PetroCaribe Fund

The People’s Progressive Party/Civic (PPP/C) has lashed back at the A Partnership for National Unity/Alliance For Change (APNU/AFC) Government’s statements that the PetroCaribe Fund was left bankrupt, calling it a clear misrepresentation of the truth.

Finance Minister, Winston Jordan

According to the former administration, contrary to Minister of State, Joseph Harmon’s misrepresentation, no money whatsoever is missing from the PetroCaribe Fund. Even if it was, the fund has limited balances in it, and that does not mean in any way that any money is missing from it.

“As his colleague in the Finance Ministry can no doubt tell him, detailed records exist and can be made public on every single inflow into the Fund and every single outflow from the Fund. These details will account fully for the operations of the fund and can withstand any degree of scrutiny. Put simply, monies are deposited into the fund when Guyana imports oil from Venezuela under the PetroCaribe Arrangement. Those monies are managed by the Bank of Guyana. The monies are utilised for only two purposes; firstly, to fund projects that are included in the National Budget and submitted to Parliament for approval,” the Party said.

It noted that over the years these projects have included the new Guyana Power and Light power plants at Kingston in Georgetown and Vreed-en-Hoop on the West Coast of Demerara, and the Hope Canal on the East Coast of Demerara, while the funds were utilised to purchase rice and paddy for export to Venezuela under the PetroCaribe Arrangement.

“At any time, the balance available in the fund is the total of all inflows deposited from oil imports, minus sums disbursed on projects and sums disbursed to GRDB (Guyana Rice Development Board) for rice and paddy purchases. In addition, periodically, Guyana and Venezuela conclude a debt reduction agreement under which Venezuela cancels an amount of PetroCaribe debt previously owed by Guyana and equivalent to the value of rice and paddy shipped in the immediately preceding period,” the previous administration explained.

The Party posited that while this is indeed clear for all Guyanese to see, Minister of State Joseph Harmon has “deliberately set about to create a misleading impression that somehow, something untoward may have occurred in the management of the fund.”

The PPP/C posited that the plain and simple truth is that “for years the inflows and outflows of the fund were managed optimally and transparently by the PPP/C Government, and within one month the APNU/AFC Government has displayed its incompetence in being unable to manage the fund’s operations properly, resulting in hardship to the rice farmers and millers.”

Former Finance Minister, Dr Ashni Singh

The statement comes on the backdrop of Minister Harmon stating that the PetroCaribe Fund, which was in place for rice farmers, is bankrupt and the Government will now have to source some US$15 million to pay off rice farmers. According to Harmon, while the current Finance Minister, Winston Jordan, had indicated that the states’ funds were vastly misused, it was an understatement.

To this end, he had noted that the fund was used for projects such as the Hope Canal and others which it should not have been. The Minister noted that the fund was for rice and rice farmers but yet monies, which were not even there, were used leading to the current state of bankruptcy of that fund. PetroCaribe is an agreement which is intended to promote trade among member countries, and Guyana has been supplying rice to Venezuela under the initiative. Under the current trade agreement, Guyana is expected to supply 210,000 tons of paddy and polished rice annually to Venezuela. The value of this supply amounts to US$130 million.

“The fact of the matter is based on the very casual and, in some cases, very callous manner in which the previous administration dealt with the proceeds from that arrangement that the fund was almost bankrupt.  There is nothing in it. You had been told by the honourable Minister of Finance that there are sums of money that were utilised for the construction of the Hope Canal, among other things. So as it stands right now, the situation with the exports of rice to Venezuela is that we are actually going to have to find approximately US$15 million to basically pay our farmers when they ship the next set of rice to Venezuela,” he disclosed.

In the meantime, Harmon disclosed that the Cabinet has decided to commission a subcommittee which will be tasked at looking at and sourcing markets to accommodate the level of production which is being recorded. “The money has to be found because we don’t believe that there is no fault on our farmers, but it has to do with the way the previous administration managed that fund. Additionally, the Cabinet approved of the setting up of the subcommittee to examine and to aggressively look at markets for our rice. Based on the current production by October/November, we will have a great production of rice that the markets available will not be able to sustain it,” Harmon disclosed.

This, he said, will be done by the Foreign Affairs and Agriculture Ministries to ensure new markets are found so that the rice can be sold. He further shared that the level of bankruptcy in the fund can also see the payback period significantly decreased.

“The monies that came in, we spent more that came in. It is even grimmer than Mr Jordan had said. It is a very serious situation which we face. The Minister has said that we had a long payback period, but what we have done is reduce the payback period. So if we had 20 or 40 years we may have to pay back in 2015 or 2020,” the Minister of State told media operatives.

Minister of State, Joseph Harmon

This was even as he noted that the governance systems in the rice sector are on the agenda to be examined to ensure transparency in appointment of boards and entities in that sector.

In the meantime, Harmon told reporters that with the ongoing investigations into the state agencies, it is definite that persons will be held culpable if found to have acted criminally with the country’s money.

Former Finance Minister Dr Ashni Singh declined to comment on the matter.