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JAMAICA: House Approves Bill to Retake Ownership of Petrojam Shares

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#Kingston, February 20, 2019 – Jamaica – Legislation to retake ownership of the 49 per cent shares in Petrojam held by the Venezuelan State-owned oil and natural gas company, Petróleos de Venezuela (PDV) Caribe, was passed in the House of Representatives on February 19.

The Compulsory Acquisition (Shares in Petrojam Limited) Act, 2019 was piloted by Prime Minister, the Most. Hon. Andrew Holness.  In his address, the Prime Minister said the decision to move in the current direction was not taken lightly, noting that Petrojam and Jamaica have been left at risk due to years of inaction.

“Technical assessments have found that refining operations will be negatively impacted by 2020 if Petrojam is not in a position to execute Phase 1 of the refinery upgrade (Vacuum Distillation Unit Project),” Mr. Holness noted.

“This is primarily due to the imminent international obligations as stipulated by the International Maritime Organization regulations regarding sulphur, which will become effective on January 1, 2020, and the transition by the Jamaica Public Service Company Limited (JPS) to Liquefied Natural Gas for its 190 MW power plant by June 2019, thereby reducing the need for heavy fuel oil produced by Petrojam,” he added.

Mr.  Holness argued that without an upgrade, Petrojam would be unable to further process heavy fuel oil (HFO) into high-value products, and having lost a major customer in JPS, Petrojam would become unprofitable.

The Prime Minister also cited the United States Executive Order 13808 dated August 24, 2017, which essentially prohibits United States persons from entering into specified transactions with the Government of Venezuela and any political division, agency or instrumentality thereof, including PDVSA. 

“While Petrojam itself was not identified as a ‘sanctioned entity’ under the Executive Order, the fact is that its banks and correspondent banks, which facilitate basic transactions with suppliers and service providers, are considered US persons, and were, therefore, at risk or at perceived risk of high fines for breaching such sanctions, and accordingly, they were hesitant to continue providing such services which were fundamental to the most basic operations of Petrojam,” he said.

The Prime Minister explained that the Government has no choice but to take action in the interest of preserving the energy security of Jamaica.

“It is important to understand that the Government of Jamaica does not see this as a political issue… .  I want to make it absolutely clear that the decision to acquire the shares is an economic decision,” Mr. Holness emphasised.

The Prime Minister also highlighted that payments to and from Petrojam have been subjected to increased due diligence by the primary suppliers of lines of credit, as well as intermediary banks, and the disruption or delay of transactions for Petrojam Limited has become a source of unease for Petrojam’s suppliers. 

“An even more serious concern is the overseas suppliers of goods and services to Petrojam. Owing to Petrojam’s continued association with Venezuelan entities, some suppliers have advised Petrojam that they are no longer willing to take the risk of supplying to Petrojam, and others have expressed grave concerns,” Mr. Holness said. 

The need for an upgrade of the refinery was recognised from as early as the 1990s, and Petrojam and the Petroleum Corporation of Jamaica (PCJ) have undertaken several studies on the refinery upgrade.  

“The challenge has always been the cost of the upgrade, which can run into hundreds of millions of dollars, with estimates as much as more than a billion dollars, depending on the extent of the upgrade,” Mr. Holness said.

In February 2005, a Letter of Intent was agreed between the Bolivarian Republic of Venezuela, acting through its Ministry of Energy and Petroleum, and the Government of Jamaica, acting through the Ministry of Commerce, Science and Technology, confirming, in principle, that they would pursue feasible options for the improvement of the refinery.

Additionally, in June 2005, further to the Letter of Intent, a Memorandum of Understanding was signed between the same parties, with a view to establishing a Joint Venture.

On August 14, 2006, a Joint Venture Agreement (JVA) was signed between the PCJ, Petrojam and PDV Caribe SA (PDV Caribe) to cooperate in the ownership and management of Petrojam and to undertake the refinery upgrade, which was recognised as critically important for the energy security of Jamaica.

“It stated that PDV Caribe SA and the PCJ agreed to embark on a Refinery Upgrade Project (RUP) through the medium of Petrojam.  The JVA defines the RUP as a project that will be carried out to expand the Kingston Refinery Processing capacity from 36 kilo barrels per day to 50 kilo barrels per day,” Mr. Holness said.

The first phase of the RUP will include a revamp of the Atmospheric Distillation Unit, and the installation of new units, including a Vacuum Distillation Unit, Naphtha Reformer. Phase II will be evaluated aiming at incorporating a Deep Conversion Unit in the Refinery.

“The JVA also set out that in order to facilitate its purpose, the parties would enter into a Share Sale and Purchase Agreement pursuant to which PCJ would sell, and PDV Caribe would purchase, shares in Petrojam. The Share Sale and Purchase Agreement was signed in August 2007, selling 49 per cent of the shares in Petrojam for the sum of US$63.7 million, based on valuations by internationally recognised consultants with expertise in valuing assets in the energy sector,” the Prime Minister explained.

Mr. Holness pointed out that despite discussions and negotiations, the RUP has not been achieved.

Contact: Latonya Linton

Release: JIS

Photo Captions:

Header:  Prime Minister, the Most Hon. Andrew Holness, addresses the House of Representatives on February 20. At right is  Minister of State in the Office of the Prime Minister with responsibility for Works, Hon. Everald Warmington.

Insert: Prime Minister, the Most Hon. Andrew Holness, reacts to a comment during his address in the House of Representatives on February 20.

Mark Bell Photos

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CARICOM speaks out on Climate Change, looking to May meeting to amplify call for Climate Funding

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March 3, 2024

 

The Caribbean Community (CARICOM) remains on the frontlines of global climate crisis, an issue the Region has been aggressively advocating on for the past thirty years. Despite the many commitments and promises of international partners, the window of opportunity to limit global warming to 1.5 degrees Celsius above pre-industrial levels is rapidly closing.

Heads of Government are concerned that while COP 28 was widely regarded as a historic event, with the completion of the first global stocktake (GST), on progress in achievement of the Paris Agreement goals, the outcomes of GST show that emissions of greenhouse gases continue to rise and the nationally determined contributions (NDCs) of Parties will not keep global temperatures below the 1.5 degree goal enshrined in the Paris Agreement.

Heads of Government also expressed concern to be heading to COP 29 where a New Finance Goal will be articulated to replace the 100bn goal, which has not yet been met, even as developing countries require trillions to deal with the escalating impacts of climate change. Developed country parties have not provided enough finance at scale, technology and capacity building support required to help developing countries tackle their pressing needs to build their resilience, especially in adapting to the adverse and increasingly catastrophic impacts of climate change. The clear absence of definitive timelines for action and quantitative commitments for scaling up of investments, and particularly adaptation finance emerging out of COP 28, cause great concern to our Region.

The Conference noted that Small Island Developing States (SIDS), recognized as the most vulnerable group of countries and a special case for sustainable development, have been facing strong push back against the recognition of their special circumstances especially in the context of climate finance. There is limited international support for special allocations for SIDS within financing arrangements and available climate finance from international and private sources is limited, expensive and too onerous to access.

In light of the preceding, Heads of Government called for CARICOM to take a strategic, unified and coordinated approach to ensure that the Region remains influential in the climate and development arena through engagements with key partners and advocacy groups.

They called for renewed focus by the Region to advocate for inclusion of forests, nature-based solutions and blue carbon into market mechanisms with the aim of articulating clear regional positions and strategies.

Heads of Government reiterated the call for improved readiness programmes, simplified approval procedures, a change to the criteria for determining access to low-cost finance, and for the adoption of programmatic approaches to address the bottlenecks in accessing finance.

The Region reiterates its support for the Bridgetown Initiative’s call to expand capital adequacy of international financial institutions.

Heads recognized that the Fourth International Conference on Small Island Developing States, scheduled to be held in Antigua and Barbuda, 27 – 30 May 2024, will be an inflection point for many of these discussions to be articulated. As such, the Region remains committed to participating in the Conference at the highest level.

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South Caicos Development Plans shared with Washington-Misick led Administration

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On Monday, 12 February 2024, the Premier led a delegation to tour the island of South Caicos to view the ongoing public and private sector projects, involving the remodelling and rebranding of the airport terminals, historical districts, and the East Bay Hotel.

The tour of the various developments reinforced the Government’s commitment to collaborating with stakeholders to boost the island’s activity and economy.

Photos courtesy of the TCI Office of the Premier

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Ministry of Tourism continues to get rid of dilapidated structures

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By LINDSAY THOMPSON

Bahamas Information Services

NASSAU, The Bahamas – The Ministry of Tourism, Investments and Aviation is continuing to rid areas of derelict and dilapidated structures posing safety problems, and a threat to the overall tourism product.

In this vein the recent structure to be demolished was the Gaming Board building owned by the Hotel Corporation.  Located adjacent to Goodman’s Bay Beach on West Bay Street, it was formerly the Sir Harry Oakes property; the northern portion once housed Bahamas Information Services for several years.

 


On hand to witness the demolition were Deputy Prime Minister and Minister of Tourism, Investments and Aviation the Hon. Chester Cooper, and Senator Randy Rolle, Global Consultant, MOTIA.

The demolition started on Monday, February 5, 2024 by Virgo Construction headed by the contractor Terry Delancy.  

DPM Cooper explained that the government felt the Gaming Board building should no longer sit there in a derelict manner, and continue to be an eyesore and pose safety concerns.

“Goodman’s Bay will be enhanced as a result of getting rid of this building. It will be more aesthetically pleasing for residents who traverse this area. Women who walk in the mornings in particular through these areas will be pleased to see that this has become a green space, rather than a derelict structure,” he said.

DPM Cooper also noted that his ministry consulted broadly with the Antiquities, Monuments & Museums Corporation (AMMC), and other historians before proceeding with demolition.

“We are sure not to take any actions as it relates to buildings, without consultation. So they were very comfortable with the process and we continue to work closely with them on all of the buildings that we have demolished in the downtown area,” he said.

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