Haiti is running out of fuel — again.
Gas stations are stockpiling and rationing gasoline. The poor are running out of kerosene to cook. Private power suppliers, out of diesel for the past 11 days, are reducing or ceasing production — taking Haiti’s already desperate electricity issues from bad to worse.
Twelve months after Venezuela stopped delivery of cheap oil under its energy-assistance PetroCaribe program, forcing Haiti to buy all of its petroleum products on the Caribbean and U.S. spot markets, Haiti’s energy woes have grown into an almost monthly panic as the country’s bankrupt government insists on maintaining control of fuel imports despite its inability to pay.
“It’s become a mess for [them] to deliver,” said Pierre-Marie Boisson, a Port-au-Prince economist and founder of Société Générale de Solidarité (SOGESOL), one of Haiti’s three largest microfinance companies.
The latest symbol of the dysfunction: Since Feb. 27, about 150,000 barrels of gasoline have been sitting in a ship off the coast of Port-au-Prince in international waters awaiting more than $37 million in overdue payments from the Haitian government’s Bureau of Monetization of Programs and Development Aid, or BMPAD.
The owner of the cargo, Houston-based Novum Energy, said it is owed $58 million in arrears, not including the $11 million for the gasoline currently sitting off the coast.
“My priority is to get some payment so I can discharge this cargo,” said Chris Scott, Novum’s chief financial officer. “We have not received any payments ... and as of right now have no idea when we are likely to get any either — we are not getting any information whatsoever.”
As part of its agreement with Novum, which had been winning most of the government’s energy bids, Haiti enjoyed 45 days payment terms. But payments, Scott said, have being repeatedly delayed, prompting the company in January to keep two shiploads at bay while fuel pumps and generators throughout Haiti ran empty.
“We’ve been doing this for four-and-a-half years and only since the collapse of PetroCaribe has this been a problem,” Scott said.
The latest arrears prompted Novum this week to issue a press release explaining why another one of its fuel ships was not off-loading. The release also went on to explain that after running up $69 million in credit, BMPAD was effectively squeezing Novum out of the Haitian fuel supply market.
Scott said BMPAD issued a request for bids in February for fuel to be delivered during two different periods in March. Novum put in bids and was then notified that the contract had been canceled. Three days later, the fuel request was re-posted, but this time with a caveat: In order to bid, a company needed to have a local registration number that was at least two years old.
“There are no requirements anywhere in the world where you need to have a local registration,” said Scott. “The reality is if BMPAD continues to put in this requirement to be a domestically registered company, then Novum will no longer be able to submit [bids]. We cannot comply. Neither can any international company.”
Scott said Novum put in a bid anyway. His company’s offer, he said, beat out competitors including local Haiti competitor DINASA, which is a subsidiary of the French Rubis Group. Scott said Novum has yet to receive official word about who won the bid request but has learned that DINASA has two cargo ships filled with fuel bound for Haiti.
“And this is also despite the fact we still have a gasoline cargo there that we have a contract to deliver and we are still awaiting payments for,” he said.
In its release, Novum said that if it is eventually disqualified, DINASA will ultimately charge the people of Haiti $700,000 “more than the real ‘best’ price available. ... Furthermore Haiti will run out of gasoline imminently since not one other company supplied a price at tender.”
Firing back with its own press release, DINASA said it has nothing to do with BMPAD’s decision. Company head Luc Maiche told the Miami Herald that its 275,000 barrels of diesel and 74,000 barrels of kerosene that are en route to Haiti are $360,000 cheaper than Novum’s offer.
Ignace Saint-Fleur, who heads BMPAD, said that he refuses to enter a debate over Novum but that the company did not meet the new requirements. He said BMPAD is awaiting payments from the oil companies in Haiti in order to pay Novum the arrears it owes on fuel.
“There is no gas crisis,” he said.
Haitians monitoring the fuel war between Novum and DINASA say the recurring fuel shortage crisis goes beyond the companies’ spat or even BMPAD’s poor handling of the latest round of bidding. The spat, like the fuel crisis, is symptomatic of the government’s continued mismanagement and misguided intervention in matters that should be handled by private businesses, they say.
“When you have government messing around and managing things that should be managed by the market, you always have that type of situation; you always have that type of hidden corruption, preference, mismanagement,” Boisson said.
Unfortunately for Haiti, the fuel war is coming as the country finds itself knee-deep in a political and economic crisis. As the government struggles to keep cars running and the lights on, the opposition is calling for the resignation of the president and the cost of living is skyrocketing.
“Anytime you have a fuel shortage in Haiti you have a mess, because it impacts everyone,” Boisson said. “A lot of people in Haiti are running on private generators and when they don’t have fuel, it impacts on a lot of different activities.”
While the end of Venezuela’s oil deliveries under PetroCaribe in March 2018 is often cited as the beginning of the crisis, some say it goes back to 2017, when the Haitian government confiscated a fuel ship after DINASA and two other oil companies decided to import fuel on their own. The government declared them “a menace to the national security of the country,” and threatened the companies’ directors with indictments.
Months later, Haitian President Jovenel Moïse issued an order explicitly giving BMPAD the monopoly over fuel imports.
But that exclusivity came amid a volatile foreign exchange market in which the local Haitian currency, the gourde, was quickly devaluing against a strong U.S. dollar. At the same time, the Moïse government, which continued a policy of subsidizing fuel prices at the pump, was incurring a record public deficit, all of which made dollars harder to come by to pay for the fuel.
Adding to the country’s woes was the government’s decision months later to ban the use of the U.S. dollar and other foreign currency in transactions. The measure has since been rescinded.
What it meant, say economists, is that every time a shipment of fuel came in, the government had to come up with dollars to pay. With the Central Bank’s own international reserves nearing a critical threshold, the government was then forced to buy dollars, which led to it further accumulating debt with Novum.
Meanwhile, the government itself loses anywhere between $25 million and $35 million a month between its financing of fuel and the state-owned power company EDH, which purchases power from private providers for its unstable grid.
“There is no energy policy in Haiti, no controls,” said Reginald Noel, a bio-energy specialist in Port-au-Prince who has a weekly investment show on Radio Metropole. “We’ve been subsidizing for so long, and it’s ridiculous that most of the diesel being used is for electricity generation that only covers three Haitians out of 10.
“It’s not going to get us anywhere, and not going to cover production for agriculture or tourism,” he added. “Hotels have to supply their own electricity. Each and every company that comes to invest here has to bring two generators and fuel tanks.”
Making matters worse, Noel pointed out, is that the government, which endured three days of violent civil unrest and canceled international flights when it announced fuel hikes in July, “cannot even raise the price of the gallon by one dime.”
“Yet on the black market, fuel is being sold for $8.48 and $12.11 a gallon in certain provinces,” Noel said. “It is total mismanagement. We need an emergency energy policy in Haiti. Things cannot go on like that.”
Indeed, black market fuel has become a hot commodity in Haiti. That and the stockpiling by gas stations is speeding up consumption, which means that even oil companies are increasingly facing difficulties trying to figure out the country’s fuel needs when sending orders to BMPAD.
Boisson said that during a visit between the president and business leaders six months ago, he warned Moïse, who has promised to bring 24/7 electricity to all of Haiti by this summer, about the pending fuel shortage.
“The way to solve the situation is pretty clear to me,” Boisson said. “First of all pay the arrears. It is really bad for the country.”
Second, he said, open the fuel market.
“Not so long ago, fuel companies used to consolidate their respective purchases into one order every three to four weeks to minimize costs,” Boisson said. “When they were purchasing their own fuel ... they were teaming together, making their own bids and deciding who was going to be the importer this time and that importer would import for everybody. ... That mechanism was more in line with everyone’s objectives and the importers just went to the bank and purchased the foreign exchange. And it was working.
“There is no need for the government to be controlling this,” he added, referring to fuel imports and BMPAD’s monopolized role. “This is really a lot of intervention in the marketplace where the state should at least focus on what is their job and let the private sector, businesses do their work.”