Guyana to get 50% petrol needs from Venezuela on concessionary terms
By Miranda La Rose
Stabroek News
January 27, 2007
Guyana would be obtaining half of its petroleum needs or 5,200 barrels per day (bpd) from Venezuela at a concessionary rate under the Petrocaribe agreement from May 1, 2007, Prime Minister Sam Hinds says.
The Prime Minister told Stabroek News that this follows the signing of a contract on Tuesday for the supply of fuel to Guyana by Guyana Energy Agency Chief Executive Officer, Joseph O'Lall and the state-owned PDVSA (Petróleos de Venezuela) marketing and supply manager Asdrúbal Chávez.
The PDVSA marketing and supply manager was quoted in El Universal as saying that, "We are making headway in the Petrocaribe initiative, which will give the 16 signatory nations the access to energy sources at reasonable prices and upon special payment conditions. Therefore, the governments will be able to redefine their expenditure schedule, reinforce social actions and bring increasing well-being to their people."
Hinds said that the other half of Guyana's needs would be supplied by Trinidad and Tobago, which has supplied Guyana's needs on a continuous basis since 2002. Guyana uses just over 10,000 bpd.
PDVSA would supply the petroleum products through the subsidiary PDV Caribe, which was created to facilitate the agreement with Guyana.
The concessionary rate at which Guyana would receive the supplies, Hinds said, was credit financing to the tune of 40% of the bill.
"The prices are, as set out, in the OPEC (Oil Producing Exporting Countries) agreement. There is no price concession but there is a concession on part financing, which is 40% of the financing at this time," he explained.
Hinds said that this mechanism would provide balance of payment support to Guyana and other Caribbean countries that have signed on to the Petrocaribe agreement to give them time to adjust to increased prices for petroleum products.
Asked what Guyana would be giving Venezuela in return, Hinds said, "We don't have to give Venezuela anything in return." There was an option regarding trade in sugar that could have been exercised separately, he said, but there was no other thing involved in the Guyana agreement.
Guyana, he said, would pay the 60% that has to be paid in cash and the Ministry of Finance would issue promissory notes to make payments in the future according to the terms of the agreement.
It is expected, he said, that once the agreement was implemented the country would face less pressure to find foreign exchange but at some time in the future Guyana would have to find the foreign exchange to pay off the debts.
Hinds explained that at present, Guyana has to find all of the finances to pay for all of the petroleum products it buys. Before 1984 Guyana bought most of its petroleum products from Trinidad and Tobago. From 1984 to May 2002 most were purchased from Venezuela under the San Jose Accord. That accord also gave Guyana the opportunity to borrow money under the Venezuelan Investment Fund for the development of the housing sector in Guyana. After the PDVSA strike in 2002, Guyana bought all of its supplies from Trinidad and Tobago.
Under the Petrocaribe agreement which was agreed to between a number of Caribbean countries, including Guyana, and Venezuela in July 2005 in Jamaica, the general agreement included the establishment of a fund for social and economic development in the wider region for which Venezuela made the first capital injection of US$50 million; facilitating the installation of storage infrastructure for member states who subscribe to it; shipping being provided at cost to move petroleum within the region; and the provision of training to enhance efficiency in the use of conventional and renewable energy sources.