A number of presidents of Venezuela floated a number of programs aimed at assisting the Caribbean, but there was very little follow-up.
However, it was the late President Hugo Chavez who unveiled what is now known as the Petro Caribe Initiative, which allowed Caribbean states to purchased petroleum products at concessionary terms.
Under the Agreement signed on June 29, 2005, at Puerto la Cruz in Venezuela, petroleum products from Venezuela were and are sold to many Caribbean countries, at prevailing international market prices.
It was during the administration of the late President Hugo Chavez in October 2000 that the concept of an energy agreement between Venezuela and Caribbean and Central American countries the Caracas Energy Agreement was signed.
This afforded Belize, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Haiti, Jamaica, Nicaragua, and Panama to purchase Venezuelan oil products at low-interest.
At the Puerto la Cruz signing in 2005, when the first Petro Caribe summit was convened, 14 countries including Venezuela, signed an agreement to form the group.
These countries are Antigua and Barbuda, the Bahamas, Belize, Cuba, Dominica, the Dominican Republic, Grenada, Guyana, Jamaica, St Kitts and Nevis, St. Vincent and Grenadines, Suriname, and Venezuela.
Haiti and Nicaragua became members in August 2007, while Guatemala and Honduras joined in 2008, but officially became members at the May 4, 2013, Petro Caribe summit.
The current 18 members of Petro Caribe are Antigua and Barbuda, Bahamas, Belize, Cuba, Dominica, Dominican Republic, Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Nicaragua, St Kitts and Nevis, St Vincent and Grenadines, Saint Lucia, Suriname, and Venezuela.
Over the years since joining Petro Caribe, St. Vincent and the Grenadines has purchased diesel for its power generating plant at Lowmans, while only 20-percent of its national liquefied petroleum gas (LPG) needs are purchased from the seller the state-owned Petroleos de Venezuela.
This arrangement is according to St. Vincent and the Grenadines Prime Minister Dr. Ralph Gonsalves, “For safety of supply and competitive reasons.”
According to information from the St. Vincent and the Grenadines Ministry of Finance, the debt of St. Vincent and the Grenadines to Petro Caribe amounts to US$190,350,704.81.
From this sum are loans to the government amounting to US$108.38 million, loans to specific government entities totaling US$81.96 million which includes a small government secured loan for an intra-island sea transport company, and $74 million to the International Airport Development Company (IADC) for airport construction at Argyle.
Prime Minister Gonsalves points out that “not one cent has been paid as yet from the Consolidated Fund (the Treasury) to repay the Petro Caribe debt. All the repayments have been made thus far from the annual flows of the Petro Caribe financing itself.”
He explained that if US$25 million comes to the government annually for long-term financing, the government finances the very debt itself from the long-term flows, and utilizes the remainder for developmental projects.
These developmental projects include US$73.99 million for the afore-mentioned IADC for the construction of the Argyle International Airport.
Other major beneficiaries have been the Farmers Support Company which had been established to make soft loans available to farmers, the Buildings, Roads and General Services Authority (BRAGSA) and the Housing and Land Development Corporation (HLDC).
Prime Minister Gonsalves further states that “This arrangement is quite beneficial to countries like St. Vincent and the Grenadines which participate in the Petro Caribe arrangement. In effect, the Government of St. Vincent and the Grenadines receives soft loans on an ongoing basis to carry out essential public policies and programmes.”
Major central government projects which have received financing from the Petro Caribe Initiative are Border Security Management, E-Passport System, Road Repair Programme, Housing Rehabilitation, Provision of housing materials – both coming out of natural disasters and general upkeep assistance projects, Female Wing at the Belle Isle Correctional Facility, LIAT re-fleeting Programme, Poverty Reduction Programme, Black Sigatoka Disease control, purchase of the Dee’s building and its subsequent retrofitting to house the Electoral and Immigration Offices, respectively, the SET Programme for the employment of college and university graduates, the St. Vincent and the Grenadines Tourism Authority for tourism production promotion, purchase of the Herboprot P medication for persons with diabetic ulcers, rehabilitation of the temporary Mental health Centre at Orange Hill, and Accountant-General budgetary support.
What is most astounding about the Petro Caribe initiative is the continued support from the Venezuelan Government under President Nicolas Maduro following the death of President Hugo Chavez, in wake of the collapse of world oil prices.
Although revenue declined as a result, Venezuela reassured Caribbean states of the Petro Caribe continuance despite its domestic challenges, and Venezuela itself offered debt-relief on the Petro Caribe debt to Organisation of Eastern Caribbean states, which incorporated into the Petro Caribe (Special Purpose) Fund Act of 2016.
The Government of St. Vincent and the Grenadines pays Petroleos de Venezuela “one-half 50-percent of the cost of the petroleum products within 90 days of delivery, and retains the other one-half at a very low-interest rate over a very long period (25 years).”
There would have been negative consequences outside for St. Vincent and the Grenadines because “Without funds from the Petro Caribe Initiative, St. Vincent and the Grenadines would be required to borrow for public expenditure these same monies at burdensome higher rates of interest over a shorter, and far more problematic period of time.”