Oil and Gas

Dominican Republic pays off Venezuelan oil debt at hefty discount

SANTO DOMINGO, Jan 30 (Reuters) - The Dominican Republic paid $1.93 billion to satisfy a $4 billion debt to PDVSA , Venezuela’s state oil company, using the proceeds of a bond sale after negotiations with the PetroCaribe oil program, a Dominican official said late Thursday.

During a press conference at the government palace, Minister of Finance Simon Lizardo said the payment was made via the issuing of $2.5 billion in bonds issued Jan. 20.

“This week the country has just closed the largest debt management transaction in its economic history,” he said.

Former Venezuelan President Hugo Chavez created PetroCaribe in 2005 to help the country’s neighbors cope with rising energy costs, letting them finance 60 percent of their purchases.

PetroCaribe offers a preferential financing program that allows countries to receive oil with payment deferred over 25 years at an interest rate as low as 1 percent.

Lizardo said the deal to pay off 98 per cent of the $4.1 billion accumulated debt with PDVSA, was “the result of negotiations that started over a year ago and emerged as an initiative of the Government of the Dominican Republic.”

The transaction allows a reduction of the country’s public debt by $2 billion, equivalent to 3.3 per cent of gross domestic product. (Editing by David Adams and Jeffrey Benkoe)