Georgetown: The oil supplies from Venezuela sourced under the oil-for-rice barter system, which is part of two agreements under the PetroCaribe Energy Cooperation Agreement with Guyana, were valued in excess of US$120 million last year, financial papers tabled in the National Assembly have revealed.
The US$124,463,500 debt cancellation was done in exchange for the supply of rice and paddy to Venezuela by Guyana. This was disclosed in the Order Paper for the July 9th sitting of the National Assembly of the 11th Parliament. The parliamentary document, which was distributed to the media, stated that the two agreements are to be circulated to the National Assembly.
The PetroCaribe initiative was established by the Venezuelan Government in 2005 with the aim of partnering with Caribbean countries in order to enhance economic and political cooperation. With this agreement, Venezuela is supplying oil to the individual countries and the payment for the produce will be made at a fixed percentage of the total value of oil supplied and the balance will be repaid over a specified period of time at no interest. The funds retained by the individual countries can now then be used by the Government for projects that can enhance the physical infrastructure or the social well-being of the country.
The initial agreement had absolutely nothing to do with rice; however, in 2009, a delegation of rice farmers representatives met with then President Bharrat Jagdeo to raise concerns about several issues affecting the sector. Jagdeo then had a discussion with the then Venezuelan President Hugo Chávez and it was only then rice became an addendum to the PetroCaribe arrangement for Guyana. Under the current trade agreement, Guyana is expected to supply approximately 210,000 tonnes of paddy and polished rice annually to Venezuela.
Meanwhile, according to the first agreement, it detailed the “Compensation Agreement under the Framework of the PETROCARIBE Energy Cooperation Agreement dated March 13, 2014, between PDVSA Petróleo, SA (PDVSA) and the Cooperative Republic of Guyana for the cancellation of the oil debt in compensation for the white rice and paddy shipments under the Guyana/Venezuela Rice Trade Agreements in the amount of US$55,453,000”.
Meanwhile, the other Compensation Agreement under the Framework of the Cooperation Agreement, which is dated September 12, 2014, between PDVSA and Guyana is for the cancellation of the oil debt in compensation for the white rice and paddy shipments under the Guyana-Venezuela Rice Trade Agreements, amounting to US$69,010,500.
Under the PetroCaribe arrangement, Venezuela has been supplying fuel to countries that subscribe to the PetroCaribe pact on the condition of preferential payments. These payments are adjusted according to oil prices. As part of the payment arrangement with Venezuela, several of the countries including Guyana are supplying the Spanish-speaking South American country with rice and coffee among other products to write-off their debts.
Current debt to Venezuela
The Finance Ministry has disclosed that currently Guyana’s total debt to the neighbouring country as at March 31, 2015, stood at approximately US$194 million. According to the Ministry, this debt would be further reduced by US$45 million after the Debt Compensation Agreement is signed with Venezuela.
“This Debt Compensation Agreement relates to rice and paddy shipped by Guyana to Venezuela under a Rice Trade Agreement done within the framework of the PetroCaribe arrangement,” the Finance Ministry stated. The Ministry was responding to an article published in the Kaieteur News on Friday that claims Guyana’s “long term oil debt” to Venezuela under the PetroCaribe agreement is at US$580 million”, citing a report in the July 2 edition of Venezuela’s El Nacional.
The Ministry pointed out that the statement was “incorrect and grossly overstated”. The Ministry further disclosed that thus far, Guyana has repaid more than US$550 million of the debt owed to Venezuela through the rice trade arrangement. When the A Partnership for National Unity + Alliance For Change (APNU+AFC) Government was elected into office almost three months ago, it discovered that the PetroCaribe Fund was empty. This was disclosed by Minister of State Joseph Harmon, who had blamed the previous People’s Progressive Party/Civic (PPP/C) Government for casually and callously mismanaging the Fund.
“We actually will have to find somewhere in the vicinity of US$15 million to basically pay our farmers when they ship the next set of rice to Venezuela,” Harmon had stated.
However, the PPP/C in response had defended the current state of the Fund, positing that whatever money was in the Fund can be accurately accounted for. The now Opposition party explained that no money was missing from the PetroCaribe Fund and even if there was a limited balance in it, that does not mean any money is missing. The PPP/C pointed out that there were records available that indicated every single inflow and outflow to and from the Fund. “Put simply, monies are deposited into the Fund when Guyana imports oil from Venezuela under the PetroCaribe arrangement. Those monies are managed by the Bank of Guyana.
The monies are utilised for only two purposes. Firstly, to fund projects that are included in the national budget and submitted to Parliament for approval. Over the years, these projects have included the new GPL power plants at Kingston and Vreed-en-Hoop and the Hope Canal. Secondly, and more substantially, the funds are utilised to purchase rice and paddy for export to Venezuela under the PetroCaribe arrangement,” the former ruling party noted.
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