Venezuelan President Hugo Chavez and Prime Minister P.J. Patterson embrace after they sign the PetroCaribe bilateral agreement at the Ritz Carlton Hotel in Montego Bay on Tuesday August 23, 2005. - HERBERT MCKENIS/FREELANCE PHOTOGRAPHER
CONCERNS OVER acquiring too much debt led Barbados to turn down a Venezuelan oil pact promising fuel to the Caribbean under easy financing terms, the energy minister said Sunday.
Anthony Wood also said joining Venezuela's PetroCaribe plan did not make sense since Barbados already received petroleum products at discounted rates from neighbouring Trinidad. That deal resulted in savings of about US$2.1 million for Barbados in 2004, he said.
Under PetroCaribe, however, countries must pay market prices for oil, but can pay for a portion up front and finance the rest over 25 years at low interest rates. Countries could also pay partly with services or goods such as rice, bananas or sugar.
"PetroCaribe will not deliver discounted prices for petroleum products," Wood said. "When we compared the current arrangement Barbados has with Trinidad ..., we are saying the PetroCaribe agreement offers very little in advancing our interests," he stated.
Thirteen Caribbean countries have joined PetroCaribe, Venezuelan President Hugo Chavez's initiative to help Caribbean countries withstand the shock of record-high oil prices while offering an alternative to US-style free trade. Only Barbados and Trinidad refused to sign on.
Trinidad, which provides 50 000 barrels of oil per day to the region, has said it would hold talks with Venezuela and its Caribbean neighbours before deciding whether to join the pact.
Wood said PetroCaribe's financing terms would add US$68 million to Barbados' annual debt under current world oil prices of around US$70 per barrel. Barbados is currently running a debt of US$2.1 billion.
"The debt implication of the PetroCaribe agreement runs counter to the governments debt management strategy," Wood said.
Venezuelan oil would also be subject to Barbados 20 per cent tariff on imported goods, adding to the cost, Wood said.
Taken from The Barbados Advocate
