be much cheaper."

Checks by The Sunday Gleaner have confirmed that the duty is preventing some Jamaicans from installing solar water heaters.

"The 25-gallon (water heater) was being sold for $75,000 inclusive of installation, so that was very attractive, and we saw a lot of sales for that last year. But now, the 25-gallon is for $82,500, and persons are saying they won't buy that small size for that price," said Kadian Brown, sales and procurement manager at energy solutions company Enersave.

"It definitely has been affecting the business because the fact that we had to increase our price caused persons to not be able to afford it as (much as) they could have last year, so we see our sales reduced," added Brown.

Managing director of Jamaican Teas John Mahfood, who has bought 29 solar water heaters for business developments in St Thomas, deems the duty "crazy".

According to Mahfood, it is madness that at a time when the Government is trying to make Jamaica less dependent on oil, the duty has been increased on solar water heaters.