CARICOM Concerned About Proposed Changes to PetroCaribe Agreement

CARICOM countries, including Jamaica, which feel endangered by proposed changes to the PetroCaribe agreement, are to approach exporter Venezuela for a compromise soon.
This was indicated by Guyana’s President, His Excellency Bharrat Jagdeo, when he addressed a special press briefing at Jamaica House, Monday (August 3). The briefing followed a meeting of the 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.
President Jagdeo, who chairs the committee, said that some of the proposed conditions would present serious challenges to these countries.
“The impending changes in the agreement will present grave difficulties for some of our member states,” he said.
“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 jeopardise that arrangement and, therefore, put some of our countries at a disadvantage when we most need this support,” he explained.
He added that, from a regional perspective, CARICOM will have to approach Venezuela, “to say that we would like the impending changes altered or delayed.”
Mr. Jagdeo pointed to particular countries in the eastern Caribbean which have faced enormous problems, with downturn in several sectors, and subsequent significant losses in revenue. He noted that Antigua has lost 35 per cent of its revenue 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 added.
Jamaica’s Prime Minister, the Hon. Bruce Golding, who also spoke at the briefing, said his Government has to stress the fact that the national budget was predicated on the PetroCaribe arrangement.
Mr. Golding said that, while he understood some of the difficulties that may warrant changes to the agreement, Jamaica’s current budget and its medium term economic programme, were predicated on the PetroCaribe agreement.
“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 said.
Mr. Golding acknowledged that the genuineness of Venezuela’s friendship towards the Caribbean was unquestionable, as the deferred payment arrangement was unmatched.
“To be allowing deferment for 20 years at 2 per cent of as much as 60 per cent 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 admitted.
“We want to work with them. I believe we will be able to work out a resolution to this issue,” the Prime Minister concluded.
The region’s concerns were triggered, mainly, by a proposal from Venezuelan President, Hugo Chavez, to amend the PetroCaribe arrangement so that beneficiaries pay all, or at least 80%, of the cash upfront and then receive direct loans from Venezuela, which would be limited to specific projects approved by Chavez’s administration.
It was expected that Mr. Golding would have been able to discuss the issue with President Chavez on Thursday, when the Venezuelan President was expected to pay an official one-day visit to Kingston. However, the visit was postponed, after Mr. Chavez sustained an injury on Sunday and was ordered to rest for eight days.
Minister of Energy, Hon. James Robertson, left the island Monday for Venezuela, at the invitation of their Minister of Energy and Petroleum, Rafael Ramirez, to hold further discussions.