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Feb 5, 2015

A look at the Petrocaribe agreement

The debt crisis that is gripping Venezuela is casting shadows on the future of the Petrocaribe agreement with Belize. While there is no clear indication that the program that extends to a number of Caribbean countries, is about to be completely discontinued, there are now significant cutbacks. Still yet, the last figure rolled out is two hundred and forty million dollars in the form of a loan which the government finally took to the House for approval in November of last year.  News Five’s Isani Cayetano reports.


Isani Cayetano, Reporting

The final shipment of premium fuel from Venezuela arrived in Belize a week and a half ago by way of Curacao.  That consignment of nine thousand barrels of gasoline, and other petroleum derivatives, landed around the time of an announcement that the delivery of fuel from that source had been put on hold indefinitely.  The suspension, the result of anxiety that plummeting oil prices could further weaken an already debilitated Venezuelan economy, sees Puma Energy in Belize sourcing an alternative to Petrocaribe.  The oil alliance with several Caribbean countries, including Belize, is a trade program established under former President Hugo Chavez.  The initiative, has kept the region reliant on the South American country for energy.

Last Monday, Minister of Energy, Science and Technology and Public Utilities, Joy Grant attended a Caribbean Energy Security Summit hosted by U.S. Vice President Joe Biden in Washington.  In the wake of oil prices sinking below fifty dollars per barrel, an atmosphere of importance shrouded the conference in view of Venezuela’s progressively worsening situation.  The objective of the summit, nonetheless, was to explore the possibilities of helping Caribbean countries to transition from premium fuels to natural gases and other forms of renewable energy.  The meeting saw Minister Grant outlining Belize’s efforts and experiences in promoting renewable energy, as well as energy efficiency.

In lieu of Petrocaribe however, Puma Energy is now forced to purchase fuel elsewhere with standard commercial provisions that will not necessarily affect consumers, since the initial procurement was at world market prices.  The downside is that government will not be able to enjoy proceeds through the existing financial arrangements.  The payment system allows for purchase of oil at market value for five to fifty percent in advance with an extension of one to two years; the balance being defrayed through a seventeen to twenty-five year financing plan at one percent interest, should oil prices exceed forty U.S. dollars per barrel.

In 2013, the Bolivarian Alliance for the Americas, ALBA, along with Petrocaribe, agreed to go beyond the sale of oil and instead promote economic cooperation.  Mid-November 2014 saw the domestic passage of a loan motion for roughly two hundred and forty million dollars.  The program has seen major infrastructure developments in Belize, Prime Minister Barrow subsequently coining the expression, “Let the Petrocaribe dollars roll!”  The flipside, nevertheless, is that Petrocaribe has also increased debt obligation, Jamaica owing an additional three billion dollars in arrears.  Despite Venezuela’s economic challenges, there is no indication that Petrocaribe will come to an end, President Nicolas Maduro lauding it as, quote, a guarantee of peace, stability, mutual benefit, shared development and fair commerce shared by the entire Caribbean, unquote.  With the shipment of oil suspended and government presently unable to imbibe freely from that financial spigot, the question now is whether enough has been saved for rainy days.

Reporting for News Five I am Isani Cayetano.


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