VZCZCXRO3653
PP RUEHQU
DE RUEHPU #0029/01 0091926
ZNR UUUUU ZZH
P 091926Z JAN 09
FM AMEMBASSY PORT AU PRINCE
TO RUEHC/SECSTATE WASHDC PRIORITY 9386
INFO RUEATRS/DEPTTREAS WASHDC PRIORITY
RUEHZH/HAITI COLLECTIVE PRIORITY
RUMIAAA/HQ USSOUTHCOM J2 MIAMI FL PRIORITY

UNCLAS SECTION 01 OF 02 PORT AU PRINCE 000029 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/CAR 
STATE PASS AID FOR LAC/CAR 
TREASURY FOR ERIN NEPHEW 
 
E.O. 12958: N/A 
TAGS: EAID ETRD ECON PGOV PREL HA
SUBJECT: HAITI'S LATEST FUEL CRISIS: WHO IS TO BLAME? 
 
REF: A) PORT-AU-PRINCE 1592 
 B) PORT-AU-PRINCE 234 
 
¶1. (U) Summary:  The Government of Haiti (GoH) announced December 31 
a 91-octane gasoline price decrease of nearly 20 percent.  By 
January 5, many gas stations were closed and those with fuel 
attracted long lines.  The GoH denied any involvement, blaming late 
delivery from the refinery; distributors admitted frustration with 
the GoH but denied sitting on supplies; and the transporters blamed 
both the GoH and problems at the refinery.  In addition to long 
lines at open stations, traffic was abnormally light until January 
8, media reported black-market sales, fights broke out at the pumps, 
and both school attendance and public/private transportation were 
negatively affected.   The January 5 arrival of a fuel tanker and 
the distribution to stations beginning January 8 seems to have 
solved the problem for now in Port-au-Prince.  End summary. 
 
¶2. (U) On December 30, the Ministry of Finance and Economy announced 
an eighth fuel price decrease, effective December 31, on 91-octane 
gasoline.  Since the first decrease November 5 (ref A) the price of 
91-octane gasoline has dropped from 174 HTG (USD 4.35) to 106 HTG 
(USD 2.65) per gallon and kerosene (mainly used for cooking 
purposes) from 131 HTG (USD 3.28) to 84 HTG (USD 2.10).  The 
previous price decreases had created brief shortages and long lines 
at the pump, partly due to increased demand. This time, however, 
following the long New Year's weekend, little or no gasoline was 
available beginning Monday, January 5, with most stations closed and 
media reports of black-market prices close to USD 20 per gallon.  At 
those stations where fuel was being sold, tension led to instances 
of fights at the pumps. School attendance and public transportation 
availability were way down, creating a remarkable reduction in 
normal Port-au-Prince rush-hour traffic.  Some mission locally 
employed staff resorted to carpooling in order to make it to and 
from work. 
 
¶3. (SBU) There was no official reason offered by fuel distributors 
for the ''shortage.'' MinFin official Ronald Decembre disclaimed any 
government involvement in the crisis, noting that the GoH gave 
distributors 48 hours notice before the announcement, and pointed 
instead to the delayed arrival of the most recent fuel tanker 
delivery.  Chevron District Sales Manager Jean Raynald Boyer 
(protect) told Econoff there were some ''issues'' at the refinery in 
Curacao that delayed the scheduled December 22 delivery until 
January 5.  The public seemed to believe, however, that supplies 
existed and that the distributors had decided not to sell in a 
deliberate protest against the GoH's December 31 price reduction. 
Chevron's Boyer and Maurice Lafortune, the head of the Haitian 
Association of Petroleum Products Distributors (ANADIPP), both 
denied this. 
 
¶4. (U) (SBU) Michel Guerrier (protect) of Haitian petroleum 
distribution company Dynasa blamed the fuel crisis wholly on the 
GoH, citing its failure to sign a long-term contract with a fuel 
company to transport fuel from refineries to Haiti (Note: This does 
not take into account Texaco/Chevron's three-year contract with the 
GoH (ref B). End note.)  Guerrier said that Texaco had downsized its 
fuel deliveries to Haiti, making it impossible to meet demand.  He 
also stated that Texaco had stopped transporting petroleum products 
such as unleaded, diesel and kerosene for Dynasa and Sol Haiti 
(another distributor) after a tanker accident damaged the jetty in 
August 2008 (Note: The Sol Group was formed through the acquisition 
of Shell's petroleum distribution and marketing businesses in the 
Eastern Caribbean, Guyana, Suriname and Belize in February 2005. End 
Note); Texaco paid USD 1.5 million in repairs.  As of October 2008, 
Texaco ships supply French-owned Total while Shell transports for 
Dynasa and Sol and occasionally Texaco. 
 
¶5. (SBU) Guerrier said that the GoH must establish a routine 
schedule of PetroCaribe fuel pickup from Venezuelan petroleum 
company PDVSA.  He noted that the PDVSA refinery in Curacao is 
unable to provide the amount ordered, that the delivery is not 
properly scheduled, and that other deliveries had priority. 
Guerrier told Econoff that the holiday closure of the receiving 
terminal from December 31 until January 5 had also contributed to 
the stock-out, noting that some service stations only have three 
days' worth of storage capacity.  Guerrier opined that the GoH would 
never admit its role in the crisis. 
 
¶6. (U) Haiti received a fuel tanker delivery the evening of January 
¶5.  Fuel distribution to service stations commenced the morning of 
January 8, following nearly three days of stock-out, and both Boyer 
and Guerrier stated that supplies of 91-octane gasoline would be 
normal by January 9.  (Note: Anecdotal evidence in Port-au-Prince 
seems to suggest that most gas stations in the city are open for 
business and well-supplied on January 9.  End note.)  MinFin's 
Decembre said this week that fuel prices are expected to drop again 
 
PORT AU PR 00000029  002 OF 002 
 
 
soon, as the GoH continues to react to decreases on the world 
market, but that this next decrease could be the last for a while. 
 
¶7. (SBU) Comment. This fuel crisis appears to be the result of a 
combination of factors, with no one entity (GoH, transporters, 
distributors) entirely at fault.  What is certain, though, is that 
this problem has not been solved for the long term.  The GoH, under 
pressure from the population and public transporters, will continue 
to tie gasoline and other fuel prices to world market prices.  This 
will be popular only until these prices inevitably go up again. 
Distributors will continue to complain when official fuel prices are 
reduced and some may resist by shutting down stations or diverting 
fuel to the black market.  They will demand immediate price 
increases if/when world market prices go back up.  Transporters, 
unhappy with port facilities/service in Port-au-Prince, may continue 
to give Haiti low priority and inadequate supplies unless the GoH 
can make improvements and agree upon the delivery of enough fuel to 
satisfy demand.  Haiti is very dependent upon fossil fuel imports 
(about one quarter of its total energy requirements), equal to about 
3.5 million barrels of oil per year or 10K barrels per day, and the 
GoH is very dependent upon the revenues generated by its nearly 60 
percent tariff on gasoline.  The GoH avoids addressing this problem 
at its own peril. 
 
TTIGHE