Posted by hougansydney.com on Monday, December 15, 2014 Under: Energy
Haiti's economy relies heavily on the importation of gas to feed its hungry and growing energy sector. Haiti main energy distributor is EDH, the national electricity company, which is by far the most unmanageable institution in Haiti. It suffers enormous annual deficits in the hundreds of millions of dollars due to poor management, outdated infrastructures and, the seemingly outright refusal of the population to pay their electrical bills. To make up for the losses, Haiti's central government invests over $500 million annually and growing to keep the EDH in function.
Haiti purchases its oil from Venezuela through the Petro Caribe, this agreement allows Haiti to buy gas from the gas giant of Latin America at a discounted price, and most importantly the privilege of paying half of the total gas purchase up front, and pay the remaining balance in the span of 25 years with a low 2% annual interest rate. The money that Haiti would normally have had to pay up front for the purchase of gas, half of that money now stays in the Haitian government's coffer to finance other national projects and social programs.
The Petrocaribe Agreement between Haiti and Venezuela is the most important economic agreement between the two nations in over their 200 years relationship, and the most important one between Haiti and any other country.
The current Haitian government has made it clear, the financing of most social programs such as free education and important national projects such as the construction of roads and public institutions and schools, are possible only because of the savings from the Petrocaribe funds; earlier this year, resigned Prime Minister Laurent Lamothe, said that 9 out of 10 social programs are financed by Petrocaribe savings.
For years, Haiti have contemplated the idea of joining the Petrocaribe program, but international politics made it extremely difficult for the country to join, despite Haiti's outstanding two centuries relationship with Venezuela.
The Wiki Leaks cables released by Julian Assange on Haiti in 2010 showed how the United States fought tooth and nails to prevent the signing of the agreement, despite acknowledging the great benefits such agreement would be for Haiti. Before Haiti entered into the Petrocaribe Agreement, the sales of gas fuel were handled by the private sector, two American, a French and a Haiti companies. Exxon Mobile, known as Esson in Haiti, Nationally, known as Shell in Haiti at the time; the French owned Total and to a lesser extent ANADIP. Association National des Distributeurs de Pétrole.The terms of the Petrocaribe meant stripping the business of gas importation altogether from the private sector and pass it on to the government of Haiti's President René Garcia Préval, who is known for micro-managing the institutions of the country; the only problem was that the Haitian government had neither the experience in transporting, delivering, storing, selling gas; nor had they the infrastructures to do so. President Préval understood the huge benefits Petrocaribe would be for Haiti and he was determined to join regardless of all the obstacles.
The possibilities of buying possible lower qualities oil directly from the corrupt Haitian bureaucratic, combined with unreliable transportation causing delays and higher gas prices, worried Exxon Mobile and Shell, both companies requested then help from their home countries in the matter.
The United States and Venezuela have been longtime foes, mainly for Venezuela's open criticisms of American politics. On the other hand, while the relationships between Haiti and the United States have been historically rocky all along, from the US refusal to acknowledge Haiti's independence for 65 years because slavery was not yet abolished in many US states, to the American Occupation of Haiti for 15 years and the recent involvement of the US in the second overthrow of Jean Bertrand Aristide, the two nations have managed to put aside their historical clashes and continue to have a somewhat friendly relationships. The United States is Haiti's largest foreign
aid contributor, and Haiti's is the United States third largest recipient of US aid behind only Israel and Egypt, amounting to nearly a billion dollar annually at the time. In other words, Haiti's public institutions depended and still depends on mostly American foreign aid to function. Naturally, the United States pressed Haiti not to enter into the Petrocaribe alliance with Venezuela.
In : Energy