(Jamaica Gleaner) It appears that there is a major problem at the Petroleum Corporation of Jamaica (Petrojam).
Well-placed Government sources said Venezuela is now tightening its exports to Jamaica under the Petro-Caribe agreement.
As a result, Petrojam is reportedly being forced to buy oil at a on the spot market to fill the shortfall putting pressure on its cash flow.
Only last week, there was a notation in the revised public bodies Budget presented to Parliament indicating that during the first quarter of 2011/2012, Petrojam experienced changes that impacted its operations.
The notation continued that since May, Venezuela has been strictly enforcing the quota system whereby only two shipments of crude were being allowed under the PetroCaribe Agreement.
The revelation is in stark contrast to an earlier position advanced by Petrojam’s managing director Winston Watson.
In August, Watson told The Gleaner that it was only in 2009 that Jamaica was receiving slightly more than its quota.
Under the PetroCaribe arrangement, Jamaica pays only 60 per cent of the cost of the oil from Venezuela.
The remainder is set aside as a loan which is payable over 20 years at an interest rate of one per cent.
Meanwhile, Opposition Spokesman on energy, Phillip Paulwell, said the development at Petrojam is worrying.
In 2009, Prime Minister Bruce Golding said that a shift in the PetroCaribe agreement could significantly impact Jamaica’s fiscal accounts.
At that time, Jamaica was receiving three shipments of crude from Venezuela per week, a situation which has now changed with the country now receiving only two shipments under the PetroCarib agreement.
Paulwell said this development will significantly cut into Petrojam’s profits because crude from other sources will be more expensive.