My Thoughts on Technology and Jamaica: PetroCaribe Trap - does this mean that Energy Sector Liberalization will not occur?

Friday, May 7, 2010

PetroCaribe Trap - does this mean that Energy Sector Liberalization will not occur?

Today I am at a loss for words as I peruse the newspapers, which I subscribe to via the internet, the future portal for news both Newspapers and Broadcast. So much so, that I shall be keeping this commentary short, as it depresses me so I am now faced with the reality that our Government has apparently showed an inability to pay for the oil acquired in the PetroCaribe Agreement with the Government of Venezuela.

This is the only plausible reason to explain the stony silence emanating from the Government of Jamaica that would explain why they would now give majority stake in the PCJ (Petroleum Corporation of Jamaica) to the Government of Venezuela, made possible by a 2% increase on their 49% stake in the oil refinery to 51% and hence controlling rights as stated in the article “Venezuelans to the Rescue - 2% deal gives PVDSA afflilate majority ownership”, published Friday April 30 2010, Mark Titus, Business Reporter, The Jamaica Gleaner.

For the record,  PVDSA (Petroleos de Venezuela SA) is the state run subsidiary that stands to benefit from recent finds of oil and a massive gas field off the coast of Venezuela as stated in the article “Venezuela taps natural gas super well”, published Tuesday March 30th2010, AP, The Jamaica Gleaner.

But what depresses me more is recent murmuring with regards to the Liberalization of the Energy Sector, so key to growth for the Private Sector even as more FDI (Foreign Direct Investors) come to our shores to invest in securing Energy Future Trade with the United States of America. Like Esau in the Bible, Jamaica is selling our birthright for a bowl of pottage to Jacob, herein represented by the Government of Venezuela.

But a bit of a back story is required. The Government of Venezuela’s control of this vital piece of infrastructure, especially as there is no end in sight to the embargo against the Government of Cuba imposed by the Government of the United States of America, was naturally expected as our Government is suffering the grave effects of the Global Recession in the United States of America. This move is significant, as like the Government of the Peoples Republic of China who had begun negotiating with the Government of Jamaica as it relates to acquiring the Kingston Wharves as part of a US$6 billion investment in the relocation of Tinson Pen and VernamField Aerodromes.

There is also the development of the railway specifically for the transshipment of goods and services between the aerodromes and Kingston Wharves as stated in the article “CHINESE WANT KINGSTON WHARVES” published Monday, March 08, 2010 by Paul Henry Observer staff reporter, The Jamaica Observer a stake in broadcasting as slyly hinted in the article “Chinese media proposal troubles local interest group”, published Tuesday April 6, 2010, The Gleaner and the Government of Jamaica’s share in the Clarendon Alumina Works (Jamalco) as well as the possible construction of an LNG pipeline to reduce the cost of energy used in the process of making alumina as stated in the article “Noranda Bauxite targeted for aquisition”, published Wednesday April 14th 2010, Business Section, The Jamaica Gleaner.

These plans have all but confirmed by the Bruce Golding, Prime Minister of Jamaica as stated in the article "Alcoa gets 90 days to counter-offer", published Wednesday April 21, 2010 by R. Anne Shirley, Business Writer, The Jamaica Gleaner, the Government of Venezuela is also claiming its stake in the soon to be lucrative Energy Sector in the United States of America as the American Economy demands more oil than can be possibly supplied by the Saudi Arabians, who ironically are going nuclear as stated in the article “Arab Atomic energy agency proposed”, published Monday March 29th 2010, The Jamaica Observer (AFP) and solar as stated in the article “Oil-Rich Brunei to have solar power plant”, published Thursday August 6, 3:33 am ET, AFP, Yahoo! News.

The learned John Public, though depressed, find all this activity by the Government of Venezuela, Government of the Peoples Republic of China and even the Government of Mexico interesting. The declaration by Mexican Petroleum interest PEMEX (Petroleos Mexicanos) of its intention to construct a US$6 billion dollar Refinery and mysterious hastily commissioned  two (2) week restoration of a 15-foot statue named El Atlante de Tula by Mexican Ambassador to Jamaica, Leonora Rueda as stated in the article “Mexico's new refinery to take shape this year, published Thursday April 1st 2010, by Nadisha Hunter, Gleaner Writer, The Jamaica Gleaner.

The Greeks plan to upgrade to a land based facility for the storage of MGO (Marine Gas Oil) and MFO (Marine Fuel Oil) as stated in the article “US$20M more to Bunker - Greek firm eyes investment in Jamaican storage facility”, published Wednesday, April 07, 2010 BY CAMILO THAME Business, The Jamaica Observer. The planned expansion of JEP (Jamaica Energy Partners) which appears to be a push into power distribution based on the location of the new plant as stated in the article “JEP lands power deal”, published Friday April 9, 2010, The Jamaica Gleaner.

These examples rest in stark contrast to statements by the Deputy Director of the OUR (Office of Utilities Regulation) Hopeton Heron, who stated that due to JPS Co. exclusive power distribution license, competition will only be among power suppliers to the JPS Co. as JPS Co. exclusive distribution license will not end until 2020. This is the OUR, that is supposed on the side of the people, defending a FDI- owned former state entity. The acquisition of more of our Energy Infrastructure is just salt in the wound, albeit this was necessary.

This is sad, as with all this activity in term of FDI interest in using Jamaica as a transit point for trade into the United States of America, the local Private Sector interests still will have to wait to benefit from the JDX (Jamaica Debt Exchange) as locally, cheaper energy is needed to make growth happen. Even Senator Phillip Paulwell, Opposition Senator on Telecoms and ICT stated that “the current cost [electricity and fuel] is astronomical, especially for businesses. What is needed at this time is competition in the sector,” as he stated in the article “'Follow my blueprint' - Paulwel pushed for breakup of JPS Monopoly”, published Friday April 30 2010, Mark Titus, Business Reporter, The Jamaica Gleaner, in his call for Liberalization of the Energy Sector.

This article appears to be a follow up on his stirring statements in Parliament recently in which he made calls for both MNP (Mobile Number Portability) and Liberalization of the Energy Sector as stated in the article “Paulwell calls for number portability”, published, Wednesday April 21, 2010, Daraine Luton, Senior Staff ReporterThe Jamaica Gleaner

Even more so his call for a divide in Parliament in an attempt to force Senator James Robertson, Minister of Mining and Energy to declare the progress on the Liberalization of the Energy Sector, which Senator James Robertson, Minister of Mining and Energy, declared was in the process of being changed as stated in the article  “Government, Opposition wrangle over energy”,  published Saturday  April 3, 2010, The Jamaica Gleaner.

It seems that there were indeed were “changes”, this relinquishing of Government of Jamaica control over our state owned refinery in a bid to complete the upgrading of the facility, as the Government of Jamaica has run out of money, having already spent US$4 billion dollars and needing another US$60 billion dollars to complete the project, which the Government of Venezuela via its proxy the PVDSA has promised to do, as apparently it is in their interest. The sacking of Dr. Ruth Potopsingh was related to this (possibly?) as well as to the damning evidence from the auditors.

The Private Sector is thus, like myself, keenly interested in how this deal will proceed, as it cannot be the case where the Government of Jamaica is allowing FDI investment in the Energy Sector for export to the United States of America and yet local Private Sector interests will still be stuck in the past, as would have been the case in the Telecommunications Sector had not the then Senator Phillip Paulwell, Minister of Telecommunications in 1995, agitated for and was able to negotiate in 1997, the end product being the Liberalized Telecoms Sector and the Telecommunications Act of 2000. 

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