PRESS STATEMENT (120/08)
30th October 2008


BULK PROCUREMENT OF PETROLEUM INITIATIVE PROGRESSES



The Bulk Procurement of Petroleum Initiative is to be progressed following endorsement of a Memorandum of Understanding and the signing of the MOU by three Forum Island Countries at the Forum Economic Ministers’ Meeting which ended in Port Vila, Vanuatu 29th October.

The initiative is in the Pacific Plan endorsed by Pacific Islands Forum Leaders in 2005.

The Cook Islands, Nauru and Tuvalu signed the MOU with other Forum Island Countries (FICs) with other FICs indicating their willingness to sign soon.

The process for the implementation of what will be known as the Pacific Petroleum Project will begin with the appointment of a Project Committee which will comprise of one representative from the signatories of the MOU.

The purpose and aims of the Project are to:

§ Capture the significant savings and benefits from more efficient import management by the aggregation of demand, and provide opportunities for strategic cost reductions at various stages of the procurement process such as coastal shipping, handling at ports and distribution;
§ Provide a strategic focus to the procurement of core energy needs, including security of supplies, management of strategic petroleum storage, risk management, and increased private sector participation in the downstream petroleum distribution sector;
§ Pool the resources of the signatories to improve negotiation for petroleum supply contracts, leverage purchasing power, and minimize the transaction costs for procurement activities;
§ Help achieve optimum resources allocation, avoid duplication of effort and ensure that procurement planning reflects energy security goals and priorities as set out in the Regional Pacific Islands Energy Policy and National Energy Policies; and
§ Promote regional cohesion and encourage long-term thinking and commitment to strategic options for the on-going procurement of petroleum products and supplies.

The Project will culminate in the negotiation of common terms and conditions for the supply of petroleum to individual Governments or contracting authorities who will enter separate contracts with a preferred supplier agreed by the Project Committee. The contracts will reflect the common terms and conditions, while allowing for any differences required to comply with specific requirements prescribed by each country’s domestic legislation.

In the Forum Economic Action Plan 2008, the Economic Ministers requested the Forum Secretariat to cooperate with Forum members regarding a possible timeframe for the implementation of the Project noting the first meeting of the Project Committee should be held in early 2009 for those members who were able to sign the MOU.

ENDS.

For more information contact Dr Roman Grynberg, the Forum Secretariat’s Director Economic Governance Programme on email: romang@forumsec.org.fj