PETROCARIBE OIL MAY FLOW THROUGH EDH

UNCLAS PORT AU PRINCE 000846

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E.O. 12958: N/A
TAGS: ENRG ECON EFIN EINV EAID HA
SUBJECT: PETROCARIBE OIL MAY FLOW THROUGH EDH


1. This message is sensitive but unclassified: please
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2. Michel Guerrier, Director of National, Haiti's only
domestic oil company, told Econoff May 11 that a ship with
100,000 barrels of PetroCaribe oil has embarked for Haiti and
is due to arrive on or before May 15. However, Haiti and
Venezuela have yet to decide how to sell PetroCaribe oil to a
country without a state-owned oil company. Guerrier said the
decision will be made before President-elect Rene Preval
signs the agreement on May 15, the day after his
inauguration. Guerrier said one possibility is that
PetroCaribe will sell the oil to Haiti's National Electricity
Company (Electricite d,Haiti -- EDH),which will then sell
to the four oil companies operating in Haiti: Texaco, Esso
(a.k.a. Exxon),National (formally Shell),and Total.


3. Guerrier stressed that this is a great deal for the
Haitian government. He suggested that the government will
continue to sell the oil at the Caribbean posting price, but
will purchase it at the slightly reduced PDVSA (Petroleum of
Venezuela, Inc.) price. This will allow the government a
slight profit in addition to the advantage offered by the
PetroCaribe deal: 60 percent of the oil is to be paid for
over 90 days with no interest and the remaining 40 percent is
to be paid for over a period of 25 years, with a one percent
interest rate. Guerrier also speculated that the government,
in order to retain total control over the supply of the oil
market (they already control the price),may put an end to
the non-PetroCaribe oil-bearing ship which arrives every
three weeks.


4. Comment: Guerrier underscores the incentives PetroCaribe
offers the incoming government. Strapped for cash and oil,
PetroCaribe provides both in a package deal too good to pass
up. Preval told the press on May 10 that his friendship with
Venezuela and Cuba were not formed out of ideology, but out
of necessity. EDH, an inefficient and corrupt public entity,
is possibly one of the worst options as the government's oil
handler. Corruption and mismanagement keep the company from
providing electricity consistently. However, filtering oil
through EDH could ensure enough fuel to power the electricity
plants, without relying on the oil companies as a costly
back-up plan.
SANDERSON

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