Jamaica Labour Party ministers and their surrogates in mass media and digital space do not like any counternarrative on the premature and precipitous act of drafting legislation to expropriate the 49 per cent stake in the Petrojam refinery, owned by PDVSA, the state-owned Venezuelan oil company.
The Opposition PNP, which has called the proposed action hostile, premature and unnecessary, has been labelled as “Maduro lover” and accused of taking a position in contradiction to the interest of Jamaica. The Government’s argument, which is being carried by the country’s chief diplomat, Senator Kamina Johnson Smith, is laced with such superficiality and sophistry, so much so that an objective way has to be found to bring the facts to the Jamaican people.
Venezuela and Jamaica signed off on a new ownership arrangement for Petrojam in 2006, under which, Jamaica, through the Petroleum Corporation of Jamaica, owns 51 per cent of its shares and Venezuela, through PDV Caribe, owns the balance. At the time of the agreement, there was much fanfare about the possibility of upgrading the Petrojam facility from hydro-skimming technology to the installation of a catalytic cracker to change the production mix and make it more aligned to Jamaica’s energy-consumption needs. Most of all, it has guaranteed Jamaica’s energy security.
Shortly after the change of government the following year, the new minister of finance was happy to receive the equity cheque of US$63 million and promptly devoured it in a spending spree. This took place at the height of Jamaica receiving other benefits under the PetroCaribe accord, under which Jamaica received in excess of US$3.2 billion in deferred crude oil payment to finance development projects.
The debt was eventually bought back by Venezuela at 50 cents on the dollar. In other words, you owe a man $3 billion and he takes $1.5 billion and tells you that “everything’s cool”.
This friendly gesture, perhaps more than any other single action, brought Jamaica’s debt to GDP ratio down. If any Jamaican is deserving of any credit, it would be Dr Peter Phillips, who, just this week, was given the accolade by Damien King of performing the single most remarkable feat in getting Jamaica to balance its fiscal Budget in one year.
There is no doubt that both Jamaica and Venezuela have been tardy in achieving the high ideals dreamt of by the partnership of 2006.
Jamaica’s inept and corrupt management of the refinery over the last 30 months has not made matters any easier, and the Venezuelan partners were themselves forced to carry out an audit, which did not leave the minister, the board, or management smelling like roses.
The distraction of both policymakers and management also caused the sidelining of critical projects, including the Vacuum Distillation Unit (VDU). This has only served to darken the bright days we had hoped for.
These plans and schemes persisted even while the hapless Mr Christopher Zacca and his commission pondered the economic and technical future of the refinery, pronounced dead by Esso in 1984, but quickly brought back to life by then Prime Minister Edward Seaga with profits from Nigerian Oil Trading, made by his predecessor, Michael Manley.
And so we come to the present expropriation strategy and its necessity. As I said before, there is enough blame to go around, but why was it necessary to be done before any attempt at mediation or arbitration, which is provided for in the shareholder agreement? It is generally less costly to try arbitration before expropriation because arbitrators and courts frown upon abuse of property rights.
On December 28, 2018, the Jamaican Government sent new communication to Venezuela, indicating the urgency of getting a response by December 31, 2018. It is curious that the day before Senator Johnson Smith sent her letter to Venezuela with the new offer, a private Jamaican company contacted the Venezuelan government and made an offer to buy the shares for US$100 million for the 49 per cent stake. This offer was preceded by another offer of US$55 million from another Jamaican company, which, strikingly, resembled the offer of US$50 million made to Venezuela by the Jamaican Government.
The plot thickens. On December 31, 2018, the same date on which the Jamaican Government had demanded a response, one of the private entities sent a revised offer of US$70 million to Venezuela.
The Government’s hostile takeover bid is no way to treat a friend. Venezuela has stood by Jamaica through thick and thin from the 1970s with Carlos Andres Perez and the San Jose Accord through to PetroCaribe under Hugo Chavez.
No one has to love Nicolas Maduro, but surely, we should never repay Venezuela’s friendship and economic solidarity with a slap in the face and kick in the butt.
Colin Campbell is a former minister of information. Email feedback to [email protected] .
LINK ORIGINAL: Jamaica Gleaner