Fri | Dec 2, 2022

Full Text | West Indies Petroleum defends CET waiver, calls for level playing field in fuel market

Published:Sunday | October 2, 2022 | 10:15 AM
West Indies Petroleum refuels a vessel offshore, a process known as bunkering, in this photo dated October 2020.

West Indies Petroleum Limited (WIPL) has come out in defence of a decision by the Ministry of Finance to grant the company a waiver of the Common External Tariff on fuel imports.

The company was prompted to speak out in response to questions tabled in Parliament on Wednesday by Opposition Spokesperson on Finance and Member of Parliament for Southeast St Andrew, Julian Robinson, to his counterpart Dr Nigel Clarke on the issue.

In a rebuke, WIPL says it finds the enquiry made by Robinson to be curious and misguided.

The company says it fought to receive the waiver which was granted to several other companies which also qualified for same.

WIPL is asserting that it was treated unfairly as against other players in the fuel market and is calling for a level playing field.

Full Statement

West Indies Petroleum Limited (WIPL) notes reports in the media that on Wednesday September 28 this year, the Opposition Spokesman on Finance and Member of Parliament for Southeast St. Andrew, Julian Robinson, had tabled questions in the House of Representatives seeking answers from the Minister of Finance and the Public Service, the Honourable Dr Nigel Clarke, concerning why our company had received a waiver of the Common External Tariff (CET).

Our company finds the enquiry by the Opposition Spokesman curious and misguided because we are of the view that the pertinent question is why we, for a protracted period of time, were denied the waiver when the relief was automatically granted to a range of players in the market.

The fact is despite West Indies Petroleum - a Jamaica-based company owned by Jamaicans, having qualified for the waiver, baseless and legally unsound reasons were put forward to deny our company the relief that was approved for several other companies which also qualified for same.

When the waiver was to be renewed, inexplicably, WIPL had to wait four (4) months while obstacles were placed in our way to deny us the relief which was given to several other international companies.

We are therefore compelled to ask - why is it easy for overseas companies to get every opportunity to do business in Jamaica, but it appears that obstacles are invented and placed in the way of established Jamaican-owned companies?

We are also compelled to question - why are we being victimised and forced to spend our resources to fight for a level playing field in our own country? It would be good if the Opposition Spokesman would indicate whether he believes that the CET should be reimposed for all players in the market or if WIPL should continue to be victimised and discriminated against?

The fact is, if the CET is reimposed across the board on all importers, then the price at the pumps will increase.  In addition, all players would be getting the same treatment in the industry

In the interest of full transparency, we will detail below a chronology of events which includes our appeal of the decision of the Minister of Finance and the Public Service's decision to deny WIPL the waiver.   

This was done through an appeal of the decision of the Minister relying on legal and legitimate grounds.

Chronology 

On February 1, 2021, WIPL submitted its application for suspension of the Common External in respect of Mogas 84 and 88 to the Ministry of Science, Energy and Technology (MSET).

WIPL sought an extension of the tax relief to be granted for the period January 1, 2021, to December 31, 2021.

After submission of the application, the Ministry of Industry, Investment and Commerce (MIIC) contacted WIPL and advised it to revise its application in several respects and to direct the revised application to MIIC.

On February 2, 2021, WIPL redirected its revised application to the MIIC. The revised application sought a suspension of the Common External Tariff (CET) for the period February 15, 2021 to February 14, 2022.

Subsequent to WIPL submitting its application, the MIIC requested several documents in furtherance of the approval process. WIPL complied with all the requests.

On February 2, 2021, WIPL received an email from MIIC which requested that our company complete a CARICOM (Caribbean Community) Approved Suspension Form.

WIPL complied with the request and submitted the CARICOM Approved Suspension Form. On or about April 7, 2021, WIPL was verbally informed that its request was denied by the Ministry of Finance and Public Service (MoFPS). WIPL did not understand why its application was denied given the COTED/Secretary General's Approval.

WIPL therefore requested an audience with the MIIC, MSET and MoFPS in order to be informed of the reason for the decision and press its case having regard to the Caribbean Community law.

WIPL was advised for the first time of the reasons for the decision and directed to appeal to the Minister of Finance & Public Service.

WIPL was forced to engage its legal team to make the appeal to the Ministry of Finance and its portfolio Minister.  

Submissions made by WIPL concerning its qualification for suspension of CET

WIPL noted that it has complied with the procedure required for the application for the suspension/waiver of the CET, which includes the procedure set out in Caribbean Community Law.

WIPL also challenged the reasons for the decision to deny it the waiver which were that: a. the applicant must have been a consistent customer of a regional supplier, prior to Petrotrin closing its operation; or b. the applicant is new; or c. the applicant was benefiting from a concessional arrangement in the past.

WIPL noted that the reasons proffered lack credible basis because the conditions alluded to are not consistent with Caribbean Community law and in particular Article 83(2).

WIPL also argued that the conditions cited by technocrats for denying it the waiver are ultra vires, arbitrary and discriminatory. WIPL objected to being completely excluded from obtaining a benefit which had been expressly outlined under CARICOM law and is applicable to our company.

Our attorney also pointed out that local suppliers of fuel who compete with WIPL currently enjoy the tax relief.

The criteria imposed by the Minister of Finance & Public Service therefore puts WIPL at a significant disadvantage in the fuel market. We were therefore concerned that the measures may be designed to keep WIPL out of the fuel market.

We also note several additional factors:

The CET on the relevant products was suspended by the Council for Trade and Economic Development (COTED) in 2018.

WIPL will never qualify for the suspension of CET if conditions not supported in law which were cited by the Finance Ministry are upheld.

WIPL has never been a consistent customer of a regional supplier prior to Petrotrin closing its operations.

In 2016, WIPL applied to be registered as a Petrotrin customer. It took a period of two years for the approval to be processed and granted.

WIPL was approved to buy from Petrotrin in January 2018.

It was not until March 2018 that Petrotrin sent WIPL an offer to buy gasoline and diesel.

During the period of delay, it was only reasonable for WIPL to have sourced its petroleum product from other external sources.

By November 2018, Petrotrin closed its business. Given this development, WIPL was not afforded an adequate opportunity to become a consistent customer of Petrotrin.

WIPL is not a new company and was not benefitting from a concessional agreement in the past.

On the basis of the foregoing, WIPL expressed its belief that it is just and fair that the decision to deny it the waiver be reversed.

Our legal advice is that the inexplicable decision of the Ministry of Finance is inconsistent with Caribbean Community Law.

WIPL also complied with the procedures outlined and qualified for the CET suspension/waiver, and further that it was granted approval by COTED as required via the appropriate authority.

Our attorney had also pointed out in clear terms that the decision to deny us the waiver should be revisited and that we urge that a decision be arrived at in reasonable time so that if adverse to us, we would be given time to appeal, as necessary to the Caribbean Court of Justice for relief.

WIPL insists on a level playing field

The opposition spokesman on finance should indicate whether he believes the CET waiver should be applied evenly and fairly, including to Jamaican-based and owned companies, or whether an unjust atmosphere of victimisation and discrimination should be allowed to prevail.

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