Thu | Jan 23, 2020

Ja to pay millions in PetroCaribe debt

Published:Thursday | September 11, 2014 | 12:00 AM

JAMAICANS WILL be required to pay a total of $2.89 billion from the Consolidated Fund to the PetroCaribe Development Fund (PDF), the National Export-Import Bank and the European Investment Bank, as part of efforts to divest the Wallenford Coffee Company.

At the same time, the taxpayers are to carry the burden of US$237.1 million to the PDF in order to ensure Clarendon Alumina Partners (CAP) ceases being a burden on the national coffers.

The House of Representatives on Tuesday passed two resolutions which will allow for the payment of the funds to the PDF.

Dr Peter Phillips, the minister of finance, who moved the resolution on the assumption of the debt, said that in relation to the coffee company, the exercise is being undertaken to facilitate the sale as part of the privatisation process.

"In keeping with this agreement, there has been substantial investment undertaken by the new owners, but it requires for the closing of this deal that the Parliament's resolution be carried so that the final procedures can be undertaken," Phillips said.

He added: "The benefit to the Government and to the country is that it will remove the charges for carrying the losses from the Consolidated Fund, but even more so it will facilitate investment in the company."

The minister also noted that the question of the financial viability of CAP has been an issue for some time and that arrangements are being put in place to allow for "the participation in the ownership of the company by a third entity, which has been completed, and to clear the balance sheet".

Phillips said the assumption of the debt by the central government will relieve the State of its obligation "to make good, on behalf of CAP, the requirements of the company for working capital and investment capital along the way".

But Audley Shaw, the opposition spokesman on finance, said the assumption of the debt brings into sharp focus the fact that the PDF has been used "more like the PetroCaribe Bailout Fund than the PetroCaribe Development Fund".

"We should take another look at the PetroCaribe Development Fund and examine carefully the purposes for which that fund was intended and see whether we can begin to channel the use of that fund in a more productive way for the economy," Shaw said.