Jamaica receives more benefits from Petrocaribe

The additional benefits include a deferred financing arrangement of up to 70% of the price for a barrel of oil should it exceed US$150. In making the disclosure in Parliament on Tuesday (July 15), Prime Minister Bruce Golding said this will ease the demand for foreign exchange to meet the country’s oil bill, which is projeced to reach US$3 Billion this year.

Mr. Golding who was updating Parliament on the outcome of the 5th Extraordinary PetroCaribe Summit held in Maracaiblo, Venezuela last weekend, said adjustments to the deferred financing arrangement would also increase the inflows into the PetroCaribe Fund. He said as these funds represent a concessionary loan from the Government of Venezuela, they must be handled in a way that generates income for its repayment.

“These robust inflows into the Fund represent a loan from the Venezuelan Government, albeit on very concessionary terms, which become part of the national debt and will have to be repaid. It is therefore of critical importance that the management and use of the Fund be handled in such a way that it generates the income necessary to ensure that the repayments are made when they become due without resorting to the Consolidated Fund,” Mr. Golding said. He added that the Government is committed to this approach.

Jamaica is also slated to benefit from a 40% discount in the prevailing market price of urea, which is a critical ingredient used in the production of fertilizer. Mr. Golding said the cost of fertilizer had increased from $46,000 per ton in September last year, to $113,000 as of this month and that this was having a negative effect on agriculture and the country’s efforts to achieve food security. He said the discount will significantly reduce costs and that the benefits must be reflected in a reduction in the price of fertilizer. “This discount will provide a significant reduction in the cost of inputs to the local manufacturer. Venezuela’s President Hugo Chavez has insisted – an insistence which we fully endorsed – that the benefit of this significant cost reduction must be fully reflected in a reduction in the price of fertilizer to the farmers,” Mr. Golding added.

He said that in order to further reduce the cost of fertilizer, the Minister of Finance has decided to remove all customs user fees on the importation of raw material for blending fertilizers. In the meantime, Mr. Golding said the Ministers of Agriculture and Industry, Investment and Commerce are to conduct a thorough analysis of the present pricing structure for locally blended fertilizer, due to the unfavourable comparison between the price of identical blends imported from other CARICOM countries. “While the Government strongly supports local manufacturing, we cannot do so at the expense of the farmers and the need for increased food production especially at this time,” Mr. Golding said.

A third benefit for Jamaica arising from the recently concluded PetroCaribe Summit, relates to an initiative by President Hugo Chavez to establish a special fund to support PetroCaribe member countries in expanding agriculture expansion and improving food security. As part of the agreement, Venezuela will contribute US 50c for every barrel of oil exported which will amount to an estimated US$760 Million. Details of the arrangement are to be worked out at a special meeting of agriculture ministers in Honduras later this month.

In the meantime, Mr. Golding said Jamaica will make a contribution of US$5 Million to an ALBA PetroCaribe Fund set up to finance development projects in member countries, with emphasis on poverty reduction. He said the government was appreciative of the assistance being offered through the fund and that twelve projects have already been submitted. Other projects being prepared for submission include a state-of-the-art Eye Care Centre which is to be established in St. Mary. “We believe we have an obligation to make our contribution to the Fund. It is not fair to the Venezuelan Government for us to be going constantly ‘hat in hand’ without reciprocating the goodwill shown by Venezuela,” Mr. Golding concluded.