Paulwell confident about PetroCaribe deal

Monique Grange, Assistant News Editor
The Gleaner/Power 106 News Centre

Energy Minister Phillip Paulwell says he is confident that Jamaica’s arrangement with the Venezuelan government for the purchase of oil will continue, despite the death of Hugo Chavez.

The Venezuelan President died yesterday.

However, Paulwell believes the next President of the Latin American country will fully embrace the terms of the agreement, in light of the strong commitment that Chavez displayed towards the PetroCaribe deal.

He says the future of the PetroCaribe deal is expected to be discussed at the PetroCaribe Summit, to be held in Caracas later this month.



The energy minister says the terms of the arrangement are also expected to be cemented during the summit.

While noting that a discontinuation of the PetroCaribe deal would be disastrous, Paulwell has not indicated whether any alternative is being considered at this time.

In the interim, he says the Government remains committed to diversifying the country’s energy sources.

Paulwell says he will speak more on the government’s plans for fuel diversification by the end of March.

Meanwhile, Head of the Management Studies Department at the University of the West Indies, Dr. Denzil Williams is expressing disappointment that the savings from the PetroCaribe agreement has not been used to get investment into other areas of the energy value chain.

Under the PetroCaribe agreement, Venezuela allows Jamaica and 17 other Caribbean countries to purchase oil by paying only a certain percentage of the money upfront.

The remaining percentage is paid over time under a special financing agreement.

Dr. Williams says the Jamaican Government should have garnered the view of Venezuela’s opposition party on the PetroCaribe deal while it was negotiating with Chavez.

He is now calling for the Ministry of Foreign Affairs to outline its next move regarding bilateral relations with Venezuela.

Dr. Williams says if the PetroCaribe agreement is not renewed, the effect will be dire on the country's balance of payments and could also result in further devaluation of the Jamaican dollar.

Former financial secretary, Dr Wesley Hughes, who is now the Chief Executive Officer of the PetroCaribe Fund, has estimated that the discontinuation of the PetroCaribe arrangement could result in a US$600 million per year impact on the country’s balance of payments.

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