An­drea Perez-Sobers

Se­nior Re­porter

an­drea.perez-sobers@guardian.co.tt

While there is some op­ti­mism about the nine po­ten­tial bid­ders for the re­fin­ery at Pointe-a-Pierre, the ques­tion that is be­ing asked is whether those in­ter­est­ed com­pa­nies can raise the cap­i­tal re­quired to pay for the fa­cil­i­ty and fi­nance its re­fur­bish­ment.

Last week, Sun­day Busi­ness Guardian re­port­ed that the new process to find a buy­er for the re­fin­ery has re­ceived nine po­ten­tial bid­ders.

The bid­ders are CRO Con­sor­tium, IEM Re­fin­ery Com­pa­ny, GN Fence­line, Colum­bus Re­fin­ing Trinidad and To­ba­go, In­tegri­tus Group of Com­pa­nies, Oan­do PLC, Nau­ti­cal Part­ners, Pa­tri­ot­ic En­er­gies, and IN­CA Re­fin­ing.

The re­fin­ery was moth­balled at the end of No­vem­ber 2018 and there have been three at­tempts by the Gov­ern­ment to dis­pose of the as­sets.

Speak­ing on this new de­vel­op­ment, for­mer En­er­gy Min­is­ter Kevin Ram­nar­ine said there will al­ways be com­pa­nies that will ex­press in­ter­est and sub­mit pro­pos­als. But, he said, the im­por­tant is­sue is if those bid­ders can raise the funds to bring the re­fin­ery back to pro­duc­tion, the cost of which is es­ti­mat­ed to be be­tween US$600 mil­lion and US$1 bil­lion.  

Ram­nar­ine al­so ques­tioned the con­di­tion of the re­fin­ery is af­ter six years of be­ing moth­balled and the rep­u­ta­tion of the po­ten­tial bid­der.  

“Too of­ten we hear names be­ing bandied about and the next ques­tions are who are they and where do they come from? What we don’t want are suit­case-trad­er in­vestors. It’s dif­fi­cult to say what the re­fin­ery is worth now but ob­vi­ous­ly, there has been de­pre­ci­a­tion in the last six years. The re­fin­ery was shut down and there was no plan be­yond that ac­tion be­cause here we are six years lat­er and it’s still down and de­pre­ci­at­ing,” he lament­ed.

Ram­nar­ine said that the pub­lic should not stand by and watch the re­fin­ery de­cay fur­ther. He point­ed out this coun­try spent US$1.6 bil­lion on the up­grade of the re­fin­ery be­tween 2006 and 2014.  

“There were five new plants and an up­grad­ed Cat­alyt­ic Crack­ing Unit. Its clo­sure was based on a mis­un­der­stand­ing of the fi­nan­cials in­clud­ing ex­pen­di­ture on bonds, de­pre­ci­a­tion, and write-downs of in­ven­to­ry val­ue (2014 to 2016) and the high lev­el of turn­arounds that had to be done (2012 to 2014),” the for­mer min­is­ter said.

Giv­ing his thoughts on the mat­ter, en­er­gy ex­pert Gre­go­ry McGuire said he was quite sur­prised that there were still nine com­pa­nies in­ter­est­ed in the re­fin­ery.

In 2019, the first re­fin­ery process re­ceived 77 pro­pos­als with 25 of those sign­ing non-dis­clo­sure agree­ments.

Asked whether he thought all nine of the com­pa­nies this time were se­ri­ous bid­ders, McGuire said, “We have to wait and see. I am op­ti­mistic. I think the in­dus­try knows the de­tails of this as­set and if a com­pa­ny, with that knowl­edge, still in­di­cat­ed in­ter­est, I think that is a good rea­son for op­ti­mism.”

In the first re­quest for pro­pos­als (RFP) the Oil­fields Work­ers Trade Union’s (OW­TU) com­pa­ny, Pa­tri­ot­ic En­er­gies and Tech­nolo­gies Ltd, of­fered an up­front cash pay­ment of US$700 mil­lion for the re­fin­ery as­set.

Ques­tioned on what he thought the re­fin­ery is pos­si­bly worth now, McGuire said he did not have a fac­tu­al ba­sis for com­ment­ing on the val­ue of the as­set.

On whether the gov­ern­ment will agree not to ac­cept an up­front pay­ment to get the re­fin­ery restart­ed, McGuire not­ed that the Gov­ern­ment needs to ac­cept the best pro­pos­al to get the re­fin­ery op­er­at­ing again.  

“That may well mean leas­ing the re­fin­ery to the com­pa­ny that is best placed with the fi­nan­cial cap­i­tal, tech­ni­cal ca­pa­bil­i­ty, and ac­cess to mar­kets to make this a vi­able re­fin­ery. Once the in­vest­ment is made, the Gov­ern­ment can earn its re­turns from du­ties and cor­po­ra­tion tax­es to be paid by the en­ti­ty. An up­front pay­ment would be a bonus but to my mind should not be a heav­i­ly weight­ed fac­tor in the de­ter­mi­na­tion of the pre­ferred buy­er,” he added.

Union up­set

 Last Fri­day, OW­TU pres­i­dent gen­er­al An­cel Ro­get, held a me­dia con­fer­ence out­side the Pointe-a-Pierre Re­fin­ery, where he ex­pressed dis­gust with the ac­qui­si­tion process. He and his team burned pho­tographs of Prime Min­is­ter Dr Kei­th Row­ley and En­er­gy Min­is­ter Stu­art Young.

Ro­get said that since the re­fin­ery’s shut­down, the gov­ern­ment has spent $43 bil­lion im­port­ing fu­els, rob­bing the coun­try of a ma­jor for­eign ex­change earn­er.

The burn­ing of the pho­tographs was strong­ly con­demned by Min­is­ter Young, who stat­ed, “That type of be­hav­iour is, un­for­tu­nate­ly, a re­flec­tion on the in­di­vid­ual car­ry­ing it out.”

The union head dis­closed that Pa­tri­ot­ic nev­er had the chance to do a full site vis­it of the re­fin­ery be­fore sub­mit­ting its bid on May 10.

“We were not af­ford­ed a full tour of all of the plants in the re­fin­ery. Look how they are de­ceit­ful and de­cep­tive. They ex­pect­ed us, in three hours, to as­sess the re­fin­ery to put in a prop­er bid. A re­fin­ery that has been shut down since No­vem­ber 2018,” Ro­get said.

Cham­ber op­ti­mistic  

Greater San Fer­nan­do Cham­ber of Com­merce pres­i­dent Ki­ran Singh said the fact that nine com­pa­nies have ex­pressed in­ter­est in ac­quir­ing the re­fin­ery is ex­cit­ing news for South Trinidad.  

He said this means that po­ten­tial in­vestors see the re­fin­ery as a valu­able as­set that can be mon­e­tised in the short to medi­um term.

“The pos­si­bil­i­ty ex­ists that not all may be se­ri­ous in­quiries but it re­mains the re­spon­si­bil­i­ty of the due dili­gence team to short­list those who qual­i­fy for the fi­nal bid,” Singh ex­plained.

He said the cham­ber is of the view that it is ex­treme­ly im­por­tant to get the re­fin­ery restart­ed.  

“It has the po­ten­tial to be a net for­eign ex­change earn­er. In ad­di­tion, it will im­me­di­ate­ly gen­er­ate hun­dreds of di­rect jobs in the plant. There will al­so be pos­i­tive ben­e­fits to em­ploy­ment cre­ation and in­vest­ment in the down­stream in­dus­tries,” Singh high­light­ed.

Asked whether Pa­tri­ot­ic En­er­gies should be giv­en an­oth­er chance in the process, the cham­ber head said once it can demon­strate its fi­nan­cial strength in be­ing able to pur­chase the re­fin­ery and sat­is­fy the due dili­gence process, then it should be al­lowed to reen­ter the bid­ding process.

With the clo­sure of the re­fin­ery in 2018, Singh dis­closed that the sur­round­ing com­mu­ni­ties were neg­a­tive­ly af­fect­ed, and the re­open­ing of the re­fin­ery will breathe new life in­to the dis­tricts that sur­round it.

De­ceti­ful games

MP for Pointe-a-Pierre Dr David Lee said the Op­po­si­tion has al­ways main­tained that the Gov­ern­ment’s de­ceit­ful games to break its elec­tion promise to give Pa­tri­ot­ic the re­fin­ery has not just jeop­ar­dised T&T’s fu­el se­cu­ri­ty, for­eign ex­change in­come and the rev­enue of the coun­try but has re­duced the val­ue of the re­fin­ery.

“The Op­po­si­tion’s biggest con­cerns are the “be­hind the scenes” games of the Gov­ern­ment, which seems to be op­er­at­ing a par­al­lel proc­cess in con­tra­dic­tion to pro­cure­ment leg­is­la­tion and the agreed closed process,” he de­tailed.

Fur­ther, Lee said it is quite con­cern­ing that while re­ports in­di­cate that Pa­tri­ot­ic En­er­gies has not been able to tour the re­fin­ery due to the dead­line be­ing closed, oth­ers have.

“Why is an un­fair ad­van­tage be­ing giv­en to some? Why is da­ta be­ing giv­en to some and not all? Is this part of the agen­da to out­play the OW­TU? If the Gov­ern­ment re­fus­es or de­clines any up­front pay­ment from any bid­der, then this Gov­ern­ment nev­er had any in­ten­tion of sell­ing the re­fin­ery to OW­TU. If the Gov­ern­ment does this, it will show that they have yet again de­prived this na­tion of mil­lions in rev­enue,” the MP added.