Government says US sanctions on Venezuela hurting local economy

Wednesday, November 15, 2017

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THE Government says it is considering buying back Venezuela's 49 per cent share in local oil refinery Petrojam following fresh problems created by United States President Donald Trump's recent executive order imposing new sanctions on the South American oil exporter.

Minister of Science, Energy and Technology Dr Andrew Wheatley made the disclosure in a statement to the House of Representatives yesterday, in which he also admitted that over the past year Jamaica has been receiving “minimal or no crude products” for the refinery from Venezuela and has been dependent on products from Trinidad and Tobago, and the “spot market”, which he described as the “normal course of operation”.

Dr Wheatley said that for over a year now Jamaica has not been receiving what it usually receives from Venezuela under the Caricom-wide PetroCaribe agreement, as well as crude required for Petrojam, Jamaica's only oil refinery, from the agreement under which Venezuela's PDV Caribe SA, an affiliate of the Venezuelan Government-owned Petroleos de Venezuela (PdVSA), bought 49 per cent of the shares in the refinery from the Jamaican Government in 2006.

However, the minister suggested that the straw that broke the camel's back may have been Trump's August 25 executive order (EO 13808), which not only strictly restricted US citizens and entities from transactions involving the Government of Venezuela, which includes “any political subdivision, agency, or instrumentality thereof, including the Central Bank of Venezuela and PdVSA, and any person owned or controlled by, or acting for, or on behalf of the Government of Venezuela”.

Wheatley noted that with PdVSA, Jamaica's partner in Petrojam, and PetroCaribe being owned or operated by the Venezuelan Government, as a result of the imposition of EO 13808, payments to and from Petrojam became subject to increased due diligence by its primary financiers/suppliers of lines of credit, as well as from intermediary banks, pending clarification on whether the EO 13808 was applicable to Petrojam.

In addition to the disruption/delay of transactions for Petrojam, sovereign debt payments due by the Government of Jamaica under the Caracas Agreement 2001 and various other loan agreements which were due and payable to the Government of Venezuela were being withheld by the US Federal Reserve Bank, and others, in order to facilitate their own due diligence process.

Although those funds were ultimately released, explanations and proof of business transactions have now become a standard requirement for all transactions by the banks, occasioning significant processing delays, he said.

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