Arawak must bring energy costs down to compete

Two months after losing a court battle in a protracted tariff war against its competitor Rock Hard Cement Limited, the Arawak Cement Company Limited has a new fight on its hand.

This time, the company is tasked with coming up with ways to considerably slash its operating costs, a move that Prime Minister Mia Mottley said was necessary if the Trinidad Cement Ltd (TCL) subsidiary was to better compete.

Mottley, who was addressing a packed Barbados Sustainable Energy Conference on Wednesday at the Hilton Resort, disclosed that her administration was in discussions with the St Lucy cement plant “because we truly believe that the cost of energy for that plant needs to be brought down”.

In August the TCL group had indicated that it disagreed with a ruling by the Caribbean Court of Justice on the rate to be charged on cement imported from outside the region.

The CCJ had ruled that the regional tax payable on “other hydraulic cement’, imported by Rock Hard Cement from Portugal and Turkey, should be five percent.

“It is better for us to protect the entire production of the plant by ensuring that it has the lowest cost of energy rather than seeking to protect domestic production alone through higher tariffs. The bottom line is, the higher tariffs ultimately will negatively affect the cost of construction,” said Mottley, though making no mention of the court ruling.

“Therefore, if we can transition into lower tariffs but lower energy costs that will fuel greater competition for them, not just at the level of domestic production but of the significant exports that Arawak plant has now to the rest of the region that we need them to continue.

“But that means us having a far more strategic approach to how we segment our garbage and where it goes. Fanciful notions of Cahill have to remain where the Jetsons ought to have remained – as part of fantasy. What we need are practical solutions that allow us to secure the future and the competitiveness of a cement sector that would otherwise really not be competitive,” said Mottley.

But the cement plant is not the only operation that will be required to make the switch. Mottley said every industry was being targeted as she said hoteliers and the wider private sector would have to make some serious decisions about employing renewable forms of energy.

She said the island’s aim of becoming 100 per cent dependent on renewable energy by 2030 “would not happen by serendipity”, adding that the cost of transition for the entire country over the next decade was estimated to cost in the region of $7 billion.

“We expect it to be in excess of 70 per cent of GDP (gross domestic product), not just for Government but the entire investment required across the country,” she said.

Adding that the time had come to translate policy into action and resilience, Mottley insisted: “In addition to asking our population to join us in this battle, we have to ask our companies as well to play their part.

“I am very clear that the tourism sector has to sit with us and agree on a timeline for the changing into renewable energy for every major hotel in this country. I am very clear that we are going to require the same thing from the members of the Chamber of Commerce with respect to the powering of the distributive trade and other aspects of the private sector operations in Barbados,” she said.

Equally, Mottley has signalled her intention to preserve the dwindling sugar cane industry.

“Our sugarcane industry truly needs to have a 12-month functioning power plant in order for the industry to be kept alive in this country, and ecologically, to preserve the rural society, we need to ensure that that happens,” she said.

Inter-American Development Bank Country Representative for Barbados Juan Carlos De La Hoz Viñas pledged that institution’s continued support for the transition to renewable energy.

Pointing to the relationship between the bank and Bridgetown, which goes back some five decades, the IDB representative said the financial institution had “mobilized more than US$200 million” that had helped Barbados to become a little less reliant on fossil fuel.

“Currently, we are in the process of implementing, with the ministry, two investment loans promoting renewable energy and the retrofitting of public buildings that will bring cost reductions to Government’s electricity bill,” he said.

“But we recognize that working with the public sector is not enough. That is the reason why we promoted also an investment loan that mobilized more than US$10 million to finance small and medium-sized enterprises in their investment to do energy efficient applications and invest in their capacity for renewable energy generation,” he added.