Who is popular today?

Minister with responsibility for Industry, investment and commerce, Senator Aubyn Hill, has blamed the former 2012/2016 People's National Party (PNP) Administration for the failure of the hedge fund efforts to control local oil prices.Responding to an accusation from Opposition Senator Damion Crawford in the Senate debate on the 2022/23 Appropriation Bill on Friday, that the current Jamaica Labour Party (JLP) Administration was responsible for the failure, Senator Hill said that in initiating the activity in 2015, the previous Government had mistakenly used the wrong option in setting up the hedge that year, which should have lasted into 2016, but eventually cost the country some $33 billion.He said that the previous Government had used the oil industry's crude oil futures' "put option", which only benefits when oil prices go down, rather than the "call option", which benefits when the prices go up. He also noted that at the time oil prices were close to US$40 per barrel."They bought a 'call option' and the price never went up during that period of time, and so we spent US$33 million. So, a rich US bank got that money, about $3.3 billion, and we got oil options which are contracts that grant the contract holder an option to execute a purchase at a later date at a predetermined price. This differs from a futures contract since it is not a commitment to buy," Senator Hill stated.Future contracts are an agreement between producers and consumers to lock in a purchase price for a transaction at a later dateIn 2020, at the request of Minister of Finance Dr Nigel Clarke, the Bank of Jamaica began looking into whether new hedging arrangements were feasible for Jamaica. This was due to the dramatic fall in oil prices that year.But, in the meantime, Jamaica had suffered huge losses from the venture, which was initially aimed at oil hedging some five-year previous but got no returns from the contracts.The investigations revealed that in mid-2015, the Jamaican Government had purchased two oil hedging contracts, which was the first time the country was dealing with the oil futures. The move was made in line with the then policy decision to manage the exposure to a predictable spike in oil prices based on the lows cost of about US$40 per barrel during that year.It is understood that the country paid approximately US$28 million in premiums to Citibank to execute the trades covering the hedging period, June 2015 to December 2016. However, none of the options were triggered and the contracts expired with no payout made to Jamaica.However, on Friday, Crawford, Hill's Opposition counterpart, blamed the Government for the rising petrol taxation costs, claiming that it was a result of their failure to follow up on the 2015 futures venture by the previous Government."Let us not be fooled what is happening now with gas prices in Jamaica is almost entirely the fault of the Government," he said, noting that it was the current Government's decision to remove the insurance which was put in place, against the oil price value.Crawford also called for the extension of the support for vulnerable Jamaica Public Service (JPS) customers to one year, up from four months, and for use of a flat rate instead of the 20 per cent across-the-board payment which the finance minister had announced in closing the annual budget debate on Tuesday.He said that in the proposed disbursement form, the proposal would benefit more customers above the vulnerability level, than those at the bottom."There is nothing to suggest that in four months the need would have been removed, and the direction is that it is getting worse. So, I recommend that it goes for a year with a review at the end. Using the minister's figures, I think that is affordable," he said.He also asked for an improvement on the $600 million approved to assist road transport operators, suggesting that the funds should also be available for the transport operators to pay off outstanding road traffic tickets."We are happy that something is being done for the taxi operators but, again, this is not enough. We also await to hear what the proposed interest rate on required collateral is, and we implore the Government not to come with a million exclusion clauses, because we know that this is an exclusion Government," he added.The 2022\23 Appropriation Bill was passed by the Senate at the close of the debate on the Bill which gives the Government the go-ahead to spend from the Consolidation Fund to finance the annual Estimates of Expenditure (Budget).