PETROCARIBE SAVINGS NOT (YET) A SLUSH FUND

C O N F I D E N T I A L KINGSTON 001298 SIPDIS SIPDIS DEPARTMENT FOR WHA/CAR (BENT),EB/ESC/IEC/EPC (MCMANUS), WHA/EPSC (CORNEILLE) STATE PASS FOR DEPARTMENT OF ENERGY E.O. 12958: DECL: 06/29/2016 TAGS: ENRG EPET ETRD EINV ECON PREL JM SUBJECT: PETROCARIBE SAVINGS NOT (YET) A SLUSH FUND REF: KINGSTON 925 Classified By: CDA Ronald Robinson, reasons 1.4 (b) and (d) ¶1. (SBU) In an informal discussion with Ruth Potopsingh, Chairwoman of the Petroleum Corporation of Jamaica Group of Companies (PCJ Group) on June 27, Potopsingh offered some clarification of the mechanism through which PetroCaribe Agreement savings are held, as well as the uses to which the savings from the Agreement with Venezuela might be put. ¶2. (SBU) Potopsingh noted that the PetroJam refinery which receives the oil remits 60 percent payment of the market price to PdVSA, and the remaining 40 percent to the PCJ. That money is then held in trust and cannot be touched, except by Cabinet decree. ¶3. (SBU) In February, the administration tabled: "A Bill to Amend the Petroleum Act," which will establish a separate entity under the PCJ Group, known as the PetroCaribe Development Fund, with a Board whose members will identify social development and poverty alleviation projects "appropriate to the spirit of the Agreement," she stated. Potopsingh expected that bill to pass some time this summer, but added that the composition of the Board had not yet been discussed. ¶4. (SBU) According to Potopsingh, thus far Cabinet has instructed that PetroCaribe funds be used for only two projects, both under the direction of the Ministry of Transport and Works/National Works Agency (NWA). Although she claimed ignorance when asked to specify the amounts and the projects, she agreed that the end result was almost certainly for road repair, under the NWA's Damaged Road Program. ¶5. (U) The Opposition Jamaica Labor Party (JLP) has made much of the ruling People,s National Party,s (PNP) lack of transparency regarding the use of PetroCaribe funds. Opposition leader Bruce Golding has also been vocal in worrying that PC is making Jamaica too beholden to the wishes of Venezuela. Speaking about the upcoming vote for non-permanent members of the United Nations Security Council, for example, Golding said: "I worry that our vote has been forced through PetroCaribe." -------------- Comment -------------- ¶6. (C) Post has engaged the GOJ repeatedly on PetroCaribe, but in the absence of a clear USG alternative, traction is proving difficult. It is heartening that the funds are being protected for the time being, as many suspected they would become the PNP's election year "slush fund," but Potopsingh was clearly anxious that the Board be established, so that she would no longer be responsible for fund oversight. Moreover, despite Golding's rhetoric, it must be remembered that an election is imminent, and the JLP itself underpinned its proposed GOJ budget using funds secured through PetroCaribe (ref. B),so there is little evidence to conclude that the JLP would cancel or amend the agreement. End comment. ROBINSON