KINGSTON, Jamaica, Wednesday February 13, 2019 – The Government is reporting that “good progress” has been made in negotiating the repurchase the 49 per cent stake that Venezuelan entity PDV Caribe has in the state refinery, Petrojam.
Foreign Affairs and Foreign Trade Minister, Senator Kamina Johnson Smith, who heads Jamaica’s negotiating team, indicated that PDV accepted a settlement price offer agreed on by the parties, following “serious” discussions over the last few weeks.
“To date, however, we have not been able to reach an agreement on the terms. So the work towards a negotiated agreement continues,” she said, while addressing a press conference yesterday.
Senator Johnson reiterated that the Government’s decision to repurchase the shares is based on the need to safeguard the country’s interests.
This is particularly in light of increasing sanctions against the administration of Venezuelan President, Nicolas Maduro, initially by the United States through Executive Orders – the latest of which was issued in January – and subsequently Canada.
The Minister further noted that this has created unease among the refinery’s financial partners and suppliers, which, she indicated, “started taking precautionary measures to ensure they are not in breach of the sanctions by doing business with Petrojam”.
“Unsurprisingly, not only have [they] started posing questions about the impact of the new Executive Order but, in some respects, have requested indemnities of the company as a basis for continued services,” she said.
Senator Johnson Smith advised that while Petrojam is not a sanctioned entity under the Executive Orders, “the ownership structure of the Petrojam refinery now poses a risk for Jamaica’s energy and for our economy and, accordingly, the Jamaican people”.
Petrojam’s structure, pursuant to the joint agreement entered into in 2006 and in accordance with the entity’s Articles of Incorporation, requires an equal number of Jamaican and Venezuelan Board members, with decisions requiring agreement between the parties.
Senator Johnson Smith said this could pose a challenge for programmed undertakings, citing issues arising, with phase-one implementation of the Vacuum Distillation Unit project as an example.
“The reality is that as a responsible government, it is important that we act to protect Jamaica’s energy security and the interest of the Jamaican people,” she added.
In light of this, Senator Johnson Smith said the Government has moved to table a Bill to compulsorily reacquire the 49 per cent Petrojam shares. Yesterday, Prime Minister Andrew Holness tabled The Compulsory Acquisition (Shares in Petrojam Limited) Act, 2019, in the House of Representatives.
Senator Johnson Smith argued that consequent on the imminent tightening of the sanctions and the risk they pose, “we must take action, even as we pursue a negotiated settlement”.
“We have, therefore, written to PDV Caribe to advise them we remain open to reaching a negotiated agreement, and to express once more that this is not a hostile step, but is one which asserts the interest of the Jamaican people,” she added.