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============================