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Jamaica: Foreign trade minister says company “in not good standing” makes bid for Petrojam

By CMC

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Johnson Smith

(CMC) – The Jamaica government has confirmed that a company, which “hasn’t even filed annual returns since 2008,” has made an offer to acquire part or all of the shares of the state-owned oil company, Petrojam.

Last week, Foreign Affairs and Foreign Trade Minister Kamina Johnson Smith said Kingston would be tabling legislation that would allow it to forcibly retake the 49 per cent stake held by Venezuela’s PDV Caribe in Petrojam.

PDV Caribe, an affiliate of the state-owned Petroleos de Venezuela S.A., and the Petroleum Corporation of Jamaica (PCJ), entered into a joint-venture agreement which resulted in the sale of PetroJam shares in August 2006 and February 2007, respectively.

The agreement had called for the upgrading and expansion of the refinery to improve its competitiveness and meet local and international market demands, but Johnson Smith said these objectives were not met and that this poses a risk to the economy.

Speaking at a news conference here on Monday, Johnson Smith defended the proposed move, telling reporters also that an offer had been made to acquire the shares of Petrojam and or PDV Caribe. She did not name the company making the offer.

“I was made aware of both of them on January 4, 2019. This was an offer to PCJ to purchase its shares and an offer to PDV Caribe to purchase its shares.

“The company offer PCJ a sum of money to purchase its 51 per cent shareholding or any part that it chooses to sell and it offered PDV Caribe almost twice that amount for its 49 per cent shares,” Johnson Smith said.

But she told reporters “what else is interesting about this company, even the most basic search at the company’s office would show that the company is not in good standing, it hasn’t even filed annual returns since 2008”.

She said the company has two outstanding loans including one for two million Jamaican dollars (one Jamaica dollar=US$0.008 cents) adding “so how now does the government of Jamaica believes that a company that needs to take out a loan for two million dollars can now make a bona fide offer for a J$100 million to pay to another company and about half of that to pay to the government of Jamaica.

“What’s also interesting is that It was less than an hour after the opposition spokesperson on energy (Phillip Paulwell) asked me if any offers had been made to the government of Jamaica for its shares or to PDV Caribe for its shares and I said no because I wasn’t aware of them.”

She repeated the statement that within “an hour” she received an email advising her of the offer, adding “interesting, facts but I gave them to you to make what you will of them”.

Last week, Paulwell, making known the main opposition People’s National Party (PNP) position on the government’s move to table legislation to acquire the PDV Caribe shares, said 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.

“The expropriation will cause ripple effects to be felt in the local and international investor community for some time. This hostile approach is uncharacteristic of Jamaica, and may, in fact, be detrimental to our future negotiating capacity with other foreign investors.

“The expropriation of investor property must always be a last resort, demonstrably justified in a free and democratic society, and only after exhausting all reasonable avenues for an amicable settlement,” Paulwell added.

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