Georgetown: Guyana has been benefitting significantly as a PetroCaribe member State says Prime Minister Samuel Hinds.
Prime Minister Samuel Hinds under whose purview the energy sector falls, explained that this initiative came at a time when many Caribbean countries were having difficulties in purchasing petroleum. At that time, crude oil prices on the world market was moving up from US$30 per barrel and peaked at about $150 per barrel.
PetroCaribe, the brainchild of late Venezuelan President, Hugo Chavez, is an oil alliance of many Caribbean States with the Bolivarian Republic of Venezuela to purchase oil on conditions of preferential payment. It was launched in June 2005.
A table was established at a certain price for petroleum. The Government of Venezuela will offer a portion on credit (co-financing) and a portion that will have to be paid for in cash immediately.
Through this mechanism, a 50 percent co-financing is offered for oil sold at $80 per barrel, $100 per barrel- 60 percent co-financing, and over $150 per barrel- 70 percent of co-financing.
According to the Prime Minister, PetroCaribe was established to be a cushion; giving countries time to adjust their rates of consumption, make lifestyle changes, and move towards renewable energy sources. It also created a mechanism, whereby a fund could be established to be used for the development of the energy sector as well as other areas.
“Our total fuel bill was about $400M per year and at 50 percent co-financing, we could be developing a debt of about US $200M per year. So we took the position that for every shipment, payment has to be made available in full. The fuel company that is buying has to pay the full price to the Guyana Energy Agency, which acts as the agent to purchase and at the level of the Government, we put aside the financed portion in a special account and the Ministry of Finance issues a promissory note,” the Prime Minister outlined.
The money that accumulated in this account has been used to finance two power plants for the Guyana Power and Light (GPL) Incorporated; while some went towards the financing of the Hope Canal.
The intention behind PetroCaribe was also to promote trade amongst member countries; whereby some of the fuel cost would be met by supplying goods and services. This led to Guyana’s rice trade agreement with Venezuela.
PetroCaribe now consists of Antigua and Barbuda, The Bahamas, Belize, Cuba, Dominica, El Salvador, Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Nicaragua, the Dominican Republic, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Suriname and Venezuela.
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