By Candia Dames
1st July 2005
Bahamian consumers are expected to soon experience significant savings on energy costs as a result of a new deal sealed in Venezuela on Wednesday night, which is designed “to build a regional oil alliance and distribute fuel more cheaply in the Caribbean.”
Minutes after arriving from a high-powered energy summit in Puerto La Cruz on Thursday, Minister of Trade and Industry Leslie Miller declared that the agreement was a significant and historic one.
He also explained that the primary thrust of the initiative, known as Petrocaribe, is to eliminate the middlemen when it comes to the purchase of fuel and fuel-related products.
One of the ways Venezuela proposes to keep oil costs down in the region is to use its tanker fleet to transport oil instead of privately owned tankers.
"For The Bahamas, [The Bahamas Electricity Corporation] can realize a savings of no less than $10 million to $15 million per annum in their fuel costs," Minister Miller told The Bahama Journal.
In addition to that, BEC, which last year spent in excess of US$100 million for its fuel costs, can now get the benefit of getting 40 percent of the fuel on credit from Petrocaribe, he said.
"BEC can get rebates on fuel and at tremendous savings," Minister Miller said.
"If BEC were to purchase $20 million worth of fuel per month, BEC would pay approximately 60 percent of that bill.
The balance can be paid over a specified period of time at 1 percent interest rate."
With the middlemen being sliced out of the pie, the Minister also reported that huge savings are on tap at the gas pumps.
His announcement came as motorists continued to face prices approaching the $4 per gallon mark.
"We’re looking at an average savings of no less than $6 per barrel which equates to approximately in our estimation anywhere from 25 cents to 30 cents on a gallon of fuel," he said. "That’s the initial cost. Bear in mind that the oil companies here use their brokerage companies, in Barbados and Jamaica and elsewhere, to purchase fuel from PDVSA, which is where we’re going to get our fuel from.
"By eliminating the middlemen, we save another 25 cents to 35 cents on a gallon of fuel. In addition to that, Petrocaribe is now in a position by having ships to lift the fuel for you. In other words, Petrocaribe would send one of its ships to The Bahamas full of fuel emanating from any of the terminals owned by PDVSA, which is the national oil company of Venezuela, thereby saving an additional 5 cents to 10 cents on a gallon of fuel."
Altogether, he claimed the average consumer can look for a savings of anywhere from 65 cents to $1 per gallon on the price of fuel in The Bahamas.
The Minister added, "Keep in mind that we still need to cut the margins by the three major oil companies that import fuel into our country from a high of 33 cents down to around 25 cents to 15 cents per gallon, which is more than enough to enable them to make an appreciable profit margin."
But Minister Miller could not say specifically when the savings will begin to materialize. He told The Bahama Journal that it will happen as soon as the government gives the green light for the establishment of a national energy corporation.
"The prices at the pumps could be decreased significantly, but we must initiate the national energy corporation to enable us to lift fuel from Venezuela," he said.
Heads of state and energy ministers attended the energy summit from The Bahamas and 14 other nations in the region.
They included Dominican Republic, Jamaica, Belize, Antigua and Barbuda, Barbados, Grenada, St. Kitts-Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, Cuba, Venezuela and Trinidad and Tobago.
The final agreement said, "Petrocaribe emerges as a new political and commercial initiative based on the conservation of non-renewal and depleteable resources, shared solidarity, and social co-responsibility between peoples, tending to assure access to energy at a just and reasonable price, under the sign of regional energy integration, with a broad vision that touches not only on energy, but also on the social, technological, and culture."
Among those attending the meeting were Venezuelan President Hugo Chavez, and Cuban President Fidel Castro.