The Bahamas Minister of Trade and Industry, Leslie Miller says His Focus is On The Establishment of a National Energy Corporation (NEC)

The National Energy Corporation, NEC is essential to The Bahamas government’s plan to ensure that cheaper fuel reaches consumers through the PetroCaribe initiative

Miller: Nat’l Energy Corp. By September

By Candia Dames

candiadames@hotmail.com

Nassau, The Bahamas

21st July 2005

Minister of Trade and Industry Leslie Miller yesterday again dismissed claims that he did not have the full support of Cabinet in signing the regional PetroCaribe oil agreement and indicated that he was focused on seeing to it that a National Energy Corporation (NEC) is up and running by September.

The NEC is essential to the government’s plan to ensure that cheaper fuel reaches consumers through the PetroCaribe initiative, he reiterated.

The Minister said that before the NEC can get off the ground, the government must first receive a report from the fuel usage committee it established several months ago.  The committee is co-chaired by Vincent Coleby, a long-time petroleum industry executive, and Independent Member of Parliament for St. Margaret Pierre Dupuch.

Minister Miller said he plans to meet today with the committee, which is looking into all aspects of PetroCaribe and fuel usage in the country.

Mr. Dupuch hinted in an interview with The Bahama Journal yesterday that the committee intends to fully back the PetroCaribe initiative, clearing the way for the NEC to be established.

"This would mean for The Bahamas extremely low oil prices," he said. "It would translate into lower electricity costs and it could translate into lower costs for the people on the road driving cars."

Minister Miller said, "I would expect that the National Energy Corporation would be incorporated as early as September to enable BEC to be the first recipient of getting cheaper fuel from Venezuela through PDVSA (that country’s national energy company) and Curacao, which is the same entity that provides the same importers in The Bahamas with 85 percent of their fuel as we speak."

He claimed again that BEC would immediately realize an annual savings of $10 million to $15 million.

The Minister said despite fears, the new arrangement should not force the three major oil companies in The Bahamas – Shell, Esso, and Texaco – to face any dramatic changes.

"What will happen because we are lifting the fuel ourselves, we would then on-sell the fuel to Shell, Esso and Texaco," he explained.  "[We’ll] give everyone a reasonable margin upon which to work in and the Bahamian people will see the benefits."

According to Minister Miller, the National Energy Corporation would not be an elaborate set-up and could easily be managed by about four people from his Ministry.

"It’s just the movement of paper," he said.  "This will not be a regular government corporation.  It could in fact be just a National Energy Agency."

Asked how Venezuela will benefit from the agreement, Minister Miller said Venezuela is not going out on a limb in this deal.

"It is simply trying to assist the countries in this region by lowering the cost of fuel to their citizens.  It’s no different from what other countries have done and continue to do."

He was also asked to respond to ongoing speculation that he signed the PetroCaribe agreement without the full backing of the Cabinet.

Minister Miller suggested that this was all part of a conspiracy to keep poor Bahamians from progressing.

"Generally, the people who are against this project are basically the same people who have been against any progressive action that was taken by any relevant government since the PLP came to power in 1967 to work on behalf of the majority of the Bahamian people, especially the small man," he said.

"They’ve been against majority rule; they’ve been against independence - and they will be against anything that benefits the majority of Bahamians and I pay no attention to them whatsoever."

In signing the PetroCaribe agreement, The Bahamas and other signatories acknowledged that, "Within the context of an unfair economic order inherited from colonialism, and imposed by the wealthy developed - and rich countries, the current global energy-related trends marked by the enormous waste of consumer societies, by the reduced availability of production capacities and by speculation leading to the rise in hydrocarbon prices, have all continuously exerted a negative impact on both the economic performance of, and the social conditions in the countries of the Caribbean."

The agreement also states that the countries of the Caribbean need to possess reliable sources of energy and must be assured that prices will not represent an obstacle to their development.

It says that PetroCaribe is a body aimed at facilitating the development of energy policies and plans for the integration of the nations of the Caribbean through the sovereign use of natural energy resources to directly benefit their peoples.

Following the signing of the agreement, some local executives of the three major oil companies in The Bahamas said that they would like to see more consultation on the whole plan as they did not have specifics on how PetroCaribe will actually work.

Minister Miller said that consultation would swing into high gear after he receives the report of the fuel usage committee.

Mixed Reviews In The Bahamas on PetroCaribe initiative

The concerning consensus is that more consultation is needed between the government, the three major oil companies, and retailers in The Bahamas on the PetroCaribe agreement 

Oil Deal Gets Mixed Reviews

By Candia Dames

candiadames@hotmail.com

Nassau, The Bahamas

4th July 2005

Players in the local oil-providing sector have mixed reviews on the recent signing of the PetroCaribe initiative, which promises to cushion Caribbean nations – including The Bahamas – from skyrocketing fuel costs.

But there is consensus on the fact that more consultation is needed between the government, the three major oil companies, and retailers.

Oil companies are seeking clarification on the whole deal, said Troy Simms, country/sales manager at Esso.

"We feel we should be an advisor to the government on this considering the experience we have locally and of course across the globe," Mr. Simms said.

"This is a pretty important change that’s being put on the table.  We really want to make sure that it’s being discussed with a lot of rigor to make sure that the government is fully aware of the risks."

Texaco’s manger, Raymond Samuels was out of town, but another executive at the oil company said that Texaco is also eager for dialogue on the initiative.

The executive said up to now, Trade and Industry Minister Leslie Miller has "not been open with us" about the plan.

Under the plan, signed by regional energy ministers and other leaders in Venezuela last Wednesday night, Petroleos de Venezuela, the state oil company, will pick up 40 percent of the cost if oil is selling at more than $50 a barrel.

Venezuela has also promised that additional concessions would become available should prices reach $100.

Petroleos de Venezuela has also announced that it would also pay for oil shipment costs, and help to construct storage facilities throughout the region.

It’s a plan Minister Miller said last week would result in "tremendous savings" on electricity and cooking gas bills and at the gas pumps.

It would be welcome news, said Gardner Dawkins, president of The Bahamas Petroleum Retail Association.

"I think it will be good news for both the retailer and consumers," he told The Bahama Journal.  "We’re hoping that we’ll be buying fuel at a lower price.  Therefore, passing the savings on to the consumers."

Minister Miller has said those savings would be significant – up to $20 million in savings for BEC annually, and at least $1 in savings on a gallon of gasoline, which is now approaching $4.

Mr. Simms, the Esso manager- said that the company is not sure of the likely impact PetroCaribe would have because it has not yet received details of the agreement.

Petroleos de Venezuela has agreed to ship fuel directly to Caribbean nations like The Bahamas, which have signed the agreement.

Asked whether this would be something Esso would welcome, Mr. Simms said, "There’ve been some concepts discussed and we continue to wait for some details.  One thing that the proposal seems to implicate is that there would be a single source of supply and this appears to be with the Venezuelans."

He said there are risks in having a single source of supply and Esso’s primary concern would be about reliability of supplies.

"If we can’t get the product when we need it, it’s going to have a detrimental impact on the business," Mr. Simms said.

He added that his impressions of how the whole arrangement would work is that the government would become the middleman.

"We need to fully understand how this would be implemented because this is a very complex and sophisticated supply system that’s now in place, that has been successful for so long.  We have a lot of experience…the industry can handle unexpected changes and delays," said Mr. Simms, while stressing that the supply of oil to a small country like The Bahamas is a complex and costly undertaking.

"The folks in our industry have learnt over many, many years how to do this efficiently and be reliable.  We need to be able to deliver petroleum products in a very safe and reliable manner."

Mr. Simms said that it’s much too soon to even speculate on how the PetroCaribe is likely to impact profits of local oil companies.

In his interview with The Bahama Journal last week, Minister Miller also said that the government expects to take another look at the operating margins in the industry.

Mr. Dawkins said this is something that retailers will fight.

"Our margins are what we survive on," he said.  "The price of the gasoline will not change what our margins are."

He added that PetroCaribe would have more of an impact on the wholesalers because they are the ones who will be buying from PetroCaribe or the national energy corporation.

"So therefore we as the retailers will still be at the mercy of the wholesalers who we will be buying products from," Mr. Dawkins added.

He disagreed that PetroCaribe will be risky business.

"The oil companies, of course, are not going to be too happy with it," Mr. Dawkins said.