Economic con job
Published:Sunday | April 13, 2014 | 12:00 AM
Samuda not convinced about logistics hub, but Government upbeat
INDUSTRY MINISTER Anthony Hylton says the establishment of enterprise zones, as part of the proposed logistics hub, will be dependent on the ability of investors to generate their own power.
"The global investor interest in this project and the logistics hub is significant. They are simply asking us to ensure that we have a settled framework of incentives and energy issued settled so that they have a clear pathway to invest on the project," Hylton told the Standing Finance Committee of the House of Representatives last week.
The Government is proposing to spend $86.9 million on the global logistics hub this year. The money is to go towards positioning Jamaica in the global supply and logistics chain. The programme involves enhancements of existing infrastructure at the Port of Kingston and the international airports, as well as the development of new projects such as commodity ports, cargo airports, dry docks, bulk storage facilities and special enterprise zones.
Hylton, responding to questions posed, by Audley Shaw, the opposition spokesman on finance, said potential investors in the economic zone want access to low-cost energy at high volume.
"The issue arises, for example, when these special economic zones are created, the investors are willing in principle to create their energy for these spaces. The question is what implications, if any, are there for the existing arrangements in regulatory terms and specific impact on the licence," Hylton said.
He argued that those energy-related issues will have to be settled shortly, as investors are not prepared to put their money into projects and be forced to purchase energy at the current price of US$0.42KwH.
Karl Samuda, the opposition spokesman on industry, has described the Government approach to positioning Jamaica as a logistics hub as the "single greatest economic con that has taken place over the last two years".
APPREHENSIVE APPROACH
According to Samuda, the Government has not been sure-footed in the way it has approach the programme, and has been relying on public relations to give the impression that work is being done in the area.
Meanwhile, Hylton said the Portia Simpson Miller-led administration abandoned a proposal which was left by the previous government for the establishment of the Caymanas Zone because it would have resulted in significant debt overhang.
"What we found in the Caymanas Zone is not something that could go forward, because, among the other things, was the idea of a bond for $1 billion, a debt, as the seed basis for the Caymanas basis, as conceived then, to proceed. That is not the basis on which we want to proceed. We do not want to approach it on the basis of a debt-financed project. Not least, the IMF (International Monetary Fund) has said there can be neither contingent liabilities nor deferred financing," said Hylton.
"Therefore, a concept was taken to the Cabinet to discuss the particular business plan and the methodology for implementation. Based on the fiscal concerns that the Ministry of Finance has, there are energy concerns as well, and there are issues of the incentives regime; these are all critical issues requiring us to design and implement the project in the most careful way manner," added Hylton.