The Weekly Brief: Greater Caribbean

November 6, 2017 edition—Nicaragua will modernize its power sector; PDVSA avoided debt default; and Colombian oil producers face a taxing future.




Last Week in a Minute or Less


Central America. Nicaragua will strengthen its power sector; El Salvador’s fuel prices went up again, but it saved money on imported electricity.


Greater Antilles. The Dominican Republic is signing the electricity pact; APR Energy is powering up Puerto Rico; and the World Bank approved US$35m for Haiti’s clean energy.


Lesser Antilles.  Barbados is trapped between the IMF and a currency devaluation.


Northern South America. PDVSA avoided debt default…for a while; Colombian oil producers will no longer deduct royalties from their corporate tax; and Suriname believes its oil prospects are good.


Déjà vu all over again. Last week’s readers were particularly interested in Ecopetrol and Petronas’ agreement (English); EU funding to support geothermal energy in the Caribbean (English); and CDB’s grid modernization and energy storage in the Caribbean (English).



Political Economy


Barbados is trapped between the IMF or devaluation. The Barbados government could soon be forced to choose between a bailout from the International Monetary Fund or the devaluation of its currency (English). The Barbados government issued a BBD$50m treasury note to 2024 with a fixed interest rate of 6.375%. (English).


Russia turns its eyes to the Caribbean. The Russian media reported Moscow is in advanced discussions with Suriname to create closer trade and economic ties (English). These developments are a first since the 1979-83 Grenada revolution.


The IMF finished the Honduras SBA reviews. The International Monetary Fund completed the fifth and sixth reviews of Honduras’ performance under the Stand-By Arrangement (SBA) (English). The executive board of the IMF approved a three-year Stand-By Arrangement (SBA) in December 2014.


The IDB awarded institutions in Colombia, the Dominican Republic, and Mexico. The winners of the Inter-American Awards for Financial and Entrepreneurial Innovation were Ecomania Civil Association Environmental Awareness, Bancolombia, the National Commission for the Retirement Savings System, the Savings and Credit Bank ADOPEM of the Dominican Republic (English). The key focus was financial inclusion.



Oil & Gas Upstream


Suriname’s oil director is hopeful over the country’s resources. The CEO argued that the prospects are good considering the nearby discovery in Guyana (Dutch). Companies have agreed to drill a well and the country wants to be ready when oil is found.


The Dominican Republic found hydrocarbons. The Energy and Mines Minister said that oil and natural gas deposits have been found in the Dominican Republic but it is unknown if its exploitation is commercially or environmentally sustainable (English). The minister listed the six areas with hydrocarbon potential.


PDVSA made its last debt payment, but restructuring looms. The Venezuela state-owned company said it made it met its bond payments that were due by October 27, although some bondholder payments were late (English) (English). The company now plans to complete the US$1.2bn payment on a different bond due on November 2 before starting talks on restructuring its debt.


Colombia’s oil producers will no longer enjoy a “juicy” tax break. Private oil and mining firms in Colombia were registered as public entities with the country’s tax office since 2005, costing the Colombian economy US$4.4bn (English) (Spanish). The companies will no longer be able to deduct royalties from their corporate tax.


Guyana’s future will be changed by oil production. Analysts agreed Guyana will start producing oil from offshore wells by 2020 and Guyana’s government will become dependent on oil revenue over the following decade (English). The discoveries may help neighboring states through rising demand for services.



Oil & Gas Downstream


Sinopec may expand storage facilities in the Caribbean. The Chinese company is considering two projects in the US to expand storage facilities in the Caribbean (English). The project includes the construction of a pipeline to move shale oil from the Permian basin in Texas to the Gulf of Mexico for export.


El Salvador’s fuel prices climbed again… The decrease in fuel prices registered in the last month could reverse (Spanish). After the normalization of oil operations in the southern US, the new risk for a price increase could come from the OPEC agreement to cut production.


…and the Dominican Republic suffered increases too. The Industry and Commerce Ministry announced fuel prices from Oct. 28 to Nov. 3 with a rise in premium gasoline prices to RD$215.8 per gallon (English). Regular gasoline cost RD$201.7 and the regular diesel price reached RD$159.5.



Renewables & Electricity


The World Bank okayed US$35m for Haiti’s clean energy. The World Bank approved two grants totaling  US$35m to improve access to electricity for two million Haitians and to increase investment in renewable energy (English). The goal is to create an enabling environment for private investors.


Cheap imported electricity saved El Salvador bid time. El Salvador saved SVC$282.8m in electricity  between 2014 and 2016 due to the competitive costs in the Regional Power Market (Spanish). El Salvador is one of the countries with more cross-border power transactions, together with Guatemala.


Nicaragua will spend US$65m to strengthen its power sector. The Finance Minister and the IDB signed a US$65m loan agreement to finance the third stage of the country’s power sector strengthening program (Spanish). The goal is to consolidate the power sector’s financial sustainability.


APR Energy is powering up Puerto Rico. Before the hurricane, APR Energy commissioned two mobile gas turbines and connected them to the local power grid 15 days after the equipment arrived (English). The solution will help restore power in the San Juan area.


The Dominican Republic is close to an electric pact. The Dominican Republic’s government invited all sectors to witness the Electric Pact signing (English). More than 95% of the points were agreed upon, although there are still some dissenting points raised by the social and labor sector.



Lateral Thinking


A zero energy building opened at UWI. The University of the West Indies cut the ribbon on the Caribbean’s first net zero energy building (English). The 2,300-square-foot structure was designed as a model to encourage sustainable and energy-efficient buildings.



Quote of the Week


“We have dared to be free. Let us dare to be so by ourselves and for ourselves.”


– Jean-Jacques Dessalines (1758-1806), leader of the Haitian Revolution.



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