Guyana says PetroCaribe provides significant benefits

Prime Minister Samuel Hinds says Guyana has benefitted significantly from the Venezuelan oil initiative, PetroCaribe, launched in 2005.

Hinds, speaking during a programme on the state-owned National Communications Network, said the initiative came at a time when many Caribbean countries were having difficulties purchasing petroleum given the high prices on the world market.

Under the initiative, the brainchild of the late Venezuelan leader Hugo Chávez, regional countries are allowed to pay Caracas a portion of the oil price in cash while engaging in other co-financing options.

Apart from Guyana, other Caribbean countries benefitting from its membership are Antigua and Barbuda, The Bahamas, Belize, Dominica, Grenada, Haiti, Jamaica, St Kitts-Nevis, St Lucia, St Vincent and the Grenadines, and Suriname.

Hinds said 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 US$400 million per year, and at 50 per cent co-financing, we could be developing a debt of about US$200 million per year. So we took the position that for every shipment, payment has to be made available in full," the prime minister said.

Promissory note

"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," Hinds added.

He said the money accumulated was used to finance two power plants for the Guyana Power and Light Incorporated and other projects.

Government officials said that PetroCaribe was also intended to promote trade among member countries with Guyana supplying rice to Venezuela under the init-iative.

Hinds made reference to a recent agreement between Georgetown and Caracas regarding the export of rice and paddy for 2013, saying the goods supplied would be discounted against what is owed by Guyana.

Government economist Chevon Wood said that under the first round of agreement signed with Venezuela, Guyana was able to cancel over US$100 million of fuel debt in 2012.

Economic zone

At the recently held ministerial meeting of PetroCaribe and the summit of heads, Venezuela proposed the establishment of a PetroCaribe economic zone through an alliance with the Bolivarian Alliance for the Peoples of Our America.

Wood said that with the introduction of an economic zone, there are many opportunities to get into greater markets.

"It is a good area to venture into, not only because you are able to reduce the amount of oil debt periodically, but you are also able to expand your market, introduce economies of scale in terms of technology, increase job creation and many other benefits," Wood added.

- CMC