Venezuelan oil subsidiary PDV Caribe is demanding that the Government of Jamaica (GOJ) pay a minimum of US$50 million (J$6.5 billion) in core share value as compensation for the forcible takeover of its 49 per cent stake in the local refinery, Petrojam.

But The Gleaner understands that the claim includes supplementary add-ons in relation to dividends and prospective value that could bring the total compensation package sought to US$250 million (J$32.5 billion).

The Jamaican Government’s initial offer of US$40 million was rejected by Venezuela and a later proposal of US$50 million also refused.

Yesterday, reliable Gleaner sources said that the GOJ has been sent communication this month on Venezuela’s behalf, through its legal team headed by Queen’s Counsel Michael Hylton.

Hylton could not be reached yesterday evening, but Gleaner sources confirmed the figure.

Jamaica’s Foreign Minister Kamina Johnson Smith also acknowledged that the Government has received communication from Venezuela. However, she said, no lawsuit has been filed.

Through the Compulsory Acquisition (Shares in Petrojam Limited) Act 2019, the Jamaican Government gave itself powers to acquire the 392,490,000 shares owned by Venezuela in Petrojam. After a valuation by Muse Stancil – the full-service, global energy consultancy firm specialising in the mid- and downstream sectors of the petroleum industry – Jamaica expropriated the shares.

Energy Minister Fayval Williams, who replaced Andrew Wheatley on February 14, said Petrojam’s market value was eroded by nearly US$100 million because of a decade of broken promises, delays and inaction by the Venezuelan government.

She told Parliament that Petrojam’s market value was listed at between US$126 million and US$128 million by Muse Stancil in 2006, when Jamaica signed a joint-venture agreement with Petróleos de Venezuela SA (PDVSA), Venezuela’s state-owned oil company and parent to PDV Caribe that was expected to finance a major upgrade of the 55-year-old refinery, among other things.

But Williams said that an evaluation carried out in 2018 by the same consultants listed Petrojam’s market value at US$34 million.

Muse Stancil, however, has remained silent, four months after The Gleaner first sought responses about the massive variance in the sale-as-is price and the investment value.

Sources have said that there is a non-disclosure agreement between the company and Jamaica.

At the time of the share swipe, Petrojam was jointly owned by the governments of Venezuela and Jamaica, with Jamaica’s shares – 51 per cent – held by the Petroleum Corporation of Jamaica.

Venezuela valued the refinery at just under US$90 million, which included the initial sum paid for shares at the time of the joint-venture agreement, plus unpaid dividends and retained earnings.

A&A Lime Hall Development Limited, a company incorporated in 2004 as a rental service in Montego Bay, St James, had also offered PDV Caribe SA US$100 million for its 49 per cent stake in Petrojam Limited.

PDV Caribe SA is the company tasked with organising and coordinating PetroCaribe’s hydrocarbon transportation network, including its vessels, storage facilities, and port terminals, as well as refining and distribution capacity.

PetroCaribe is an energy cooperation agreement signed by 14 Caribbean countries, including Jamaica, which was established to secure a direct oil supply among members on preferential terms. Created in 2005 by Venezuelan state-owned PDVSA, and acting as a subsidiary, PDV Caribe holds interests in several subsidiaries established in each of these countries.

PDV Caribe is headquartered in Caracas.

Australian dollar nears decade-low after Reserve Bank justifies interest rate cut

Updated June 18, 2019 17:08:20

The Australian dollar has fallen to its lowest level in around a decade as investors anticipate further interest rate cuts from the Reserve Bank in the next few months.

Key points:

By 12:00pm (AEST), the local currency had fallen 0.2 per cent to 68.42 US cents, following the RBA’s release of its June meeting minutes.

That is the lowest level since January 2016, and you have to go all the way back to the aftermath of the global financial crisis in March 2009 to find an even lower level.

The minutes revealed Australia’s central bankers thought it was “more likely than not” that it would be appropriate for the cash rate to fall in the period ahead.

However, the board recognised that lower interest rates are not the only monetary policy lever.

It also said that other options might assist in lowering the rate of unemployment towards 4.5 percent, the level which the RBA regards as full employment.

Late last year, RBA deputy governor Guy Debelle has flagged the option of quantitative easing — or metaphorical money printing — to help stimulate the economy through bond buying and asset purchases, used by major global central banks during the global financial crisis.

The minutes reiterated previous public statements that the RBA is now focussed on lowering the jobless rate given it is “apparent that the labour market still had significant spare capacity”.

Depositors feel rate pain

The minutes also revealed that impact of lower interest rates on depositors — in particular older Australians — was a key consideration in the RBA’s decision to slash the cash rate to a record low earlier this month.

The “implications of lower interest rates on household incomes” was discussed at length, and “changes in interest rates can have different effects on different groups of households”, according to the RBA’s minutes of its June meeting.

“Members recognised that many older Australians rely on interest income which would decline with lower rates,” the RBA said.

However, board members opted to cut the cash rate to 1.25 per cent to help lower the unemployment rate after “carefully considering” the impact on people relying on interest from bank deposits.

The argument in favour of cutting rates was based on the outlook for a lower Australian dollar, reduced borrowing rates for business, and lower interest payments for households which would free up cash for other spending.

Since the RBA’s decision to cut rates, banks have passed on either all or most of the reduction to borrowers — while also reducing deposit rates to the disappointment of older Australians who rely on the income stream.

The RBA board also discussed the risks of lower interest rates, especially given the current high levels of household debt.

“Members judged a decline in interest rates was unlikely to encourage a material pickup in borrowing by households that would add to medium term risks in the economy,” the minutes said.

The board also noted the trade dispute between the United States and China had “intensified the downside risk posed to the global economic outlook”.

President Donald Trump announced late on Monday night that Immigration and Customs Enforcement (ICE) will begin the process of removing illegal aliens unlawfully present in the United States.

“Next week ICE will begin the process of removing the millions of illegal aliens who have illicitly found their way into the United States,” Trump wrote on Twitter. “They will be removed as fast as they come in. Mexico, using their strong immigration laws, is doing a very good job of stopping people long before they get to our Southern Border. Guatemala is getting ready to sign a Safe-Third Agreement. The only ones who won’t do anything are the Democrats in Congress. They must vote to get rid of the loopholes, and fix asylum! If so, Border Crisis will end quickly!”

….long before they get to our Southern Border. Guatemala is getting ready to sign a Safe-Third Agreement. The only ones who won’t do anything are the Democrats in Congress. They must vote to get rid of the loopholes, and fix asylum! If so, Border Crisis will end quickly!

— Donald J. Trump (@realDonaldTrump)

Trump’s announcement comes after the administration reached a deal with Mexico two weeks in which Mexico agreed to stop the flow of illegal aliens headed to the U.S. border and in return, the administration canceled massive tariffs it was prepared to implement against Mexico.

Also on Monday, State Department Spokesperson Morgan Ortagus said that the administration was canceling future economic aid to the Northern Triangle, which is comprised of El Salvador, Guatemala, and Honduras.

“We will not provide new funds for programs in those countries until we are satisfied the Northern Triangle governments are taking concrete actions to reduce the number of illegal migrants coming to the U.S. border,” Ortagus said. “Working with Congress, we will reprogram those funds to other priorities as appropriate.”

.This content was originally published here.