Sun | Jun 20, 2021

Aubyn Hill | Those wages and the PetroCaribe calculations

Published:Thursday | August 20, 2015 | 10:59 AM

According to various government ministers and government supporters, the PetroCaribe debt buy-back and the corresponding bond deals to purchase the debt at about 50 per cent discount has resulted in a large saving to Jamaica.

I use the term 'large' to define it because the amount of saving has been a moving target even according to the official pronouncements by the minister of finance, Dr Peter Philips, and his ministry's press release.

In a similar vein, the gushing ecstasy of Minister Horace Dalley to the acceptance on Tuesday of this week, by a denuded delegate population representing 28,000 teachers in the public service, of the Government's 'seven per cent pay increase offer' is understandable but misleading in terms of its calculation.

Minister Dalley has negotiated long and hard to stick to the official seven per cent line, so his euphoria is a natural reaction. Dwelling on the seven per cent wage hike, and especially the $4,000 across-the-board pay increase, as he and his senior minister, Dr Phillips, have done, is misleading given the very substantial increases in the benefits that have been agreed.

The agreeing unions - with the teachers on board they now represent about 75 per cent of the civil service employees - have been very circumspect and their comments have been diplomatic and politically correct.

They stress the need for a larger salary increases but say little about the benefits. Government ministers have been largely mum, or opaquely unspecific, about the quantum of benefits agreed. In the case of the teachers alone, benefits have moved from $111,430 to $171,000 - not $147,000 as reported by the Daily Observer on Wednesday of this week. Persons in the security forces, I'm told, probably fared substantially better.

That $59,570 increase, a 53 per cent jump, is substantially more than $4,000 and the 7-per-cent-over-two-years figure the Government keeps banding about. Good for the teachers after a long wait; obfuscating reporting on the part of the Government.

Those who have had the temerity to question the cost of the PetroCaribe deal to Jamaicans have been rebutted with hundreds of millions of savings in US dollars - none substantiated with detailed calculations by the Government.

In a press release late in the day on August 3 - a day before a scheduled Jamaica Labour Party press conference on the deal - the Government said Jamaica would save US$250 million.

Seven days later, the Daily Observer reported that at his press conference earlier that day "Dr Phillips noted that the country's debt service will be lower by just under US$300 million over the life of the transaction". The savings on the same transactions had climbed by about US$50 million in seven days. Others have spoken publicly about a US$400-million saving.

My colleague on the Economic Advisory Council of Opposition Leader Andrew Holness, the head of the Jamaica Labour Party (JLP), agreed that we would approach PetroCaribe for the detailed figures and calculations to back up the claims of huge savings by Dr Phillips, and a member of his appointed EPOC who speaks on these issues.

Bear in mind that we are all citizens of Jamaica and the transactions are being done in our name and on our behalf - and we are the ones who must pay.


I share a selection of the email exchanges between Fayval Williams, the deputy spokeswoman on finance for the JLP, and Dr Wesley Hughes, the chief executive officer of the PetroCaribe Development Fund, so you, the reader, can draw your own conclusion.

August 12 - Fayval Williams to Dr Hughes:

This is request for the audited financials for the PetroCaribe Fund for the years ended March 31, 2014 and 2015. Please also send the details of the interest payments, the annual amortisation schedule, the maturity dates and start dates on each of the loans outstanding to Venezuela/PDVSA as of March 31, 2014 and 2015.We look forward to receiving this information as soon as possible.

August 17 - Williams to Dr Hughes:

Mr Hughes, thanks for your response. We find it quite alarming that the audited financials for the period ended March 31, 2014 is over a year late and the one for the period ended March 31, 2015 is almost two months late if we use the benchmark to which publicly listed companies in Jamaica are held. The fact that a current event has overtaken the financials, such that they are delayed even further, is very concerning especially in light of conflicting figures about the PetroCaribe deal.

As such, we are requesting answers and information for the following:

1) What was the total amount of loan (current and non-current) to PDVSA as of December 31, 2014?

2) The finance minister said that the 'US$1.5 billion allowed the JA gov to purchase a major portion of the Petrocaribe debt owed to Venezuela'. What is the amount remaining? What is the amount that was purchased?

3) What was the total interest payment per year to PDVSA for years ended March 31, 2014 and March 31, 2015?

4) Given that the PDVSA loans accumulated over the past 10 years with very little amortisation, approximately US$43 million for the year as per financials for 2013, how did the amortisation change to such a hefty figure of US$120 million, as per EPOC's chairman and the finance minister in explaining the principal + interest requirement for the PetroCaribe debt versus the capital markets bonds?

5) What was the principal amortisation for the PetroCaribe loans for years ended March 31, 2014 and March 31, 2015?

6) What are the beginning and end dates and amounts outstanding (current and non-current) for all the loans to PDVSA as of year March 31, 2015?

7) How much was the cash and short-term deposits at March 31, 2015?

8) How much was the Loans Receivable + Investment Securities + Due from Petrojam at March 31, 2015?

We do not believe that any of the figures we are requesting would be impacted by the current PetroCaribe transaction as these are historical figures.

We look forward to your response at the earliest.

Dr Hughes to Williams:

Dear Fayval, I discussed your earlier request with Minister Phillips and he indicated that all data requests on PetroCaribe coming from the political Opposition should be directed to him via questions in the House. I therefore ask that you direct your questions to the Hon Minister."

Dr Hughes also explained the process to release the financials to the public and gave clear technical reasons for the delay in the completion of the financials.

Aubyn Hill is CEO of Corporate Strategies Ltd and chairman of the Economic Advisory Council of the Opposition Leader.


Twitter: @hillaubyn