Venezuela has agreed to cancel more than US$120 million in debt accumulated by Guyana for the payment of fuel supplies under the PetroCaribe agreement.
The debt write-offs are linked to Guyana’s supply of quantities of rice and paddy.
Preliminary information shows that the debt cancellation of US$124,463,500 covers two agreements.
According to the Order Paper for the July 9,2015 sitting of the National Assembly, a Compensation Agreement under the Framework of the PETROCARIBE Energy Cooperation Agreement dated March 13, 2014, between PDVSA Petróleo, S.A. (PDVSA) and the Co-operative Republic of Guyana provides for the cancellation of the oil debt in compensation for the white rice and paddy shipments under the Guyana/Venezuela Rice Trade Agreements in the amount of US$55,453,000.00.
Reference is also made to a similar agreement Compensation Agreement dated September 12, 2014 for the cancellation of the oil debt in compensation for the white rice and paddy shipments under the Guyana/Venezuela Rice Trade Agreements in the amount of US$69,010,500.00.
The recently elected Guyana government has claimed that when it took office from the People’s Progressive Party Civic (PPPC) administration, it found an empty PetroCaribe fund and so there was no money to pay rice farmers for huge quantities of paddy supplied.
But a former top PPPC government official intimately aware of Guyana’s financial architecture has told Demerara Waves that the PetroCaribe fund was partly affected by the decline in international oil prices.
Other factors included the amount of fuel purchased over a given period of time.
Guyana and other Caribbean countries only benefit from signficant price cuts in oil if the international price begins to soars above US$50.00 per barrel.