James Robertson, the minister of mining and energy, told the Standing Finance Committee of Parliament on Friday that Petrojam Ethanol Plant Ltd (PEL) lost $230 million in producing and delivering the blend to consumers.
Government policy provides for the E-10 blend of gasolene to be sold at $2 less than the cost of 87 octane gasolene.
Despite the loss being absorbed by the Government, Robertson has insisted that the State was not subsidising the product to the consumer.
The recently appointed energy minister was responding to questions from Opposition Spokes-man on Energy Phillip Paulwell who asked whether the government was recovering all the cost from the sale of E-10 that the PEL has incurred.
"It is not a subsidy. It has more to do with the price of oil and the E-10 mix ... I am not seeing it as a subsidy," he said.
Meanwhile, Robertson has confirmed that Petroleum Corpo-ration of Jamaica (Petrojam) sustained a $7.7-billion loss, $3.5 billion of which represents foreign-exchange losses.
Oil prices
He said the losses were due to the fall in oil prices from US$140 per barrel to US$30 on the world market, which affected the value of Petrojam's inventory.
Robertson said the accounting mechanism used to value the stock might have contributed to the extent of the losses.
"It is an accounting loss which does give you a cash-flow problem," said Robertson, while echoing Paulwell's comment that "it is a huge loss".
Robertson said the ministry has put a team in place to review the accounting mechanism used by Petrojam and has assured Parliament that the oil refinery will be able to self-finance and remain off the national budget.