Jamaica News: The Government will be returning a US$100-million loan which was secured from the Ministry of Finance and the Public Service to develop the proposed Vacuum Distillation Unit (VDU) by State refinery, PETROJAM.
The loan was allocated earlier this year to PETROJAM’s parent company, the Petroleum Corporation of Jamaica (PCJ), to undertake the project, which would enable the refinery to further diversify its operations into asphalt production.
However, Prime Minister, the Most Hon. Andrew Holness, says delays in the project’s commencement consequent on United States (US)-imposed sanctions, among other geopolitical challenges, on Venezuela, which owns 49 per cent of PETROJAM through state oil and natural gas company, Petróleos de Venezuela, “the Government has to consider, carefully, the expenditure of the US$100 million”.
“It doesn’t make sense to have the money [languishing], when the Government has hundreds of other things that it could use it on to increase the revenue base. For us to make that expenditure, we have to look carefully at the overall position of PETROJAM. So, we have decided to return the US$100 million to the Ministry of Finance and the Public Service,” Mr. Holness said.
He was speaking during a press conference at the Office of the Prime Minister (OPM) on Monday (December 10).
Mr. Holness noted that US sanctions placed on Venezuela over the last three years have become “progressively difficult” to the point where “businesses and countries that do business with the Venezuelan government or businesses could, themselves, be sanctioned”, adding that “this is the situation now”.
“Jamaica is in an invidious position. We have only managed to survive because we have pleaded our case and there is the exercise of some discretion. But we should not rest comfortably in this situation [because] recent events have shown that when the sanctions are executed, they can have consequences,” he pointed out, while acknowledging that Jamaica forged a strong bond with Venezuela “which has always been good to us”.
Finance Minister, Dr. the Hon. Nigel Clarke, who also spoke, indicated that the loan was recalled in accordance with the principles of international best practice and public financial management.
He pointed out that consequent on the sanctions against Venezuela, which impacted Petróleos de Venezuela, coupled with PETROJAM’s association with the entity, the PCJ could not borrow from the international private capital market, “so they had to borrow from within the Government”.
“The decision to invest in a VDU called for significant capital investment. Those funds were not in the PCJ, but had to be borrowed. That loan was executed… and the funds were transferred to the PCJ,” the Minister noted.
Dr. Clarke pointed out, however, that since then, “things have occurred, and that project has not started… therefore, the funds are not being used”.
The PCJ, he further indicated, is paying interest on the loan for a project that is not being implemented… “and so, the Ministry of Finance will recall the loan”.
Dr. Clarke assured, however, that should the PCJ/PETROJAM encounter challenges sourcing private capital market funding for the VDU project in the future, “the Government/Ministry can look to lend, again, at that time”.
Source: JIS News