No Hay Dinero

A few days ago, the MinInfra announced the construction of two new hotels in San Nicholas. He did not specify how big, or what kind of development is coming; he did not report on the size of the investment, and whether it was by a reliable party.

I classified that hoopla under “Fake News,” but my friend Rory Arends went on to outline the negative impact of such as development, on his FB page, stating that any additional hotel construction would apply unreasonable pressure on the job market, on the educational system, on the Police force, on medical care, and basically provide employment to nationals of neighboring countries, who will come here to work, instead of focusing on Aruba’s specific needs, and on the Aruban quality of life.

The following day, ARGUS Media ran a not-surprising press release. It basically says:

The launch of work to rehab Aruba’s mothballed 280,000 b/d refinery has been delayed, by eight months to July 2017, pushing back a planned restart to 2020 from an original target date of 2018. “The refinery will start operations at two‐thirds capacity in 2020, with transition to full capacity in 2021,” our Central Bank reports to ARGUS Media.

It’s been a year since CITGO, the US subsidiary of Venezuela’s financially quagmired PdV agreed to lease RDA, which closed in 2012, for 15 years.

ARGUS Media then quotes “a government official close to the project,” saying that logistical and financial obstacles prevented the work from starting. And the agreement talked about in January whereby a French multi-national will finance and execute the job is still inconclusive. No wonder, they need $700mn to overhaul the rust bucket.

You understand that the project cannot start until the financing is in place, says the same Aruban government official. And they still need to lay that famous natural gas pipeline to deliver the fuel from Venezuela to San Nicholas.

Adding to the saga, a senior Venezuelan energy ministry official, admitting the deal is in danger because No Hay Dinero. CITGO cannot raise the capital to pay for the job, because PdV has new Russian bondholders, and totally controversial finances reflecting Venezuela’s catastrophic economy.

So now I understand the new hotel announcement: Was it made to mitigate the blow, the refinery ain’t happening, at least two hotels are on the drawing board?!

Sure, the plan to upgrade Orinoco extra-heavy crude from Venezuela, in Aruba makes economic sense, there is no money to make it happen, and someone in the government is singing to the press….

Same day news, the CBA Economic Outlook May 2017 states that “The Aruban economy is projected to expand (in real terms) in 2017 by 3.4 percent, driven in large part by the refurbishment activities of the oil refinery.”

But you know from the ARGUS Media newsletter that this is not so. And the IMF confirmed on March 31st, in a review of the island’s economy: Aruba’s growth projection “faces significant downside risks, especially due to possible delays in the refinery-related investments.”

We must add that the MinEcon immediately dismissed and denied the ARGUS Media press release, of course, he had to, it’s election time in Aruba, we must keep up appearances.

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May 12, 2017
Rona Coster