Dominican Republic would not have the prices of fuels cheaper if the alliance were still in force Petrocaribe. This agreement provided the Caribbean countries with Venezuelan oil with advantageous financing conditions, but it did not subsidize the final price of the fuels.
The President of the Dominican Republic, Louis Abinadersaid last Sunday at a press conference in Barahona, in the south of the country, that if he had “a Petrocaribethe fuels they would be cheaper”, in a context of discomfort due to the rise in prices of fuels in the country.
With Petrocaribethe Dominican State bought Venezuelan oil “at 50 dollars”, sold it “at 70” and had a “profit with an extra tax”, added the president, according to a press release from the Presidency.
The statements were replicated in local media and on social networks with dozens of “likes”, and the former Minister of Economy, Planning and Development, Juan Ariel Jiménez, among other politicians, came out to refute him.
prices of fuels cheaper with Petrocaribe?
Petrocaribe is a regional energy cooperation initiative founded by 14 Caribbean countries in Puerto La Cruz, Venezuela, in June 2005.
Although formally the alliance continues to exist, following the economic and social crisis in Venezuela and the fall in oil prices, crude shipments declined. There is also no official data to know its current dynamics.
The fundamental objective of the initiative was to guarantee the energy supply in the region. To do this, Venezuela provided crude oil to the other member countries at market prices, but part of the payment might be deferred between 17 and 25 years, at an interest rate of 1%.
What did the alliance contemplate? Petrocaribe?
The agreement contemplated that if the international price of a barrel of oil “exceeds 40 dollars, its payment will be extended to 25 years, with a two-year grace period included and 1% interest.”
And, when the price was below 40 dollars, the payment was extended to 17 years, at 2% interest and a two-year grace period, while the short-term payment was between 30 and 90 days.
In other words, if it is assumed that oil is at today’s price, at 90 dollars, “Venezuela would sell it at that price, but the Dominican Republic would have to pay it 40 dollars and the difference would accumulate over 20 years, financed at a extremely cheap, 1%”, explains Henri Hebrard, economic adviser, to EFE.
Does the Dominican Republic continue to pay the debt of Petrocaribe?
President Abinader also said that the State is currently paying the debt of “those interests not paid to Venezuela by those who benefited from the agreement of Petrocaribe”.
In January 2015, the Dominican Republic redeemed in advance 98% of the debt of 4,027 million dollars that it had with the state-owned company Petróleos de Venezuela (PDVSA) within the framework of Petrocaribe and was left with an obligation of 96.5 million dollars.
According to Hebrard, “it was a very advantageous negotiation for the Dominican Republic because only half of the debt was paid.”
However, he clarifies, to buy back the debt with PetrocaribeDominican Republic “had to issue sovereign bonds and refinance.”
Today, the State does not owe this money to Venezuela but to the rest of the world through sovereign bonds, at an interest rate higher than that of Petrocaribeexplains the economist.
EFE Verifies contacted the president’s team to comment on the statements, but received no response.
In summary, the Dominican Republic would not have the prices of fuels cheaper if the alliance were still in force Petrocaribe. This agreement provided the Caribbean countries with Venezuelan oil at market prices, with the possibility of financing its purchase at low interest rates, but it did not subsidize the final price of gasoline. Efe Verifica also recently verified a normality index from The Economist that was shared by the Government of Colombia and that was out of context.