You don't need to look further than Belize being blacklisted for human trafficking to know that the United States clearly frowns on this country's close alliance to socialist states Venezuela and Cuba. But regardless, the ties between the three countries continue to grow. On Monday in the House of Representatives, government will approve a US$25 million loan from Venezuela. And yesterday, in an event open only to government friendly media, Belize and Venezuela agreed to form a new oil company.
It's a formalization and extension of the PetroCaribe initiative signed by CARICOM nations on September sixth. Belize was one of the first countries to benefit with a shipment of fuel sent here in November. Famously, there was nowhere to store it, and it ended up costing more to have Esso keep it for a few months as government searched for ways to sell or barter it off.
Well, don't tell Uncle Sam, but this new deal might ensure that that's not going to be a problem again because Venezuela is now expected to invest in oil infrastructure which, according to what we hear, is some kind of fuel depot, a hugely costly venture. That's what Home Affairs Minister and Petrocaribe point man Ralph Fonseca said at the signing ceremony yesterday. To illustrate how important infrastructure is, he discussed what went wrong with last year's shipment.
Hon. Ralph Fonseca, Minister of Public Utilities
"Because of limited tank storage and other issues, this first shipment underscored Belize's need to seriously assess its energy security level. In any case, this first purchase followed all the terms and intent of the agreement. The product was delivered to the tanker at market prices but the freight at actual cost with no markup. Also because the price per barrel of crude was above US$50 per barrel, Belize paid for 50% of the product cost and will pay the remaining 40% after a two year grace period over 23 years at 1% per annum.
Of course this greatly assists our foreign reserves management, lessens the strain on the Belize dollar and frees up more foreign exchange for development purposes as together we march against poverty.
Now again in the spirit of the agreement, we are forming this joint venture Alga PetroCaribe Belize Energy Limited owned by Belize's BPEL and Venezuela's PDV Caribe. The venture will invest in infrastructure necessary to raise the level of Belize's energy security while working with interested private sector groups willing to stay within the parameters of the agreement."
The Belize leg of the new company is called Belize Petroleum and Energy Limited and signing on its behalf was its Chairman, Fonseca's CEO Cresencio Sosa, and signing on behalf of PDV, Petroles de Venezuela was Vice-President Alejandro Granado Ravelo.
Again, as has been noted before, Venezuelan fuel is sold to Belize for market price but Cuba facilitates the shipping so that is discounted, and Belize pays 60% of the transaction in cash and finances the remaining 40%. But while it allows an ease on the foreign exchange supply, it does not lower pump prices.
