BASSETERRE, St. Kitts – COMMENCING in October, the Venezuelan government will be increasing the interest rate it currently charges for the supply of oil to Central American and Caribbean countries that are signatories to the PetroCaribe Agreements.
This revelation, according to a news website (www.platts.com), was made on condition of anonymity by a source within the state-owned oil company Petróleos de Venezuela, South America (PDVSA) on Monday (Jul. 29).
The news website stated that the source said the increase was a result of higher administrative and maintenance costs of the loans.
St. Kitts and Nevis is one of a number of countries which are benefitting from the PetroCaribe arrangement, which was introduced under the administration of the late President Hugo Chavez.
PetroCaribe came into existence in June 2006, and since then 16 countries have enjoyed an annual interest rate between one and two percent. However, according to the source, the rate would rise to two to four percent but the increase would not be uniform across the board and could be lower for poorer nations.
In addition to St. Kitts-Nevis, PetroCaribe members are Antigua and Barbuda, Bahamas, Belize, Cuba, Dominican Republic, Dominica, Grenada, Guatemala, Guyana, Honduras, Haiti, Jamaica, Nicaragua, St. Vincent and the Grenadines, St. Lucia and Venezuela.
The source claimed that the planned increases in interest rate were under the agreements Venezuela signed with the member countries, and that no additional rate increases are contemplated in the near future.
The source also claimed that, given the political value Venezuela sees in the oil alliance, the South American country is unlikely to reduce or suspend oil shipments to debtor countries.
The source said Venezuela exports an average of 180 000 barrels per day (b/d) to PetroCaribe countries, of which 143 000 b/d is oil and 37 000 b/d is refined product.
Over the past two years, the debt for oil purchase by PetroCaribe countries has risen to $5.7B with Cuba and Nicaragua accounting for the most of it.
In a press release headlined “St. Kitts & Nevis Signs Another Petrocaribe Agreement” and dated June 29, 2006, it stated that St. Kitts and Nevis and the Bolivarian Republic of Venezuela have signed another PetroCaribe Agreement designed to activate the terms of the first agreement which symbolized a fuel arrangement between the two countries.
It also stated: “Permanent Secretary in the Ministry of Public Works, Utilities, Transport and Posts Mr. Oaklyn Peets, said that prior to the second signing there had been a meeting with the stake holders to ensure that the supply agreement would materialize.”
And that Permanent Secretary Peets said there had also been a meeting with representatives from Antigua and Barbuda to discuss the possibility of the country being a transshipment point to St. Kitts and Nevis.
The release also spoke to the benefits that could be derived from the PetroCaribe Agreement, which Minister of Public Works, Utilities, Transport and Posts Hon. Dr. Earl Asim Martin outlined the financial agreement.
“He said that if, for example, $100 million in petroleum products was purchased via the agreement, $60 million would have to be paid upfront. The Government of St. Kitts and Nevis could then invest the remaining $40 million in social programmes. The agreement enables the repayment of the $40 million over a period of 25 years at a one percent interest rate.
“The Minister responsible for Utilities further explained that the full repayment does not have to be done monetarily. He stated that the repayment could also be worked out in terms of services and products that could be given to the people of Venezuela. Minister Martin also referred to the fact that Venezuela is a member of the Organisation of the Petroleum Exporting Countries (OPEC) and so has to sell its petroleum at a standard price as set by the organisation. As such, the agreement is a means by which the signatory counties can obtain cheaper initial petroleum costs enabling the development of social programmes."
