Chávez Makes Oil Deal with Honduras

EFE January 25, 2008

TEGUCIGALPA – The president of oilrich Venezuela, Hugo Chávez, has offered to provide Honduras oil “without conditions” and on beneficial payment terms via the PetroCaribe initiative launched by Caracas.

“These agreements are unconditional, we are not placing any conditions,” Chávez said in a press conference here Jan. 15 with his Honduran counterpart, Mel Zelaya, with whom he sped up the negotiations for Tegucigalpa to join Petrocaribe.

Chávez also proposed the creation to Zelaya of a bilateral commission to further expand “the mechanisms of cooperation” in health, education, science, technology and other areas.

Zelaya said the meeting he had with Chávez helped “advance” negotiations for an agreement with Venezuela to bring about his Central American nation’s entry into PetroCaribe.

The Honduran leader said he expected to send the agreement to Congress next week to obtain permission to sign it.

Under the terms of the agreement, state-owned electricity distributor ENEE will get 20,000 barrels per day of Venezuelan oil and transfer the fuel to the private companies that generate electricity in the Central American nation, Zelaya said.

Chávez said the cost of the oil provided to Honduras would be “$730 million a year.” “For Honduras, this is an exceedingly large bill,” Chávez said.

The leftist Venezuelan leader said that like the 16 existing PetroCaribe members, Honduras would pay 60% of the petroleum bill in 90 days and the remaining 40% over 25 years, with a two-year grace period and at 1% interest.

That 40%, however, would go into a fund to finance public works in Honduras, the Venezuelan leader said, adding that this added an aid element to the arrangement. Chávez said Honduras could pay the 60% share of the bill with agricultural goods or services, like Argentina, Cuba, Nicaragua and Uruguay do.

Zelaya said his administration was looking to enter PetroCaribe because it was “extremely important for the small countries” that depend on petroleum products, “whose (price) has increased sharply in recent years.”

Chávez praised Zelaya for having the “courage” to invite him to Honduras and said he hoped his presence would “not do him harm.” It was Chávez’s first trip to Honduras in the nine years he has been president of Venezuela.

Honduras is one of Washington’s traditional allies in Central America, and Venezuela and the United States have had tense relations since Chávez took office in 1999.