Petrocaribe Could Lead To “Substantial” Infrastructure Costs:

By Candia Dames -
Nassau, Bahamas:

The Bahamas could face "substantial" infrastructure costs should it join the Venezuela-sponsored Petrocaribe initiative, Minister of Energy and Environment Dr. Marcus Bethel said the senate on Monday.

The oil alliance, launched a year ago, allows Caribbean countries that have signed on to purchase oil on conditions of preferential payment.

Under the plan, nations can purchase oil at market value, but are only required to pay a certain amount up front. The remainder can be paid through a 25-year financing agreement on 1 percent interest.

"Whereas such a line of credit would benefit the Bahamas in short term outlay of capital and infrastructural development programmes, there exists some operational infrastructure challenges that would prohibit early implementation of such an agreement," explained Dr. Bethel, while contributing to debate on the 2006/2007 budget.

"The cost of transport facilities and liability insurance during transportation, also the absence of state-owned docking, pumping and storage capacity in the Bahamas, and the cost of transportation and distribution of fuel to the Family Islands, these costs must be quantified and could be substantial. Hence, further analysis is being undertaken to address these issues."

Dr. Bethel also pointed to the work of the Petroleum Usage Committee, which has completed its report. He said the report is expected to be made public after a cabinet briefing.

The report addresses issues relative to the petroleum industry in the Bahamas and makes recommendations on the way forward in lowering the cost of fuel supplies to the Bahamas.

During debate on the budget in the House of Assembly on July 12, Minister of Agriculture and Marine Resources Leslie Miller, who had responsibility for the Petrocaribe issue before the February cabinet reshuffle, pointed to the benefits of joining the agreement.

He told members of the House of Assembly that motorists would be able to save $1,200 per year under Petrocaribe.

The minister added that the Bahamian people could have saved anywhere between 25 cents and $1 per gallon of gasoline and diesel, which could have translated into savings for the country of up to $85 million per year.

He said that in 2005, expenditure on petroleum products surpassed the half billion-dollar mark for the first time in the country’s history, when expenditure reached $525.2 million. This represented an increase of $159.8 million or 44 percent over 2004.

"Many persons have said that Petrocaribe was not going to save money," Minister Miller said. "However, everyone should know that buying directly from the producer always creates savings as you cut out the middle man."

At the time, Minister Miller also pointed to what he said would be benefits of establishing liquefied natural gas (LNG) projects in the Bahamas.

Dr. Bethel did the same in the senate on Monday.

"I remain committed to the belief that the environmental risk is minimal and sustainable, the economic benefits are substantial and the safety and security components are manageable," the energy and environment minister said.

27 June 2006


caribbean