PRIME Minister Bruce Golding says his government’s decision to approve the contract for Glencore International to lift Nigerian crude oil on behalf of Jamaica will be subject to its investigation into the pricing.

The new administration approved the 12-month contract at its first Cabinet sitting last Monday. But the prime minister said that, in the meantime, Minister of Energy, Mining and Technology, Clive Mullings would undertake investigations into the price.

“We took that decision as a matter of urgency so as not to lose the opportunity for the October lifting,” the prime minister told a press briefing at Jamaica House last Monday.

Swiss trader Glencore is to replace Dutch firm Trafigura Beheer which was at the centre of a political donation scandal last year, after donating $31 million to the then ruling People’s National Party (PNP).

Following the previous government’s decision to put the contract to tender, the tender was conducted and the company offering Jamaica the best price was Glencore International.

Glencore was recommended by the National Contracts Commission (NCC) to be awarded the contract to lift the oil after bidding US25 cents per barrel.

Golding noted that the contract was not approved by the previous cabinet.

“Cabinet took the decision, today, to approve the award of the contract to Glencore, subject only to confirmation from the Attorney General’s Department that certain amendments that were recommended by the department to the draft contract have been in fact incorporated,” Golding said.

“Remember that we were previously getting 12 cents. In the bids that were invited, Glencore submitted a bid for 25 cents.

Interestingly, Trafigura, which had been paying the 12 cents, submitted a bid for 24 cents. There were about two or three other bids, with the lowest being ten cents,” he explained.

“We asked the minister of energy, mining and technology to carry out the appropriate investigations and to advise us whether, given the price of oil and given the fact that the oil we are lifting under an agreement with the government of Nigeria is the ‘Mercedes Benz’ of oil…to advise us whether or not US25 cents is a good figure, a competitive figure and a commensurate figure, bearing in mind the quality of the oil.

“But, we could not afford for that investigation to hold up the signing of a contract, or else we would lose the October lifting and possibly lose subsequent liftings,” he said.

However, he added that, knowing that the contract is for 12 months, the government has decided to use that 12 months to see “whether or not US25 cents is still cutting it and, if it is not cutting it, at least, to be able to advise ourselves as to what arrangements we could enter into at the end of that 12 months to get the best possible deal for Jamaica.”

Golding said that the country should bear in mind that, based on the agreement with Nigeria, Jamaica is entitled to lift 30,000 barrels per day. He said that although Jamaica was rarely able to secure the full entitlement, because on occasions the Nigerian oil company was not able to supply, if the country was able to lift the full 30,000 barrels a day, it would amount to about 10 million barrels per year which, at US25 cents maximum lifting, would amount to about US$2 1/2 million for the year.