100 containers of geothermal drilling equipment to arrive by April
In anticipation of 100 containers filled with geothermal drilling apparatus, lawmakers have approved amendments to the Value Added Tax (VAT) Act.
The amendment to the Act went through all its stages in Parliament on Monday, with the purpose of adding one item to the list of zero rated products and services.
Finance minister, Camillo Gonsalves said that the act was to zero rate “a supply of drilling services for the exploration of geothermal energy sources”.
“The bill is timely at this point because the drill rig is on the way. We anticipate the drill rig, the arrival of the rig on the 8th of April from New Zealand and that shipment will contain some 90 containers and the second ship, from I believe Guadeloupe, it might be Martinique, from the French Caribbean territories, will be arriving on the fourth of April and that will have just 10 containers. And those 100 containers Mr Speaker, make up the drill rig assembly that will be transported to the site near Soufriere,” Gonsalves said.
The finance minister said that the rig will take two weeks to set up and drilling is set to begin no later than May 15 and is anticipated to conclude by the end of the year.
He added that the contract is being executed by Iceland Drilling Company, a company with extensive experience in geothermal exploration and production, to the tune of US$21 million.
“On a 21 million US contract, one can anticipate that the value if it were not zero rated, will not be an insignificant amount of money and we are hoping that in doing this, we facilitate the production affordably…” Gonsalves said. “Given the immediacy of the arrival of this equipment and the actual execution of this US$21 million contract with the Iceland Drilling Company, it is important that we carry forward this particular piece of legislation, this particular amendment to the VAT act in a timely manner.”
St Clair ‘Major’ Leacock, the parliamentary representative for Central Kingstown said in his contribution to the debate, that his side of the House did not object to the amendment.
He said that the provision could be seen as a contribution to the issue of Climate change with respect to reducing this country’s fossil fuel consumption.
“We on this side are comfortable lending support to the legislation, with the understanding, Mr Minister of Finance, that ultimately, the government is going to be aggressive in its pursuit of sending the cost of energy down for the man on the street,” Leacock said.
The parliamentary representative noted that the geothermal project was a significantly large one being undertaken in St Vincent and he made several statements to highlight some concerns that he may have about the project.
He made the point that St Vincent Electricity Services Limited (VINLEC) was “our biggest energy provider in St Vincent and the Grenadines” but did not currently own any shares in the large and significant project.
Leacock also continued to stress the importance of lowering electricity costs for the public, once geothermal energy comes on stream.
Opposition leader, Dr Godwin Friday also contributed to the debate, alluding to questions that he posed to the prime minister in the questions segment earlier in Parliament on the geothermal project.
Like Leacock, he said that the Opposition would not give resistance in relation to the project.
“We would like to see it succeed as well and this is why we lend our support to the bill here and we hope that at some point, it will result in lowering the cost of…the overall establishment of the project and cost to consumer ultimately, both domestic and commercial, industrial,” Friday said.
The opposition leader also said that he understands the importance of having clean and cheaper energy and the impact it will have not only environmentally, but also on the ability to produce goods and services at competitive prices.
And he urged government to be more forthcoming as it relates to details of the project.
“There will be more questions in this Honourable House regarding this project because it’s a major project and it’s not just major in respect of the cost of it, it’s the implications that holds for the economy,” Friday said. “The contemplation seems to be that this will replace to a great extent, not just in a marginal way, but to a great extent, the importation of diesel fuel, reducing our foreign exchange to purchase fuel…but over time it should reduce cost to consumer because no longer will fuel surcharge be a factor in the cost of energy.”
Prime Minister Dr Ralph Gonsalves also contributed to Monday’s debate, making reference to this country’s renewable energy mix of solar and hydro capacities.
He said that no country in the region has yet delivered on geothermal energy, despite the fact that Dominica started their project almost 16 years ago.
The prime minister also addressed other areas relating to energy in St Vincent and said that with several hotels coming on stream to provide collectively 1000 rooms, there will an increase in the demand for electricity.
“I think what is important is that we must all realise the centrality of reliable energy and cheaper energy and we have cleaner energy. We are going there, we are on the way to build a modern, competitive, many sided, post colonial economy which is at once regional, national and global because that is where we have to go…” Gonsalves said.