Venezuelan Company Seeks Compensation for Petrojam Shares after Jamaica Government Acquires Them

Minister of Science, Energy and Technology Fayval Williams (Credit: JIS)

KINGSTON, Jamaica, Monday July 8, 2019 – Minister of Science, Energy and Technology Fayval Williams, says Petróleos de Venezuela (PDV) has brought a compensation claim against the Government of Jamaica over the retake of the company’s 49 per cent shares in Petrojam.

She made the disclosure following the tabling of the Report on the strategic review of the State-owned oil refinery.

“We have been notified of one claim from PDV, and it’s in keeping with the provisions of The Compulsory Acquisition (Shares in Petrojam Limited) Act. The claim has been made in the Supreme Court all the documents are being reviewed [by] the Attorney General,” Williams said in response to questions posed by Opposition Spokesperson on Energy, Phillip Paulwell.

She said she would make a statement to the House, after being fully briefed on the issue by Attorney General Marlene Malahoo Forte.

Legislation to retake ownership of the 49 per cent shares in Petrojam held by the Venezuelan State-owned oil and natural gas company, PDV Caribe, was passed in both Houses of Parliament in February.

The move was taken in a bid to safeguard the country’s energy security.

Meantime, the Petroleum (Amendment) Act, 2019, which seeks to transfer the rights and obligations of the PetroCaribe Development Fund (PDF) to the Government has been passed in the Senate. Under the amendments, the PDF’s functions and a small amount of liabilities will be integrated into the Ministry of Finance and Public Service, and the Fund, as a separate entity, will cease to exist.

Legislation to allow for this new arrangement had become necessary given that the Fund, which was established as a public body in 2006, has now fulfilled its mandate.

The PDF had the responsibility of managing the proceeds, which accrued to Jamaica under the Energy Co-operation Agreement entered into between the Governments of Jamaica and Venezuela.

It was charged with lending to self-financing public bodies for human capital development, offering assistance to the Ministry of Finance for domestic debt refinancing as well as lending to reduce Jamaica’s dependence on fossil fuel.

Minister without Portfolio in the Ministry of Economic Growth and Job Creation, Senator Pearnel Charles Jr., who piloted the legislation, said that transfer of the Fund to Central Government is crucial in light of the Standby Agreement with the International Monetary Fund (IMF) and is also in keeping with good public financial management.

He noted that the inflows to Jamaica under the PetroCaribe Agreement have been negligible since financial year 2015/2016 and the prospects for any improvement in inflows “appears to be unlikely given the clear outlook on Venezuela’s economy and the sanctions that have been imposed by the United States and other Governments.”

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