While Venezuelan President Hugo Chavez has floated the possibility of amendments to the Petrocaribe agreement, an Associated Press (AP) report on Sunday quoted the Petrocaribe Secretariat as saying that there were no plans along this line.
Concerned about a fall in oil revenues, Chavez recently suggested that countries participating in the deal, which provides oil on preferential terms, pay at least 80% of the cost upfront within 90 days instead of the current 60%. On Sunday, AP reported that the Petrocaribe Secretariat had said that there were no plans being considered to require more money up front from Caribbean and Central American members. The AP report said that officials never considered changing the terms of the time of payment or the percentage to be paid in cash upfront.
Caribbean countries have since registered their concerns over the drastic effects any such amendments could result in and Caricom chairman President Bharrat Jagdeo has since said that the body will approach Venezuela and lobby for the impending changes to “altered or delayed.”
Jagdeo spoke with the Jamaican press following a meeting of a Special Prime Ministerial Task force set up by Caricom to craft appropriate strategies in response to the global economic crisis and its impact on the region , which was held in Jamaica earlier this month . Reports from the Jamaica Information Services quoted Jagdeo as saying that the impending changes in the agreement would present grave difficulties for some Caricom states. “They didn’t have to pay the full cost of the import of oil, immediately. The rest came as a loan to these countries, which they could have used for balance of payment purposes and budgetary support.
This change now will jeopardize that arrangement and, therefore, put some of our countries at a disadvantage when we most need this support,” he said. It was in this regard he revealed the intention to approach Venezuela. He pointed to particular countries in the Eastern Caribbean, specifically, which have faced enormous problems, with a downturn in several sectors and subsequent significant losses in revenue. He pinpointed Antigua which has lost 35% of its income in the past year.
“They have difficulties paying, on a monthly basis, wages and salaries in the public sector and this problem is not unique to Antigua and Barbuda. Because of the weight of Antigua and Barbuda in the Eastern Caribbean Currency Union, we have to ensure, at the task force level, that they receive all the support they can get from the bilateral and multilateral agencies,” he was quoted as saying.
Guyana imports 10,400 barrels of oil per day , 5200 of which comes from Venezuela under the Petrocaribe agreement and four or sometimes five shipments are made each month. Under this agreement, Caricom countries with the exception of Barbados and Trinidad and Tobago, are allowed to import oil from Venezuela on preferential terms. Guyana Energy Agency (GEA) chief executive officer Mahender Sharma told Stabroek News that the detail of the proposed amendments to Petrocaribe have not been finalised and that there were still discussions on the matter.
He noted too that there exists a sliding scale formula which dictates how much Guyana’s pays upfront depending on the price of fuel on the world market.
Guyana has to start repaying its loan in 2010.
Reuters has reported that Antigua prime minister Baldwin Spencer has told his country that Chavez has provided US$50M in urgent financial assistance . Reuters said in his announcement , Spencer told the Twin Island state that Chavez signed the necessary paperwork to approve the immediate transfer of the full amount of cash to the government’s account at the Eastern Caribbean Central Bank.
He said the fund would help his country to confront the effects of the global financial crisis. The terms of the assistance involve a grant element and a loan on concessionary terms which are being finalized the report said.
Jamaican reports also revealed Prime Minister Bruce Golding’s position on the proposed changes saying that they would also have adverse effects on his country. “We have already indicated to the Venezuelans that, while we understand some of the difficulties that may warrant a change in the Petrocaribe arrangement, not only our current budget, our medium term economic programme was predicated on the Petrocaribe arrangement as it now exists and, therefore, any sudden change would have a significant effect on our external and fiscal accounts,” he has been quoted as saying.
The Jamaican Information Service also said Golding believes that Venezuela and the Caribbean could reach a compromise on the issue. “To be allowing deferment for 20 years at two per cent of as much as 60% of the cost of the product, is a significant amount of generosity and, given the difficulty that Venezuela is now facing, it is not difficult to understand why they may need to make some adjustments in those arrangements,” he said. “We want to work with them. I believe we will be able to work out a resolution to this issue.”
Chavez was listed for an official one-day visit to Jamaica however this has since been postponed due to a brief illness . Beneficial elements of the Petrocaribe agreement between CARICOM and Venezuela, also include the establishment of a fund for social and economic development in the wider region for which Venezuela has made the first capital injection of US$50 million; facilitating the installation of a storage infrastructure for member states who subscribe to it; shipping being provided at cost to move petroleum within the region; and the provision of training to enhance efficiency in the use of conventional and renewable energy sources.
Barbados and Trinidad & Tobago are the only CARICOM member states that have not signed on to the Petrocaribe agreement.
