JIS News

On June the 29th, I signed with other Caribbean Heads the PetroCaribe Agreement with Venezuela.
Between then and last Tuesday in Montego Bay, when President Chavez and I signed the first Bilateral Agreement to trigger the benefits which will flow from PetroCaribe, you would have heard a lot. But I think it is my duty to outline to the nation, further to my statement in Parliament on July 27th, what the PetroCaribe Agreement really means.
My Administration has been constantly seeking ways to diversify the country’s energy base and to reduce the negative effects that the rising price of oil is having on the Jamaican people. This has to be the only sensible course of action, since Jamaica has no control over the price of oil which we have to buy.
Jamaica’s oil bill is expected to exceed $1,200 million US Dollars this year. This represents a 300% increase since 2001.
Under the Petrocaribe Agreement, Venezuela will continue to sell us oil at prevailing market prices, in accordance with its obligations as a Member of OPEC.
The concession we obtain, will not be in the price but in the timing of our payment. Instead of having to find the cash to pay for it all up front, a portion of the price will be converted into a long term loan.
Let me illustrate. At a price of US$60 per barrel, Jamaica will pay 60% or US$36 per barrel in cash, when the oil is delivered. The remaining 40%, or US$24 per barrel, will be converted into a loan. As a result, less foreign exchange will be required upfront to purchase the oil supplied by Venezuela.
This will apply to 21,000 barrels per day out of the total amount purchased from Venezuela. I should point out that Jamaica uses about 70,000 barrels per day of petroleum products.
The Loan under this facility will attract an interest rate of 1% over a term varying from 15 to 23 years with 2 years moratorium. The percentage of the price of oil which is convertible into a loan will vary according to the movements of the price of oil on the international market.
All professional forecasts suggest a rise, rather than a dip in oil prices. This is the reality energy deficient countries like Jamaica will have to face in the foreseeable future.
The PetroCaribe Agreement will replace the San Jose Accord and supersede the previous Caracas Energy Agreement. There are no strings attached. The grace period, the interest rate of 1%, and a repayment over 23 years, will make available to the Government of Jamaica a pool of loan funds that must be prudently invested in programmes of social upliftment, improvements in our physical infrastructure and projects for economic growth which would otherwise be stymied by the limits of our own financial resources.
Jamaica will benefit in two broad ways in the short and medium term.
One, the dramatic increase in the nation’s oil bill will be curtailed. It will also reduce the demand for foreign exchange and help to ensure stability in the foreign exchange market. This stability is critical to the effort to control inflation. As we only know too well from our past experiences, an unstable currency drives up the cost of living.
Two, the extended period that we have to pay for the oil, the 2 year grace period and the low interest rate of one percent, will allow Jamaica to allocate funds to social and economic programmes which can ease the immediate burden on Jamaicans who are most affected by the rising oil price.
It will permit us to pursue new projects to create more jobs and spur economic growth.
Our bilateral Agreement also provides for financing the expansion of the Petrojam Oil Refinery, and will attract a substantial Venezuelan equity investment.
The expansion of the refinery will mean greater economic activity in Jamaica.
The basic engineering studies should be completed in January 2006 and for construction to begin later that year. When the oil refinery is expanded, it will have the capacity to process heavier and cheaper crude oil. Then and only then can the consumer enjoy a supply of the finished products to the domestic market at somewhat lower prices.
The intent of the signatories to the PetroCaribe Agreement is to broaden the framework of regional cooperation – not to weaken our efforts in securing regional integration within CARICOM.
Given the significant and rapid increases in the price of oil, and with most of the Region still reeling from the adverse rulings of the WTO in respect of our traditional export commodities, such as bananas, sugar and rice, it is accepted by all Governments that the support we need at this time cannot be expected from the sole energy surplus Member alone.
We see the arrangements being put in place by Venezuela as complementary and not as an alternative to those which Trinidad and Tobago have been providing, particularly for the countries of the Eastern Caribbean.
We are pressing ahead with our agreement to build a LNG plant in Jamaica with Trinidad and Tobago as a joint venture partner.
As we contemplate the modernization and upgrading of our own refinery, Trinidad and Tobago is far advanced on plans to expand its PetroTrin refinery.
This opens the possibility of PetroTrin processing Venezuelan crude for shipment to the Eastern Caribbean islands – in accordance with the PetroCaribe Agreement.
We hope that ongoing discussions between the Energy Agencies of Venezuela and Trinidad could result in an early agreement to result in complementarity and that we can all enjoy harmonization of the benefits.
It remains my hope that these discussions can be completed by the time the Special Meeting of PetroCaribe Heads is convened in Montego Bay on September 6th, as we commemorate the 190th Anniversary of Simon Bolivar’s Jamaican Letter, written from Kingston in 1815 to herald a new phase in the quest for sovereignty and independence within the Americas.
Eye Surgery
It is within the context of the great Bolivarian vision, that President Chavez and President Fidel Castro have conceived a programme which could address needy persons who require eye surgery that may not be affordable or readily available locally.
Based on the offers of the two Governments, our Ministry of Health is now working with Cuban Ophthalmologists to identify persons who have been on the waiting list for eye surgery in the public health system.
These patients will start travelling to Cuba within a week for surgery at no cost to them. Those who have been waiting the longest will go first. We are starting with patients with cataracts and other selected eye conditions.
The first batch of about 20-30 persons will benefit from pre-operative assessment, eye surgery and immediate post-op care. Transportation and accommodation are covered under the facility.
They will return to Jamaica after about 5 days.
On their return to Jamaica, they will do follow-up visits at local eye clinics
The Ministry of Health will provide administrative support to ensure that the programme goes smoothly.
This eye care facility is being offered to other Caribbean and Central American countries as well.
Strengthening our bilateral relations
I am doing everything to possible to address the emerging issues that impact the most on all of us. The Petrocaribe initiative and the eye care facility must be viewed within the broader framework of public policies that are designed to achieve the vision of a prosperous Jamaica.
We must strengthen our relations with other countries to seek opportunities for mutually beneficial economic and commercial exchanges. This includes strengthening bilateral relations with countries of the South even as we maintain our historical links with the north.
I am asking all of you to cooperate with the Government as we continue to widen the field of opportunity for all Jamaicans.
I need your support and understanding to move Jamaica forward. We are in a difficult global environment but we can overcome any challenge if we work together as one people.
Please have a good evening and God bless you all.

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