VENEZUELA and 14 Caribbean nations last night signed the historic PetroCaribe agreement under which Caracas will provide oil to Caribbean countries on concessionary terms.

The formalising of the accord at the luxurious Ritz-Carlton Hotel came on the 190th anniversary of the Letter from Jamaica by Simon Bolivar, the 19th century Latin American liberator and hero of Venezuela’s president Hugo Chavez, who has sought to re-ignite Bolivar’s vision of hemispheric unity.

Bolivar lived for several months in Jamaica, finding refuge here after one of his setbacks in the revolutionary wars.

Chavez, in signing the pact with regional leaders, called for the development of “a strong union” as perceived by Bolivar as the basis of real “political freedom and the breaking of the chains of poverty and slavery”.

Chavez has irked the United States with his sharp anti-imperialist rhetoric and his friendship with Cuba’s president Fidel Castro, but his willingness to take action to ease the burden on small Caribbean countries faced with rocketing oil bills has found resonance in the region.

Apart from the broad framework agreement signed yesterday in the Declaration of Montego Bay, Chavez had already signed bilateral packs with Jamaica and Cuba and yesterday entered similar arrangements with the heads of state or delegation from Belize, the Dominican Republic, Guyana, St Kitts Nevis, Suriname, St Vincent and the Grenadines, Dominica and Antigua and Barbuda.

Under the agreement it signed last month, Jamaica is to be provided with 21,000 barrels of crude oil per day via a loan of US$40 per barrel from Venezuela under the agreement, at an interest rate of one per cent.

There is to be a two-year grace period for the repayment of the loan over 25 years, but where payments are deferred, according to the terms of the agreement, Venezuela will accept partial payment with goods and services.

However, Prime Minister P J Patterson made it clear that under the agreement beneficiaries would not be receiving oil at concessionary prices.

“Within the framework of OPEC, Venezuela is not permitted to sell below world market price. We have to buy the oil from Venezuela at prevailing world market price. We must therefore sell the oil to the retail trade to recover the full price.

However, instead of paying the full amount to Venezuela, up front, only a part is remitted immediately in cash,” Patterson said last night.

“The rest of the payment is convertible by our governments as a concessionary loan at one per cent over 25 years. In keeping with the philosophy of Venezuela, this loan is available to fund social and economic development programmes and to improve the social quality of the life of the poor,” Patterson said.

Patterson said the immediate benefits of the agreement are:

. Averting a severe reduction of foreign exchange reserves and thereby easing the pressure for currency devaluation which would trigger inflation and consequently increase the plight of the poor.

. The accumulation of loan funds at concessionary rates which cannot be secured either from the international lending agencies or capital markets and without any conditionalities attached.

. The ability to repay portions of the loan by way of goods and services, including commodities such as sugar, bananas and rice, which have suffered from adverse rulings of the WTO.

He described the PetroCaribe agreement as opening a new chapter for expanded regional trade and economic partnership.

Said Patterson: “We strive to meet millennium development goals while the developed countries are yet to honour their commitments made in Doha, Monterrey, Johannesburg and Mauritius.”

At the same time, a PetroCaribe ministerial council was established yesterday, while the Pertocaribe Executive Secretariat will undertake strategic studies in each member country for the Characterisation of Energy in the Central American and Caribbean Region as well as a study for Advancing Renewable Energy Technology in the Caribbean region.

Phillip Paulwell, who has portfolio responsibility for energy in the Jamaican Cabinet, said the PetroCaribe agreement was just another step on the long road towards energy co-operation and integration for socio-economic development of “our countries and people”.

In fact, this is where the real hard work begins as we move to take advantage of many developmental opportunities available under this agreement,” Paulwell said at the signing last night.

Paulwell thanked President Chavez for his “vision and for his generosity which gave birth to the revolutionary initiative that is PetroCaribe. and above all, for recognising the socio-economic imperatives for the future”.

In the meantime, Raphael Ramirez, Venezuela’s minister of energy and petroleum, said the delegations of the 14 PetroCaribe member countries, in addition to the observers from Trinidad and Tobago, Barbados, Bahamas and the Caribbean community had participated in the Montego Bay meetings “with which Caribbean energy integration will make a leap forward as a tribute to the ideals of the Liberator Simon Bolivar.

In opening the summit earlier in the day at the posh Ritz Carlton Hotel in Montego Bay, Patterson said it marked another milestone “in our current initiatives to forge a unified approach to social and economic development in the Caribbean Community (Caricom).

“It will serve to strengthen our ties with the Bolivarian Republic of Venezuela and two of our close neighbours in the wider Caribbean Basin – Cuba and the Dominican Republic,” Patterson told the summit.

The Jamaican prime minister said technological revolution had brought with it a massive rise in global energy consumption and that this increased demand was also evident in the country, and projections for energy to meet growth targets reflected an inescapable upward trend.

Cuban leader Fidel Castro, who joined leaders of the Caricom bloc for the oil summit, was praised by Patterson, who said the communist leader’s record for “humanitarian generosity has never diminished despite whatever daunting challenges his government and people have faced over the past decades”.

Castro was paying his fourth visit to Jamaica, having come here first in October 1977, during the Michael Manley administration, again in 1997 for Manley’s funeral and in July 1998 when he spent three days in the country.

Dr Keith Mitchell, the prime minister of Grenada, pointed to the importance of oil in the national reconstruction of his country, which he said had been hit by three disasters in the last 12 months. He listed these as Hurricane Ivan last September, Hurricane Emily in July this year, and the high cost of oil.

The crude oil supplies from Venezuela will be governed under the policies and commercial practices of the Venezuelan state oil company, Petroleos de Venezuela S A (PDVSA), in accordance with stipulations under the PetroCaribe agreement.

In the closing moments of the summit, President Fidel Castro of Cuba suggested the setting up of an “Electro-Caribe” along the lines of Petro-Caribe, to deal with electricity problems, and President Chavez said he would consider it.