Ja pressed to pay off PetroCaribe debt

In the wake of news yesterday that the Maduro regime will be further starved of cash as the Trump administration imposes sanctions on Venezuela’s state oil company, the Holness administration must decide whether it can pay off the outstanding PetroCaribe debt and cut all ties with the South American nation, says Professor Densil Williams.

Washington’s action on Petroleos de Venezuela SA (PDVSA) is a blow to the embattled Nicolas Maduro and is aimed at replacing him with Opposition Leader Juan Guaido, the 35-year-old congressman who has been recognised by the United States, Canada and a growing cadre of European heads as the legitimate president.

PDVSA, which owns a 49 per cent stake in Jamaican oil refinery Petrojam, through the subsidiary PDV Caribe, will see its economic fortunes worsen, as all funds for oil exported to the US will be routed to blocked bank accounts that will remain frozen until Maduro hands over power to Guaido.

“It is clear that they want us to exit any deals with Venezuela. We have stopped taking a significant amount of oil under the PetroCaribe Agreement from Venezuela for a while now, so it will not have much in terms of disruption of our oil supply. The issue now is if we are in a position to pay back what we have under the PetroCaribe agreement,” Williams, professor of international business at The University of the West Indies, told The Gleaner last night.

Monthly debt payments

Dr Wesley Hughes, chief executive officer of the PetroCaribe Fund, put the outstanding debt from the concessionary oil agreement with Venezuela at about US$120 million. Oil supply to Jamaica ended months ago but the Government continues to make monthly debt payments.

The Jamaican Government indicated weeks ago that it would table special legislation to forcibly retake the 49 per cent stake that PDV Caribe has in Petrojam.

“We will not be able to stop dealing with them and still have the debt outstanding. So if there’s a call on the debt now, that quantum of debt that we owe under the agreement, we would have to pay that debt now. What is not clear is if we are in a position to pay that debt now and the impact it would have on our fiscal accounts,” Williams added.

He also expressed concern that Kingson’s salvos against Caracas, including a vote at the Organization of American States labelling Maduro’s regime as illegitimate, was evidence of kowtowing to US pressure.

“There’s a broader context, though, in terms of the principle of how we are operating,” said Williams. “Should we be forced by another power to end our relationship with Venezuela, or should we do it in a principled way which is to go through arbitration and let the courts decide and then we make a decision, or should we do it in a hasty way?”