Blogs

A case for PetroCaribe

Posted by CaribShout on August 6, 2009 at 7:08pm

Caricom countries are hoping for a sympathetic ear from Venezuelan leader Hugo Chavez when they present their case for a delay or alteration to proposed changes to the PetroCaribe agreement. Under the current terms and conditions of the agreement, signatories can purchase oil on market value, with 60 per cent of the cost to be paid up front.The remainder can be paid over 25 years at one per cent interest. PetroCaribe, which was launched by Mr Chavez in 2005, also allows Caribbean countries to buy up to 185,000 barrels of oil per day. Additionally, countries can pay part of the cost with goods and services. But the Venezuelan government is now considering increasing the amount to be paid up front - from 60 to 80 per cent. Caribbean Community (Caricom) member states, already grappling with a fallout from the global financial crisis, fear they will not be able take advantage of the Hugo Chavez initiative if the existing programme is amended. Grave difficulties Caricom leaders who sit on a special task force to look at the financial crisis met in Jamaica earlier this week. After this meeting, Guyana's President Bharrat Jagdeo said the impending changes will present grave difficulties for member 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. Bharrat Jagdeo

Jagdeo: the changes will "jeopardise" the arrangement "This change now will jeopardise that arrangement and therefore, put some of our countries at a disadvantage when we most need this support," Mr Jagdeo said. Jamaica's Energy Minister James Robertson has been meeting with his counterpart in Caracas Rafael Ramirez in a bid to secure a deferred-payment oil agreement with that country. Jamaican Prime Minister Bruce Golding said he expects a sympathetic response from President Chavez to a Caricom request to alter or delay the PetroCaribe amendments. "I don't think anybody can question the genuineness of Venezuela's friendship towards the Caribbean, as manifested in the PetroCaribe arrangement," Mr Golding said. Not only our current budget, our medium term economic programme was predicated on the PetroCaribe arrangement as it now exists Bruce Golding, Jamaican Prime Minister, "We want to work with them because I think that they will also be sympathetic to the difficulties that countries like Jamaica and other PetroCaribe members would have." Economies hard hit Caribbean economies have been hard hit by the financial downturn, with many recording a significant drop in tourism revenue and remittances. Caricom is the trade and economic grouping pulling together 15 Caribbean countries, including the English-speaking independent territories, Haiti and Suriname. President Jagdeo, who is also the current Caricom chairman, pointed to Antigua which he said has lost 35 per cent of its revenue. "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," Mr Jagdeo said. Venezuela depends on revenue from oil exports to finance half the government's budget. But the fall in global fuel prices has threatened the government's high spending social programmes that made President Chavez popular with the poor majority. In March of this year, President Chavez announced spending cuts and revised the reference price for oil (from the $60-a-barrel forecast to $40) to balance his country's budget. Although he vowed to raise the minimum wage while cutting official spending on luxuries, one opposition leader called the Venezuelan reform package a "smokescreen" designed to hide deeper problems in the country's oil-dependent economy. Changes warranted Bruce Golding

Mr Golding says Jamaica's budget was based on PetroCaribe The Jamaican leader, meanwhile, said while he understood some of the difficulties that may warrant changes to the agreement, his country's current budget were based on the PetroCaribe agreement. "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," Mr Golding said. In June, the Kittitian leader, Denzil Douglas, defended the proposed increased charges. Dr Douglas said that, while President Chavez remained committed to supplying the region's energy needs, Venezuela has no control over the oil market. "It is really a sliding scale arrangement that we have agreed to. "It is not that they are demanding 80 per cent but it is what the sliding scale arrangement has been, based on the price of fuel on the world market," Dr Douglas said. Thirteen of the 15 Caricom members, and Cuba and the Dominican Republic have signed up to PetroCaribe.

Community

Culture

Entertainment

Food

Health