US embassy cable - 05NASSAU1225

C O N F I D E N T I A L NASSAU 001225 
 
SIPDIS 
 
STATE FOR WHA/CAR WBENT 
 
E.O. 12958: DECL: 07/01/2010 
TAGS: ENRG, PREL, BF, Energy and Environment 
SUBJECT: PETROCARIBE: "A DREAM COME TRUE" FOR MINISTER 
MILLER 
 
REF: A. NASSAU 1191 
     B. NASSAU 754 
 
Classified By: DCM Robert M. Witajewski, Reasons 1.4 b and d 
 
1.  (C) Trade and Industry Minister Leslie Miller returned 
from Venezuela on June 30 waving the PetroCaribe agreement 
and declaring cheap gas prices in our time.  Minister Miller 
stated that, "What we got from the Venezuelans is a dream 
come true.  This is an extraordinary agreement, one that I 
have been behind for the past two and a half years." 
 
2.  (C) Minister Miller claimed he could not go into the 
details of the PetroCaribe contract until he had first 
addressed Cabinet.  He stated, however, that the Bahamas 
Electricity Corporation would save "between $10 million and 
$15 million per year."  Bahamian motorists, he continued, 
would see gas prices decline by anywhere from 65 cents to $1 
per gallon. 
 
3.  (C) According to Minister Miller, the program comes into 
effect immediately.  "We are now going to implement this 
PetroCaribe initiative as soon as possible because gas is 
scheduled to go over $4 per gallon this month.  We now need 
to set up a national energy corporation because they 
(Venezuela) are not going to sell to a private corporation." 
Miller added that the oil would be supplied through PDV 
Caribe, a subsidiary of the Venezuelan state-run 
conglomerate, PDVSA. 
 
4.  (C) Shell's local representative stated that his company 
remained in the dark about PetroCaribe and had not been made 
aware of any of the details of the agreement.  He underscored 
the complexity of the energy business and wondered how the 
Bahamian government planned to deal with issues such as 
shipping, storage facilities, inventory levels, and a supply 
network.  (Reportedly, Shell has in recent months also been 
seeking a buyer for its Bahamas operations fearing that 
Miller's plans might actually come to fruition.) 
 
 
COMMENT 
------- 
 
5.  (C) Reducing the price of gas in The Bahamas without 
reducing either wholesaler or dealer profit margins or the 
government tax has long been one of Leslie Miller's signature 
theme projects.  His past predictions of cheap gas in our 
time have gone unfulfilled while he has lurched from 
political gaffe to political gaffe.  The local oil companies 
have long been suspicious of his maneuverings and have 
challenged his proposals both publicly and privately.  His 
permanent secretary, the senior civil servant in the 
ministry, has long given up trying to explain to him the 
economics of the oil business in general and in The Bahamas 
in particular.  On top of this, The Bahamas does not have a 
national energy corporation.  Minister Miller very much wants 
one to be created under the authority of his ministry 
(reftels).  He talks of "eliminating the middle man" but even 
if a national energy corporation were created it would have 
little choice but to rely on the existing supply networks run 
in The Bahamas by Shell, Esso and Texaco, in essence making 
the government an additional middle man.  The lack of 
consultation with the local oil companies suggests that any 
real changes to The Bahamas' energy market remains a distant 
dream. 
 
6. (C)  Other public corporations in The Bahamas -- the 
national airline, the national telephone company, and the 
national electricity company -- are the butt of cynical jokes 
regarding their overstaffing, waste, and inefficiency. 
Ordinarily, conservative, free-market Bahamians would dismiss 
the idea of creating yet another public entity out of hand. 
But if the alternative is to have to give up their beloved 
SUV's and pick-up trucks, many Bahamians may well be caught 
on the horns of a serious dilemma and conclude that another 
wasteful public entity is the lesser of two evils. 
 
ROOD