Gary Spaulding, Senior Gleaner Writer
After being put on hold for the past three years because of the negative response from International Monetary Fund (IMF), plans to upgrade and expand the Petrojam refinery appear back on track.
Energy Minister Phillip Paulwell last week argued that he had all but succeeded in convincing the IMF that this was the way to go.
The project was stalled in 2009 under the Bruce Golding administration after the IMF's refused to give the green light after it was realised that the capital cost associated with the upgrade would double from the original estimate of US$663 million to US$1.3 billion over a three-year period
"The IMF had ruled negatively on it," confirmed Paulwell.
"I have had discussions with them to show the significant advantage that Jamaica can accrue under this project. There is (now) greater receptivity to this project and, as a Government, it is one of the priority projects that we are pushing."
Paulwell said that Jamaica would save over US$200 million annually if the project gets off the ground as Petrojam would be able to produce and generate more of the fuel that the country needs.
"We can't continue to have the refinery in this state, we might as well shut it down," declared the energy minister.
He asserted that with the upgraded refinery, Jamaica would be able to produce petcoke that would facilitate the generation of 220 megawatts of electricity.
"This is a most critical project that has to be put back on the front burner, notwithstanding the situation in Venezuela," Paulwell asserted.
"It will lead to cheaper fuel prices coming out of the refinery and more importantly, support our electricity-generating project."
Talks with Ambassador
Paulwell said he has initiated talks with the Venezuelan ambassador in Kingston as that country is a significant partner in the planned upgrading of the refinery and the project cannot be allowed to languish for much longer.
According to the energy minister, other talks should take place shortly.
"I am attending a special energy conference in The Bahamas week after next and I will be meeting with the Petroleos de Venezuela SA (PDVSA) people and the specific item on the agenda is this project and how to get this expansion going."
Paulwell said he would be negotiating to secure some form of a guarantee facility with Venezuela as that country possesses the strength of cash to deal with the debt funding for the project.
"We are prepared to convert some of the shares to give them a greater stake in the refinery, but all of the issues will be addressed when we meet in another week and a half ... ," he said.
Paulwell also gave the assurances that local stakeholders will not be excluded from the project.
"We are looking at how we can involve Jamaicans in this," he said. "But in the final analysis, we have to get the Petrojam refinery project back on track."
The refinery upgrade project was part of a memorandum of understanding signed in 2005 between then Jamaican prime minister at the time, P.J. Patterson, and Venezuela's President Hugo Chávez, with an expected 2010 completion date.