Guyana is expected to be able to divert a substantial part of its US$110 million annual fuel bill to other developmental uses, as a result of its membership of the Caracas Energy Cooperation Agreement.

Before joining the agreement, Guyana was required to pay cash for its oil imports.

President Bharrat Jagdeo signed the accord on Wednesday during the just concluded conference of the Heads of Government of the Association of Caribbean States on Margarita Island, Venezuela.

He told a press briefing yesterday at the Office of the President that in addition to being able to access its oil needs on enhanced credit terms, further benefits for Guyana would be triggered when the price of oil reached US$15 a barrel. At that price, he said, signatories of the agreement become eligible for a development loan equal to five per cent of their bill, rising to 25 per cent when the price reached US$30 a barrel.

Another condition of the agreement requires that the oil not be resold to a third country. The payment conditions call for a 15-year repayment period at an interest rate of two per cent with a one-year moratorium.

When Venezuela first extended membership of the accord to member states of the Caribbean Community, Guyana was excluded as Caracas said that the nature of its engagement with Georgetown was different to its relations with the other CARICOM states.

Venezuela later revised this position extending membership to Guyana with its Foreign Minister Luis Alfonso Davila recently saying that the relationship with Guyana had gone past the stage where oil would be used as a political weapon. Several other CARICOM states have signed on to the agreement.