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### Viewing cable 06PORTAUPRINCE1205, HAITI: PETROCARIBE IMPLEMENTATION STALLED

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
06PORTAUPRINCE1205 | 2006-07-07 13:03 | 2011-06-01 14:00 | CONFIDENTIAL | Embassy Port Au Prince
Appears in these articles: http://www.haitiliberte.com http://bit.ly/mDfYBE http://bit.ly/mcuO3r

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    VZCZCXRO2015
    PP RUEHQU
    DE RUEHPU #1205/01 1881303
    ZNY CCCCC ZZH
    P 071303Z JUL 06
    FM AMEMBASSY PORT AU PRINCE
    TO RUEHC/SECSTATE WASHDC PRIORITY 3433
    INFO RUEHZH/HAITI COLLECTIVE PRIORITY
    RUEHBR/AMEMBASSY BRASILIA PRIORITY 1094
    RUEHSA/AMEMBASSY PRETORIA PRIORITY 0939
    RUEHQU/AMCONSUL QUEBEC PRIORITY 0498
    RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
    RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

` `

    C O N F I D E N T I A L SECTION 01 OF 02 PORT AU PRINCE 001205

    SIPDIS

    SIPDIS

    STATE FOR WHA/CAR
    WHA/EPSC FOR FAITH CORNEILLE, ED MARTINEZ
    EB/IFD
    STATE PASS TO USAID FOR LAC/CAR
    TREASURY FOR JEFFERY LEVINE
    COMMERCE FOR SCOTT SMITH

    E.O. 12958: DECL: 07/07/2016
    TAGS: ENRG EPET ECON EAID HA
    SUBJECT: HAITI: PETROCARIBE IMPLEMENTATION STALLED

    REF: PAP 803

    Classified By: Ambassador Janet A. Sanderson for reason 1.4 (b) and (d)
    .

    ¶1.  (C) Summary:  The 100,000 barrels of petroleum, from the
    initial PetroCaribe shipment to Haiti on May 14, remain in
    storage facilities at the port and have not been put on the
    market.  To date, no second PetroCaribe transport ship has
    been scheduled to arrive.  Edouard Baussan (President Rene
    Preval's PetroCaribe confidant and vice-President of Haiti's
    only domestic oil company, Dinasa) told the Ambassador that
    PetroCaribe will not solve Haiti's petroleum problems -- like
    the high price of fuel -- and that the government would use
    only the interest on the loan from Venezuela for social
    projects. He said the three international oil companies in
    Haiti feel uninformed about Haiti's PetroCaribe plan and are
    wary of how PetroCaribe will affect their operations.  Post
    suspects the PetroCaribe agreement was political showmanship
    for Preval's inauguration day, and that Haiti may not move
    forward to implement the program.  End Summary.

    PetroCaribe: Dead or Stalled?
    - - - - - - - - - -

    ¶2.  (C) Ambassador met June 2 with Edouard Baussan (President
    Rene Preval's PetroCaribe confidant and vice-President of
    Haiti's only domestic oil company, Dinasa) to discuss Haiti's
    progress with the Venezuelan energy initiative, PetroCaribe.
    Preval designated Baussan, and by extension Dinasa, to manage
    the stock of PetroCaribe fuel on behalf of the national
    electricity company (Electricite d,Haiti -- EDH), the
    "state-owned" oil company.  Baussan opened the meeting by
    explaining the problems Haiti faces as the price of fuel
    rises: in a country with little infrastructure and
    malfunctioning institutions, the economy is not equipped to
    deal with a steep rise in the cost of fuel.  He admitted that
    PetroCaribe will not solve the problem of high fuel prices in
    a tight world market, but said it would give the government
    access to much-needed cash.

    ¶3.  (C) According to Baussan  the first PetroCaribe shipment
    remains in the storage tanks at the Varreux Port because
    distribution channels have yet to be established.  To date,
    no second PetroCaribe transport ship has been scheduled to
    arrive.  Baussan said Preval's government initially thought
    that the PetroCaribe agreement would allow for more
    flexibility to resolve stipulations in the agreement that
    Haiti is not prepared to handle, like transport and
    insurance.  However, the government has realized that
    Venezuela will not give Haiti any special consideration.
    Baussan also pointed out that the GOH is wary of disturbing
    the distribution of fuel by the four oil companies, including
    Dinasa, given the inconsistent and unreliable history of
    PetroCaribe in other Caribbean nations.  The "industry ship,"
    the fuel tanker shared by all four oil companies in Haiti,
    has continued to arrive on its regular schedule and meets
    Haiti's relatively small petroleum demand.

    Haiti's Initial PetroCaribe Plan
    - - - - - - - - - -

    ¶4.  (C) Baussan discussed the new government's plans for the
    PetroCaribe funds, though he had no details beyond the
    initial planning stages.  Based on the PetroCaribe agreement
    (in which the GOH pays for 60 percent of the fuel up front
    and pays for the additional 40 percent over a 25 year span
    with a one to two percent interest rate), Baussan estimated
    the GOH would save USD 100 million per year from the delayed
    payments.  He stressed that PetroCaribe is not a subsidy
    program and that the funds earned from the donated fuel
    cannot be consumed, but instead must be put into a trust
    fund, for later re-payment to Venezuela.  The interest earned
    on the amount would be used for social projects in Haiti.

    ¶5.  (C) Baussan commented that Haiti consumes about 11,000
    barrels of gasoline per day, 6,000 of which he estimated
    would come from PetroCaribe channels.  When asked how the
    international oil companies in Haiti -- Chevron, ExxonMobil,
    and Total -- have responded, Baussan said that the government
    has not communicated its plan to them.  Reportedly, the newly
    appointed Minister of Economy and Finance Daniel Dorsainville
    has been too busy to brief the international oil companies.
    (Note: Separately, the Ambassador met with representatives of
    ExxonMobil and Texaco.  Both companies were concerned and
    curious about how Preval planned to implement PetroCaribe.
    However, neither company felt especially threatened by the
    agreement, and they have not modified their operations in
    Haiti.  End note.)

    Falling Fuel Prices and Increase in Electricity not Related
    to PetroCaribe
    - - - - - - - - -

    ¶6.  (U) Since Preval's inauguration, Port-au-Prince has
    experienced an increase in electricity supply.  In early July
    the price of petroleum, which had risen by nine percent since
    late April, decreased by ten percent.  Though Haitians are
    inclined to thank Venezuela for both improvements, neither
    are related to PetroCaribe.  EDH has been supplying
    electricity from the hydro-electric damn, Peligue, and the
    reduced price of fuel is due to a drop in the world market
    price.

    ¶7.  (C) Comment: Baussan is the third Haitian close to Preval
    -- including the former Minister of Finance Henry Bazin
    (reftel) and Gabriel Varret, [should be Verret] Preval's economic advisor -- to
    give Post the impression that Preval is not well-versed in
    the PetroCaribe agreement and not seriously concerned with
    its requirements.  All three have also said that the GOH does
    not have a plan for implementation.  Both Haitian and
    Venezuelan governments reportedly ignored key articles in the
    interest of time for the ceremonial signing on May 15.
    PetroCaribe seems stalled indefinitely, and it is possible
    that Haiti will not move forward with the agreement.  The
    first and so far only ship, which was a minor victory for
    Venezuela's Caribbean campaign and a tangible sign from
    Preval to his constituents that he will bring change, may
    mark both the beginning and the end of PetroCaribe in Haiti.
    SANDERSON

    =======================CABLE ENDS============================

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