PetroCaribe fuelling development
Below are excerpts from an address delivered at a meeting of the Rotary Club of Downtown Kingston on December 16.
As you may be aware, The PetroCaribe Agreement, negotiated in 2005, is a bilateral arrangement between Venezuela and 18 other countries, including Jamaica.
The agreement, over the years, has drawn a lot of comments – praise and criticism. In the case of Jamaica, we have only high praise for the agreement and the positive impact it has had for us.
I imagine that the recent parliamentary election results in Venezuela would have heightened interest in the future of the agreement. Let me say that the regional agreement is operating normally at this time.
Venezuela continues to deliver oil to us under the agreement, and we continue to honour our debt and other obligations in full and on time.
The PetroCaribe Development Fund (PDF) was established in 2006 to manage funds accrued under the PetroCaribe Energy Cooperation Agreement with Venezuela. These funds represent a percentage of the proceeds for the purchase of oil and are converted into renewable long-term loans at a concessionary interest rate, for 25 years with two years grace, with an interest rate of 1%, when oil prices are between US$40 and US$100 per barrel. When oil price drops below $40, interest rate goes up to 2%.
Before the recent debt-buy-back arrangement between the GOJ and PDVSA, we had accumulated debt of just over US$3.0 billion.
The PDF manages these funds to achieve a number of social and economic objectives. Primary among them is the provision of funds to the Ministry of Finance and Planning, and self-financing public bodies, for debt operations and for critical development projects. The Fund also maintains a portfolio of investments to enhance its overall returns and provides liquidity for GOJ debt-servicing and operational expenses.
For the financial year 2014-2015, the PDF recorded a successful year of operation. Most of the major targets were met, while our asset base grew by 14.5%.
We are truly proud of our efforts to ensure that our operations at the PetroCaribe Development Fund are financially sustainable and transparent and that we meet all our obligations and deliver on our mandate.
Many of you may not know, but the PDF is a major source of funding for infrastructural projects, among them:
-The upgrading of the Norman Manley International Airport.
-The cruise ship pier in Falmouth.
I was recently taken on a tour of the North-South leg of the highway, which, when completed early next year, will link the north and the south coast with a modern highway for the first time in our history.
This has the potential of opening great possibilities for development.
We need to connect the dots in terms of potential so that we can take advantage of the opportunities that are emerging.
Cast your mind back to the original discussion more than 20 years ago when we started talking about development of the north coast road from Negril to Port Antonio. I was around through the conception, design, funding, and implementation. The project had its critics.
So, the north coast road was recently constructed, but that was not an end in itself. It had to be on the basis for further investment. The Government at the time gave priority to investment in tourism.
This required investments in a whole host of projects:
1. Reconstruction of the floodcontrol system in Montego Bay.
2. New and modern sewerage systems in Montego Bay and Ocho Rios.
3. Upgrading of the water systems in Hanover and Trelawny.
4. New power plants at Bogue.
5. Modernisation of the Sangster International Airport.
6. Building of the new cruise pier in Falmouth.
7. Construction of the convention centre.
With the coming together of these project involving billions of dollars of investment, the country has been able to attract significant new investment in hotels and attractions that create jobs and other economic opportunities such as commerce and housing.
The North Coast Highway is expected to open up new areas for development in housing, shopping, hotels and agriculture.
I specifically mention agriculture as the tourism expansion of the north coast was to have been fed by an expansion in agriculture on the plains of Clarendon and St Catherine, in particular. I know that additional infrastructure may be needed in irrigation and feeder roads.
The general point I am trying to convey is that if you connect the dots, you can see the elements of a national development strategy using infrastructural investment to drive private sector-led growth.
Doing these projects takes time. Given all that has been done, not just promised, I think it is time for some of the scepticism and doubt to fall away and for our people to begin to take advantage of the opportunities.
Development is not a spectator sport. It requires players on the field participating vigorously and creatively.
-Dr Wesley Hughes is CEO of the PetroCaribe Development Fund. Email feedback to email@example.com.