The Venezuelan government is set to increase the interest rate it charges to finance oil purchases by Central American and Caribbean countries under the PetroCaribe oil facility.
According to reports from online financial news agency Platts, the increase stems from higher administrative and maintenance costs of the loans.
Since the creation of PetroCaribe in 2005, member countries who are signatories to the agreement have enjoyed an annual interest rate of one to two per cent on the portion of the oil bill that is treated as long-term loans.
But as of October, that will rise to 2.4 per cent.
The source said the planned increases are permitted under the agreements Venezuela signed with the participating countries.
The report states that Venezuela is unlikely to reduce or suspend oil shipments to the debtor countries given the political value it sees in the oil alliance.
The next PetroCaribe summit is set for September.
In reacting to news of the planned increase, Jamaica's Energy Minister, Phillip Pauwell, said he was not aware of this move. However, the Opposition Jamaica Labour Party's (JLP) Spokesman on Energy, Gregory Mair, said he was not surprised.
real concern
"Because of the precarious financial situation that Venezuela is in, I'm not surprised, but what is of real concern is what we could see in the future a tightening of the terms and conditions of the PetroCaribe agreement, meaning that they could reduce the credit lines, and probably, we would have to find more US dollars to pay them on a monthly basis, which would put more pressure on the foreign exchange rate for us here in Jamaica."
PetroCaribe members include Antigua & Barbuda, Honduras, Bahamas, Jamaica, Belize, Nicaragua, Cuba, Dominican Republic, Dominica, St Kitts & Nevis, Grenada, St Vincent & the Grenadines, Guatemala, St Lucia, Guyana, Suriname, and Haiti.
- CMC