A new oil deal struck recently with Jamaica has resulted in Barbadians paying much less for fuel.
This was revealed today by chairman of the Barbados National Terminal Company Limited (BNTCL) Alex McDonald, who confirmed that the contract had been awarded to Jamaican company Petrojam Limited “within the last six months” following last November’s closure of Barbados’ previous oil provider, Petrotrin.
Last year, after 101 years in the oil refining business, the Board of Directors of Petrotrin announced that it was ceasing operations of the Trinidadian refinery.
At that time the Board said the company intended to restructure and expand its role in exploration and production.
Petrojam is Jamaica’s only pretroleum company and is wholly owned by the Government of that country. It provides a full range of domestic, transportation and industrial petroleum products.
In an interview with Barbados TODAY, McDonald said the new deal with Petrojam meant Barbadians would pay less for fuel.
However, he explained that due to fluctuating oil prices on the international market, it might not appear that way.
“The quantities of oil and the quantities of fuels that we bring in, in the scheme of the global makeup, are very, very small, so typically what we buy it for is the global price plus a premium. So depending on your consumption, the premium is lowered. Countries that use a lot of fuel pay at the global price, but the countries that don’t use a lot pay the global price plus a high premium,” McDonald explained.
“One of our mandates was to lower that premium. Unfortunately, the price of oil has been going up and down in the recent past and the mechanism has been very quick to adjust, so the average person would not have seen the benefit of the deal that we have struck. But I can tell you, had we not gone to this point, the price of fuel would be much higher.”
In fact, McDonald said the deal with Petrojam was much better than the one with Petrotrin.
He said while BNTCL had received numerous offers worldwide, Barbados’ relationship with Jamaica was a decisive factor in awarding the contract to Petrojam.
The chairman however, did not disclose the price which was negotiated.
“Through our competitive tendering process that went through about six months ago, we received a lot of quotations from all over the world and Jamaica had the best price for us and as a result we went and we renegotiated an even better deal based on our relationships with them and our future plans. So that’s where we get our oil from right now,” McDonald said.
“The price we are getting now is much more competitive than the Petrotrin deal. What the closure of the Petrotrin refinery did was allow us to get into a position where we could be very competitive.”
Minister of Energy and Water Resources Wilfred Abrahams told Barbados TODAY he was satisfied with the deal which had been brokered.
“I am comfortable and I have entire faith in my chair and the management of the statutory corporation and I am comfortable that we are getting the best price possible. The Petrotrin closure affected us briefly, but it allowed us the opportunity to find a better deal somewhere else,” Abrahams noted.