Since no one appears to know what the nature of the deal with Venezuela that Boris isn’t extending, I’ve been reading the legals.

The deal is technically between GLA and TfL and Petroleos de Venezuela Europa (a Dutch company, as it happens, although obviously an arm of the Venezuelan state oil company), and the details are (still) on the website, along with various supportive quotes pointing out that this benefits London’s poorest children.  Sweet.

Skimming the PDF of the agreement, which includes interesting stuff about where in the hell the legal framework for this resides (Local Government (Overseas Assistance) Act 1993, apparently), it’s a 12 month deal, extensible by mutual agreement.  The Venezuelans send cash (known as the Energy Funding Contribution) to the tune of 20% of something called the Realised Fuel Price.  This has a tiresome legal definition but is basically the amount of diesel used on London Buses during the year multiplied by the (net) price of diesel at around the time TfL ask for the money.  TfL actually make two requests, each for 50% of the total, the second of which also obliges the Venezuelans to pay for the administration of the 50% discount scheme *and* the administrative costs of the technical assistance provided, which probably explains why the estimated savings from closing the Caracas office are so small – the Venezuelans paid them.

The cash comes, in US dollars unfortunately, in two wads six months apart roughly at the beginning and middle of the year following the official start date (perhaps October/April, so we may just have had the second lot).  There’s a total cap of $32m.

TfL’s obligations are to provide advice which:

“…may include integration of transport modes, traffic management, bus
service management and priority, metro management, public protection and
safety on public transport services, regulation and operation of taxis and private hire vehicles and marketing of transport services. “

The agreement limits TfL to using the cash solely to cut fares by 50% for Income Support recipients on bus/tram fares on PAYG and bus passes (so if you’re on income support and bought a bus pass this year because it was half price you’re in for a shock when you renew it).  TfL actually has to provide Oyster usage data to the Venezuelans on this, although this has to be within the DPA.

As for renewal, this comes up two months before the end of the year, which would be about June/July time.  One of the things that gets considered is the price of diesel, which leads to an interesting point.

Because the deal applies to diesel used in the same year TfL gets paid in, there has to be an adjustment at the end based on the real value, since you can’t know at the beginning how much you’ll use or what the oil price is:

7.3 Where the Parties do not agree that this Energy Funding Contribution and Co-operation Agreement should be extended, TfL shall calculate the actual Realised Fuel Price for the Year and:

7.3.1 to the extent that such sum is more than the estimated Realised Fuel Pricesused in the First Request and Second Request, PDVE shall reimburse TfL, subject to clause 3.5; or

7.3.2 to the extent such sum is less than the estimated Realised Fuel Prices used in the First Request and the Second Request, such difference shall be applied to the discount scheme referred to in clause 5.2 and in respect of the Discount Benefit Administration costs and the Technical Advice Administration Costs and to the extent that any sums remain unapplied as set out in this clause

7.3.2, they shall be reimbursed to PDVE, and the Energy Funding Contribution and Co-operation Agreement will terminate automatically at the end of the Year.

Naturally, since the original calculation of the Realised Fuel Price last September time the price of diesel has rather gone up, so it’s not beyond the realms of possibility that they owe us some cash.  Since the scheme now stops at some point but the cash can only officially be spent on it, what happens?  Do we continue issuing cards until the cash runs out, return it to the Venezuelans, or what?

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