Petro Caribe Initiative will go head to head with Esso

The Petro Caribe Initiative, under which Belize buys refined fuel from Venezuela under extremely favourable credit terms, appears to be gaining momentum. A release today from the government’s Press Office announces that Venezuelan officials are in Belize to prepare for the building of two ten thousand barrel fuel storage tanks at the port of Big Creek. According to the release the construction contract will be put out to local tender, with work scheduled to begin in December and completed by June 2008.

Under the agreement Belize will import gasoline and diesel from Venezuela at prevailing market prices but will pay only sixty percent of the invoice within ninety days. The forty percent balance will be repaid as a soft loan over twenty-three years at one percent interest with a three year moratorium on the first repayment. The idea, put forward by Venezuelan president Hugo Chavez, is to use the long term low interest credit to undertake projects that will benefit the masses of Belizeans.

While the concept of the initiative is unassailable, working out the details is a bit more complicated. To set up a distribution network for the various fuels a private company has been set up, Petrofuels Belize Ltd. That company will operate in direct competition with Esso Belize Limited, a subsidiary of the global giant Exxon-Mobil, which has been the country’s exclusive supplier of fuel for decades. It appears that initial attempts to arrange some sort of compromise deal with Esso failed and have been abandoned. Esso country manager Guillermo Alamina told News Five this afternoon that his company will continue to operate in Belize. “We are ready for fair competition”, he said. What is not clear is whether the two multinational distribution companies operating in Belize—Texaco and Sol, which markets under the Shell brand—will choose to buy the Venezuelan fuel or stick with their traditional supplier, Esso. Consumers will likely not feel any change as prices at the pump will still fluctuate according to world markets and the heavy taxes will still be applied regardless of where the petroleum comes from. The big windfall will accrue to government … and presumably the public, as the more Venezuelan gasoline and diesel sold in Belize, the more cheap credit that will ultimately flow into Belmopan.