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JAMAICA | Venezuelan Company Seeks Compensation for Petrojam Shares

Featured Minister of Science, Energy and Technology, Hon. Fayval Williams, delivers a statement to the House of Representatives, on July 2. | Michael Sloley photo Minister of Science, Energy and Technology, Hon. Fayval Williams, delivers a statement to the House of Representatives, on July 2. | Michael Sloley photo
KINGSTON, Jamaica, July 3, 2019 -  Minister of Science, Energy and Technology,  Fayval Williams, says Petróleos de Venezuela (PDV) has brought a compensation claim against the Government of Jamaica over the Jamaican government's decision to expropriate the company’s 49 per cent shares in Petrojam.

The Energy Minister made the disclosure following the tabling of the Report on the strategic review of the State-owned oil refinery and in response to  questions posed by Opposition Spokesman on Energy, Phillip Paulwell.

“We have been notified of one claim from PDV, and it’s in keeping with the provisions of The Compulsory Acquisition (Shares in Petrojam Limited) Act. The claim has been made in the Supreme Court [and] all the documents are being reviewed [by] the Attorney General,” Mrs. Williams said.

She noted that she will make a statement to the House, after being fully briefed on the issue by the Attorney General, Marlene Malahoo Forte.

Legislation to retake ownership of the 49 per cent shares in Petrojam held by the Venezuelan State-owned oil and natural gas company, PDV Caribe, was passed in both Houses of Parliament in February in the face of repeated protests of the Opposition.

The Government passed legislation for the forced acquisition of the 49 per cent shares in Petrojam held by Venezuela's State-owned oil company's subsidiary, PDV Caribe.

The Jamaican Government maintained that the move was necessary as Venezuela had not kept its end of the bargain for the upgrading of the refinery, under the 2006 joint venture agreement signed between the Petroleum Corporation of Jamaica (PCJ), its subsidiary Petrojam, and PDV Caribe SA — a subsidiary of Venezuela's State oil refinery PDVSA.

Included in the legislation is a provision for parties who wish to make compensation claims to do so within three months after the gazetting of the notice of March 13, 2019.

Prime Minister Andrew Holness told the House in his budget presentation in March that: “Without that action, credible investment in the refinery would have been limited, if not impossible to obtain. Without this action, it was clear that it would have become increasingly difficult and ultimately unsustainable to operate and do business with suppliers, banks and insurers once sanctions remained in place. This action has cleared the way for Jamaica to make strategic decisions about its energy security without encumbrances.”

He said the Government was satisfied that it acted fairly and appropriately to secure Petrojam's value for the benefit of the country. “We aren't seeking to take property without paying for it,” he said.

However, Shadow of Minister of Energy, Mr. Phillip Paulwell says the Opposition is against the hostile takeover of the shares in Petrojam of the Government of Venezuela.

Paulwell labelled the government's action as hostile, premature and unwarranted.

“No apparent effort was made to use any international arbitration organisations to settle any dispute which may have arisen between the two governments, especially in light of reports that a settlement price was the only outstanding issue,” Paulwell charged.

“This hostile approach is uncharacteristic of Jamaica, and may, in fact, be detrimental to our future negotiating capacity with other foreign investors,” he added.

He said this premature and rushed expropriation of the shares is unwarranted as both sides were in talks to reach a negotiated settlement.

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