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#477776 - 11/19/13 03:52 AM PetroCaribe energy programme may be in trouble
Marty Offline
Following Guatemala’s announcement in early November that it was pulling out of Venezuela's PetroCaribe alliance, the Hugo Chavez-era oil-for-regional-influence program could be on its last legs, the Christian Science Monitor (CSM) reports.

Although the Venezuelan government has promised to keep PetroCaribe intact, it has nevertheless quietly cut oil shipments, and may push up interest rates and modify repayment terms. Any such changes could have deep and lasting impacts on small countries accustomed to propping up their economies with the shipments, CSM said.

“The Venezuelan PetroCaribe Initiative provided a partial and temporary solution for [regional energy needs] but this solution is unlikely to be sustainable,” Trinidad and Tobago’s acting minister of energy and energy affairs, Bhoendradatt Tewarie, told leaders last week at the Caribbean Community Energy Week in Port of Spain.

Guatemala’s Vice President Roxana Baldetti said her country backed out of the pact because the terms of the deal had changed.

Under most contracts, countries pay 40 percent of a bill in the first 90 days and finance the rest at a 1 percent interest rate over 25 years. (Countries are required to pay more of the bill up front if the price of oil slips to $80 per barrel or below). But Guatemala was offered a repayment interest rate of between 2 percent and 4 percent with more of the bill paid up front, Baldetti said.

Guatemala is not the only country to see unexpected changes to its deal with Venezuela. The Dominican Republic, one of the leading recipients of petroleum shipments under PetroCaribe, is receiving about half of the 50,000 barrels per day it was promised, according to government advisers familiar with the contract.

“It’s not the only country that is not receiving its quota,” an unidentified person who has seen PetroCaribe contracts for various governments told CSM. “What’s frightening for them is that the deals are structured so that the terms of repayment can change with 30 days advance written notice.”

A significant portion of Venezuela’s oil is promised to countries such as India and China, where it's sending 640,000 barrels per day, half of which is sent to repay $40 billion in loans. Sending oil to those countries is more financially beneficial to Venezuela than shipments closer to home, where countries are repaying their debts in-kind with products like black beans and chicken parts.

According to CSM, China and Venezuela are soon expected to begin negotiating the renewal of a $20 billion credit line that would further oblige the South American country to send its oil to Asia.

Despite economic problems at home, Venezuela has sent 232 million barrels of oil to PetroCaribe nations on preferential terms, providing some 40 percent of the energy needs of its 14 Caribbean partners.

The threat of any change to the PetroCaribe repayment terms is especially frightening for small islands that are heavily reliant on Venezuelan oil. Without PetroCaribe shipments, they will be forced to turn to the open market, where they will pay the going rate without the long-term financing option.

“What’s most intriguing is recognizing that the architect of the deal and the individual who had power to comfort these countries is no longer there,” said Caribbean News Now contributor Anton Edmunds, a consultant who advises corporations and Caribbean governments on energy policy.

“Since the passing of Hugo Chávez, the whole climate and arrangement with Venezuela is no longer certain,” he said.

Caribbean News Now

#477803 - 11/19/13 06:11 AM Re: PetroCaribe energy programme may be in trouble [Re: Marty]
Katie Valk Offline
This will have a huge impact on us
Belize based travel specialist

#477865 - 11/20/13 05:43 AM Re: PetroCaribe energy programme may be in trouble [Re: Marty]
Diane Campbell Offline
Last spring the government of Venezuela devalued the local currency (the Bolivar Fuerte) from 4 BF = $1 US - to 6.5 BF = $1 US.
At the same time the BF was trading at 22 BF to $1 US in the "parallel" market (AKA black market).
Today the official rate is still 6.5. The parallel market is presently 60 Bf to $1 US.

The officials in Venezuela admit to an annual inflation rate of 54% for 2013.
Unfortunately the "real" inflation rate is reflected in the parallel market rate which is well into triple digits.

This is more than a bubble. It's a volcano. Unfortunate to see this mess in any country, much less one with such abundant resources, such lovely people and such stunning natural beauty. As a major oil producer the fate of Venezuela is of concern to us all.

#478148 - 11/23/13 05:07 AM Re: PetroCaribe energy programme may be in trouble [Re: Marty]
Marty Offline

Belize may be able to barter rice, sugar and tourism services to pay for oil

Reports are surfacing again in the international press of uncertainty over the PetroCaribe initiative, through which Belize receives fuel from Venezuela under a concessionary finance arrangement which permits the country to defer payments and to use those funds to instead finance projects for socio-economic advancement.

With an initial $20 million from the proceeds of the Venezuela-financed PetroCaribe Fund, Belize launched the National Bank of Belize—which plans to offer mortgage financing at a concessionary rate of 5.5% for a maximum of $100,000—on September 2, 2013. This has been the signal output from Venezuela’s pact with Belize.

Whereas a Belize official told us that the deal has yielded substantial benefit for Belize, there is an indication that other countries may not be as happy.

Earlier this month, it was reported that Guatemala had decided to pull out of the alliance. Then the Inter-American Development Bank (IDB) reportedly issued a word of caution, saying in the Caribbean Region Quarterly Bulletin, Volume 2, Issue 4, that, “A possible new direction in PetroCaribe’s future could also impact the Eastern Caribbean. St. Lucia has recently begun to receive shipments of fuel from Venezuela under PetroCaribe, amid announcements by President Maduro that the interest rates on deferred payments would double to 2 percent.”

Indications are that other PetroCaribe members allege that they are not receiving the agreed quota of fuel, forcing them to buy fuel on the open market.

In the case of Belize, Venezuela has been supplying the country with the quota of 4,000 barrels a day and since September 2012, all diesel, gasoline and kerosene comes under the PetroCaribe initiative, John Mencias, the local coordinator for the program, told Amandala today. Mencias said that only aviation fuel is sourced elsewhere.

Belize and Venezuela administer the PetroCaribe arrangement via a joint venture called ALBA PetroCaribe Belize Energy Limited.

Mencias said that currently, Belize has to pay 40% of the fuel bill upfront, within 90 days, but the remaining 60% of the cost is to be paid over a period of 25 years. There is a 2-year grace period, so Belize has 23 years to repay Venezuela at 1% interest per annum.

Despite reports of regional concerns and uncertainty over the PetroCaribe deal, Mencias said that it has been working well for Belize. He went further to say that the parties intend to expand the agreement to put into effect the PetroCaribe Economic Zone, which would mean that rather than paying Venezuela hard currency, Belize could barter goods such as rice and sugar (unrefined and refined), and services such as tourism and the teaching of English.

Mencias told Amandala that Venezuela’s arrangement with Belize remains intact, and there has been no formal indication to Belize that any of the key terms of the arrangement, such as the interest rate and repayment terms, will change.

He said that the Government of Belize is making sure it has a plan for how the PetroCaribe Fund will be allocated in the different sectors of the economy, and he went on to add that even if the interest rate increases to 2%, it would still be sustainable and that still does not mean the Belize Government would pull out.

According to Mencias, as the arrangement with Venezuela now stands, it is beneficial almost unilaterally to Belize.


#478560 - 11/27/13 03:53 PM Re: PetroCaribe energy programme may be in trouble [Re: Marty]
SFJeff Offline
Who do you think is a bigger priority to Venezuela, Belize or China? Uh, yeah... at least if they hike up the interest rate or pull the plug they have to give us 30 days notice...

#478591 - 11/28/13 04:38 AM Re: PetroCaribe energy programme may be in trouble [Re: Marty]
Katie Valk Offline
Getting a bunch of $ from PC for road rapairs and infrastructure
Belize based travel specialist

#478737 - 11/30/13 04:48 AM Re: PetroCaribe energy programme may be in trouble [Re: Marty]
Marty Offline

Prime Minister Barrow Allays Fears on Petro-Caribe

In the context of addressing plans for improved infrastructure, the Prime Minister mentioned the Petro-Caribe initiative in which Belize saves millions in interest from concessionary loans by Venezuela which can only be used for capital projects.  Some have called for the money to be used for other purposes and the Prime Minister maintained that’s not how it’s done.

Prime Minister Dean Barrow

“This Petro-Caribe fund is under the agreement of Belize and Venezuela only available for use in capital projects.  I tried to say it in the National Assembly in the context of the ask on the part of the teachers and public officers for salary increases that we cannot use Petro-Caribe monies to fund/recurrent expenditures to fund salary increases.  Conceptually, you don’t use borrowed money; this is borrowed money to pay salary, but in addition to that conceptual constraint, contractually or in consequence of the international agreement, that is not on; (We would be in breach of the terms and conditions if we attempted to do that)”.

Likewise, the Prime Minister addressed on assumptions or fears that the Venezuelan benefits may dry up soon.

Prime Minister Dean Barrow:  “The concern that some people have that Petro-Caribe will come to an end, we have no indication of that.  While the Venezuelans looking at the program a sort of informal classification of countries, puts Belize right in the top tear in the terms of the lending country’s satisfaction with the way Petro-Caribe funds are being administered.  So, we are not going to derail a program that represents a sort of gift that keeps on giving when it is maintained in place and is going to continue to be maintained in place, not forever, but for the indefinite future to some extent in consequence of the excellent stewardship of those funds by this administration”.


#486456 - 02/21/14 03:55 AM Re: PetroCaribe energy programme may be in trouble [Re: Marty]
Marty Offline

Venezuela’s Troubles Could Be Belizean Trouble

The Barrow Administration has come under heavy and sustained criticism for corruption in the ranks of its ministers, but no one can argue that right now the Government is spending major money on infrastructure. And most of that is coming from the Venezuelan fund. Through the Petrocaribe initiative, governments all across the Caribbean buy fuel on credit from Venezuela, paying half, and taking the other half as a long term, low-interest loan. Presently, no official figure has been published, but conservative estimates say that the government of Belize has more than 50 million US dollars in its Venezuelan fund - and every time there is a shipment of oil coming into the country, that figure goes up.

And that's why what's happening right now in Venezuela is worth watching closely. Hugo Chavez's successor, President Nicolas Maduro is facing a fierce round of anti-government protests. In three weeks of sustained protest, five are dead, dozens injured and the opposition leader Leopoldo Lopez was arrested on Tuesday.

At 56% Venezuela has the highest inflation rate in the hemisphere and its murder rate is the highest in the world.

Channel 7

Petro Caribe: Are Caribbean Countries Prepared for the Worst?

Caribbean governments that are members of the Petro Caribe Agreement with Venezuela would be prudent by beginning to adjust their budgets to take account of the loss of benefits now derived from the oil arrangement. This is especially important for the countries of the Eastern Caribbean that appear to have made little provision for the possibility that the arrangements with Venezuela could end abruptly.

Two events are playing-out in Venezuela to which vigilant officials in Ministries of Finance in Caribbean countries should be alert. The first is the problematic state of the Venezuelan government’s finances and the other is the increasing confrontation between dissenting groups and the government that has spurred violence in the streets.

Venezuela’s economic conditions make it tough for President Nicolás Maduro to continue the largesse of Petro Caribe started by his predecessor Hugo Chávez. Inflation is now at 56 per cent; the government’s budget deficit is almost 50 per cent; the rating agencies, Moody’s and Standard & Poor’s, have downgraded Venezuelan bonds to junk status; and the bolivar fuerte (the “strong bolivar” so re-named by Chávez) has weakened steeply against the U.S. dollar -- on the black market its value dropped from roughly 8 to 1 a year ago to 87 to 1 now; additionally, while in the Chávez years poverty declined and access to health care increased, today there are real food shortages across the country -– the food shortages have a worse effect on the poor who, unlike the better-off, cannot afford to pay to circumvent normal food distribution chains.

The declining value of the Venezuelan bolivar and the foreign currency restrictions that the government has imposed have also angered the Venezuelan diaspora who find it difficult to get US dollars out of the country. This led to a demonstration by disgruntled Venezuelans outside the Embassy in Barbados on February 17 when charges of human rights violations by the Maduro government were also made.

Venezuela also has debt obligations it must service. For example, reports indicate that the government and the state-owned oil company, Petroleos de Venezuela, S.A. (PDVSA), signed loan agreements with China amounting to US$49.5 billion for the period 2007-2013. Of that sum only US$20 billion - or less than half - has been repaid in oil supplies.

These economic conditions make it difficult for Maduro, with the best will in the world, to continue the Petro Caribe arrangements as they are. His government needs to address its crucial fiscal problems as well as the performance issues that confront PDVSA which has been the source of financing not only for the social transformation measures under Chávez, but also for the Petro Caribe arrangements.

There are 17 beneficiary members of PetroCaribe of which 12 are Caribbean Community (CARICOM) countries including The Bahamas, Guyana, Haiti, Jamaica and Suriname. But the most vulnerable are the smaller territories Antigua and Barbuda, Belize, Dominica, Grenada, St Lucia, St Kitts-Nevis, and St Vincent and the Grenadines. It should be noted that two other CARICOM countries -- Barbados and Trinidad and Tobago -- are not exposed to change in the Petro Caribe Agreement since neither country joined the arrangement. Under Petro Caribe beneficiary there is no reduction in the price of oil; instead Venezuela converts a portion of the cost into a low-cost loan.

The amount of the debt owed to Venezuela by many Caribbean countries is shrouded in secrecy because the process of dealing with Petro Caribe has not been transparent. A notable exception is Jamaica where, in January, the government publicly put its Petro Caribe debt at US$2.5 billion. For each of the other Caribbean countries, the debt would amount to hundreds of millions of dollars that, in their current situation of very high debt and large fiscal deficits, they would find almost impossible to repay.

Sources within the Venezuelan government have lamented that in many Caribbean countries not only has provision not been made to repay the debt, but the loan component of the oil price has not been used for the social programmes for which Chávez intended it. It has been used in one case to pay the government’s public sector wage bill and in another to meet commercial obligations.

What would be worse for all of the beneficiary governments is either a sudden change in the Petro Caribe arrangements, forced by increasingly difficult economic circumstances in Venezuela, or a collapse of the arrangements altogether triggered by the intensifying confrontation between dissenting groups and the Maduro government in the streets of Caracas.

There is no doubt that Maduro is politically committed to continuing Chávez policies of helping Caribbean countries through the low-cost loan component of oil supplied by Venezuela. But as conflict and confrontation increases and intensifies within Venezuela, and economic conditions worsen for his own supporters, he may be forced to choose between them and his own political fortunes and a political commitment to Chávez’s ideas.

The present turmoil in Venezuela and the clashes in the streets between groups protesting against the government and security forces have resulted in four deaths so far and increased alarm about the stability of the country and its prospects for economic growth. CARICOM as a whole was right to call on all parties in the Venezuelan confrontation “to take the necessary steps to refrain from any further action that would hinder a peaceful resolution of the differences and a return to peace and calm in the country”.

The beneficiary Caribbean governments have much for which to thank Hugo Chávez and Nicolás Maduro, but they would be imprudent if they did not now begin to make adjustments to their budgets for a transition from dependence on Petro Caribe to buying oil on the international market. They would be sensible to approach the Caribbean Development Bank for technical advice on how to alter their financial circumstances to make the transition and to propose ways in which such a transition could be accomplished with the least amount of inevitable pain; pain which would be more desirable than calamity.


#487878 - 03/12/14 06:52 AM Re: PetroCaribe energy programme may be in trouble [Re: Marty]
Marty Offline
Venezuela assures PetroCaribe and ALBA agreements are safe

Venezuela says the current political unrest in the country poses no danger to the future of the Bolivarian Alliance for the Peoples of the Americas(ALBA) and the oil initiative PetroCaribe.

Venezuela’s Ambassador to St Lucia, Leiff Escalona Barrueta, addressing a sod turning ceremony for a bridge building project funded through ALBA, said there were "concerns expressed by various communication professionals in the news media" regarding the two initiatives that Caracas has been using as a means of integrating Latin America and the Caribbean.

The diplomat gave the assurance that the ALBA and PetroCaribe agreements would continue in "full force".

ALBA, the brainchild of the late Venezuelan leader Hugo Chavez, is based on the idea of the social, political and economic integration of the countries of Latin America and the Caribbean.

Antigua and Barbuda, Dominica, St Vincent and the Grenadines, Suriname and St Lucia are members of the grouping.

Commenting on the anti-government demonstrations aimed at forcing the resignation of President Nicolas Maduro, Ambassador Escalona dismissed the unrest as "an attempted coup d'etat.”

She said that despite a gradual return to calm, there had been an increase in the media campaign which her government has called "media terrorism.”

Prime Minister Dr Kenny Anthony, who also addressed the ceremony, said the bridge would be called "ALBA Bridge" as a mark of gratitude to the Venezuela/Cuba sponsored Caribbean Latin American economic and social integration movement.

(Caribbean 360)

#487887 - 03/12/14 07:36 AM Re: PetroCaribe energy programme may be in trouble [Re: Marty]
Katie Valk Offline
Serious issue for us
Belize based travel specialist

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