US embassy cable - 05NASSAU1610

C O N F I D E N T I A L SECTION 01 OF 02 NASSAU 001610 
 
SIPDIS 
 
STATE FOR WHA/CAR WBENT 
 
E.O. 12958: DECL: 09/09/2010 
TAGS: ENRG, PREL, BF, Energy and Environment 
SUBJECT: BAHAMAS SKEPTICAL OF PETROCARIBE IMPLEMENTING 
AGREEMENT 
 
REF: NASSAU 1225 
 
Classified By: Charge d'Affaires Brent Hardt, Reasons 1.5 b and d 
 
1.  (C) SUMMARY: The Bahamas sent a ministerial delegation to 
the September 6 Petrocaribe discussions in Jamaica but did 
not sign an implementing agreement.  The Cabinet remains 
sharply divided on Petrocaribe but expects to discuss the 
issue at its next meeting on September 13.  The chief 
government proponent of Petrocaribe claims that the Bahamas 
Electricity Corporation would be an early beneficiary of the 
program, but the electric company's current exclusive supply 
contract with Shell has a notification period of several 
months and withdrawal penalties that make any short-term 
switch unlikely.  END SUMMARY. 
 
2.  (C) The Bahamas was represented at the September 6 
Petrocaribe discussions in Montego Bay by Foreign Minister 
Fred Mitchell, Minister of Trade and Industry Leslie Miller, 
and Minister of Works and Utilities Bradley Roberts. 
Minister Miller is the government's chief proponent of 
Petrocaribe and signed the initial agreement on behalf of The 
Bahamas at the end of June. 
 
3.  (C) Prior to his departure for Jamaica, the Foreign 
Minister privately indicated that The Bahamas did not intend 
to sign anything at the meeting.  Mitchell also made a public 
statement: "The Bahamas is at present studying the full 
parameters of the initiative and will in due course determine 
what steps it will take in this matter.  The Petrocaribe 
initiative is clearly part of the process of the sovereign 
nations of the region seeking to chart their own course." 
 
4.  (C) The Bahamian delegation did not change its position 
in Montego Bay and did not conclude an implementing 
agreement.  The Foreign Minister on September 9 indicated 
that Petrocaribe would be discussed at the next Cabinet 
meeting on September 13.  He commented that Cabinet remained 
divided on the issue. 
 
 
Electric Company to Benefit? 
---------------------------- 
 
5.  (C) Minister Miller has claimed that the Bahamas 
Electricity Corporation (BEC) would be one of the early 
beneficiaries of Petrocaribe and could save between $10 
million and $15 million per year.  He stated that BEC as a 
government-owned entity could participate immediately on a 
government-to-government basis once an implementing agreement 
is signed. 
 
6.  (C) BEC currently purchases its petroleum products from 
Shell Bahamas Limited.  Shell is two years into a five-year 
contract as BEC's exclusive supplier.  Shell's Country 
Chairman for The Bahamas privately indicated that the supply 
contract does have an escape clause, but that it also 
contains a mandatory notification period of several months 
(he believed six months) before the agreement could be 
broken.  Even with notification, BEC would still have to pay 
a considerable penalty to withdraw.  Shell's Country Chairman 
also stated that BEC's General Manager and Chairman told him 
that they have not been given any information from the 
Ministry of Works and Utilities about a possible switch in 
supplier.  Shell's understanding, however, is that a change, 
if any, in BEC's supply arrangement would only affect the 
main island of New Providence, where BEC has storage 
facilities, and not the other islands in The Bahamas. 
 
7.  (C) COMMENT: After months of claiming Petrocaribe would 
drastically reduce pump prices for consumers, Minister Miller 
has lately focused his claims on BEC.  The Montego Bay 
meeting was the first Petrocaribe event that Minister 
Roberts, whose ministry has oversight over BEC, has attended. 
 That said, the mechanics of a supply switch are more 
complicated than Minister Miller is letting on or has 
prepared for, suggesting he is unaware or unconcerned about 
the details of implementing the agreement he is calling for. 
Minister Mitchell has promised Charge a more detailed readout 
of the Government's position following the Cabinet discussion 
next week.  It is clear from his comments, however, that 
divisions remain sharp among his Cabinet colleagues. 
HARDT