Jun 13, 2015 Editorial
EACH day there is some revelation about unexplained happenings in the public treasury, and each day, the public is becoming more and more convinced that financial irregularities were the order of the day. The most shocking appears to be the money that should have formed the PetroCaribe fund initiated by Venezuela. This was money that should have accrued from the purchase of fuel from Venezuela.
The neighbouring country, recognizing that it had a lot of oil that could help the economies of countries like ours, opted to make concessionary loans by way of fuel to Guyana and other countries in the region.
Indeed this was a boon. Guyana Power and Light, the country’s electricity company was using US$120 million per year in fuel. Then there were the other users of fuel like the petrol stations and the various other entities that retail fuel.
Guyana imports fuel from other sources but the chance to save on fuel imports must have been a giant-sized magnet. PetroCaribe is an oil alliance of many Caribbean states with Venezuela to purchase oil on conditions of preferential payment. The alliance was launched on June 29, 2005 in Puerto La Cruz, Venezuela.
The payment system allows for purchase of oil at market value for five per cent to 50 per cent up front with a grace period of one to two years; the remainder can be paid through a 17-year to 25-year financing agreement with one per cent interest if oil prices are above US$40 per barrel.
Needless to say, oil prices have been higher than US$40 per barrel for more than a decade. Poor countries already cash strapped were glad for every bit of additional income to pursue their individual development.
Indeed, Guyana was not the only beneficiary of the PetroCaribe deal. Other Caribbean countries grasped the opportunity but it was not all plain sailing. Countries that relied almost exclusively on the United States were advised against the deal because the United States and Venezuela were at each other’s throats.
Guyana had no such problem so it agreed to the conditions that the money saved from the PetroCaribe deal would be used to help the agriculture sector. It was a lot of money that went into the Central Bank over the ten years that Guyana signed the deal. We now hear that the fund is bankrupt, that somehow, the previous administration ensured that it spent every cent in the fund.
We know that some of the money went to construct a home for senior citizens in West Berbice. We then learnt that money from the PetroCaribe agreement went into the Hope Canal. Former President Bharrat Jagdeo was so excited at the available cash that he decided to make even more money. He later told the press that he had invested the PetroCaribe money. So he would have no problem in paying the one per cent per annum interest.
Now the new government says that there is no money in the fund, that it is bankrupt. We do not know where the money went or if indeed it has been reinvested. If the money is not there then where has it gone?
Certainly the previous government was not playing fast and loose with the public treasury. There is evidence that money was no problem when it had to be dispensed by the government. How else could one explain a $16 million payout to a Canada-based Guyanese for no known reason?
We are not at a stage where we would have expected that the PetroCaribe funds would have brought benefits to the nation. It has brought none. In addition, we have to pay Venezuela for what we have no knowledge of.
For sure, the government took the people of Guyana for granted and therefore did not deign to tell the nation of the plans for national development. Even the parliamentarians were not told everything about public spending. So money was spent and we must now try to find out on what.
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