Thursday 27 February, 2020

WATCH: Gov't explains decision to retake ownership of Petrojam shares

Kamina Johnson Smith

Kamina Johnson Smith

Foreign Affairs and Foreign Trade Minister Kamina Johnson Smith says a confluence of important factors were behind the decision by the Jamaican government to retake ownership of the 49 per cent shares in Petrojam held by the Venezuelan state-owned oil and natural gas company, PDV Caribe.

At a press conference at the Office of the Prime Minister on Monday, Johnson Smith said the government is committed to safeguarding the country’s energy security and is confident that it has made the right decision.

Among the factors she highlighted were the need to upgrade the refinery from as far back as 2006, the Jamaica Public Service Company (JPS) decision to convert to liquefied natural gas (LNG) in 2019 as well as the fact that JPS makes up 50 per cent of Petrojam’s market.

Additionally, she said new international regulations will make it difficult for Petrojam to sell heavy fuel oil and process it as it now does, which takes effect on January 1, 2020; and banking and operational risks caused by domestic and hemispheric issues and challenges experienced by Venezuela.

Johnson Smith also said the decision was not made without recognition and appreciation of the “space that the Petro Caribe arrangements gave us and the relationship between Venezuela and Jamaica that dates back to the days of Simón Bolívar seeking refuge in Jamaica”.

She advised that the Government did make attempts to offer incentives to the Venezuelan Government in the hopes of them selling the shares. However, there has been no take-up, she said.

“We did not just offer fair market value, we offered three times that at the first instance and at the second instance. We then increased it further in November (2018),” she said.

First announced last week, the Government said it would be taking legislative action in furtherance of obtaining the shares and would begin the formal process in Parliament in short order.

The announcement has been met with disfavour from the Opposition and some political commentators.

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