Cur­tis Williams

cur­tis.williams@guardian.co.tt

The Oil­fields Work­ers’ Trade Union (OW­TU) has not shown it has the abil­i­ty to raise the US$500 mil­lion re­quired to pur­chase the Petrotrin Point-a-Pierre re­fin­ery and as a re­sult, the Gov­ern­ment is pro­ceed­ing to im­me­di­ate­ly re­turn to the open mar­ket to seek suit­able par­ties in­ter­est­ed in op­er­at­ing the fa­cil­i­ty.

En­er­gy Min­is­ter Franklin Khan made the dis­clo­sure yes­ter­day dur­ing a joint news con­fer­ence with Fi­nance Min­is­ter Colm Im­bert, in which Im­bert in­sist­ed that af­ter a year of ne­go­ti­a­tions the OW­TU sim­ply could not meet the fi­nan­cial re­quire­ments of the deal.

“All that Pa­tri­ot­ic was able to pro­duce at that time was a let­ter from RBC say­ing they were in­ter­est­ed in as­sist­ing Pa­tri­ot­ic. They gave no guar­an­tee of pro­vid­ing fund­ing, they gave no com­mit­ment on pro­vid­ing fund­ing, they gave no time­frame, they gave no terms, so it was not a suit­able of­fer,” Im­bert told the vir­tu­al me­dia brief­ing.

The Fi­nance Min­is­ter in­sist­ed that the lien (a right to keep pos­ses­sion of prop­er­ty be­long­ing to an­oth­er per­son un­til a debt owed by that per­son is dis­charged) was not the prob­lem, al­though OW­TU pres­i­dent An­cel Ro­get yes­ter­day in­sist­ed to Guardian Me­dia that this was at the heart of the chal­lenges.

To un­der­stand the is­sue bet­ter, one has to re­mem­ber that the Petrotrin re­fin­ery was heav­i­ly lever­aged with sig­nif­i­cant debt. When the Gov­ern­ment de­cid­ed to close down the re­fin­ery, it had to come to agree­ments with the bond­hold­ers, who owned part of the debt of the for­mer Petrotrin.

The bond­hold­ers have first lien on the Point-a-Pierre re­fin­ery, mean­ing if it is sold, they have to get their mon­ey first. It is in that con­text that the of­fer by the Gov­ern­ment to Pa­tri­ot­ic in 2019 to get ac­cess to the plant and pay the mon­ey at a lat­er date, could not stand.

With this in mind and hav­ing worked out the present val­ue of Pa­tri­ot­ic’s ini­tial of­fer of US$700 mil­lion, the fig­ure of US$500 mil­lion was ar­rived at.

The min­is­ters said the Gov­ern­ment would re­turn to the open mar­ket be­cause it felt that too much time had elapsed to ne­go­ti­ate with Pa­tri­ot­ic’s sec­ond placed of­fer. Asked what would be the min­i­mum amount of mon­ey the state can be ex­pect­ed to set­tle on for sale of the plant in the con­text of the bond­hold­ers hav­ing to be paid, Im­bert was coy, not be­ing pre­pared to say what that is.

En­er­gy Min­is­ter Franklin Khan said while Gov­ern­ment wants the re­fin­ery restart­ed, it was not pre­pared to put state funds back in­to it.

“We want it to run with­out State cap­i­tal, with­out State in­ter­jec­tion and with­out State fund­ing. We have dis­ag­gre­gat­ed Her­itage and Paria, which has been suc­cess­ful. The re­fin­ery was al­ways the can­cer in Petrotrin and if some oth­er en­ti­ty can see it fit to restart the re­fin­ery in a prof­itable busi­ness mod­el, that is what the Gov­ern­ment wants,” Khan told the news con­fer­ence.

On Oc­to­ber 29 last year, Pa­tri­ot­ic sub­mit­ted a pro­pos­al for the pur­chase of the Petrotrin re­fin­ery. How­ev­er, two days lat­er, on Oc­to­ber 31, Khan an­nounced that Gov­ern­ment had re­ject­ed Pa­tri­ot­ic’s pro­pos­al. Not­ing that both par­ties were bound to non-dis­clo­sure agree­ments in these dis­cus­sions, he said the key is­sues at the end of pro­longed dis­cus­sions were the pur­chase price fi­nanc­ing, the restart fi­nanc­ing and first pri­or­i­ty lien on the as­sets.

“Af­ter much to-ing and fro-ing, ex­change of let­ters and a se­ries of meet­ings in­volved with the ne­go­ti­at­ing team, the Ho­n­ourable Prime Min­is­ter and the Ho­n­ourable Min­is­ter of Fi­nance gave the par­ties an Oc­to­ber 31 dead­line to reach an agree­ment on the sale of the cap­tioned as­set,” Khan said then, adding the pro­pos­al did not ad­dress key out­stand­ing is­sues and there­fore did not meet the nec­es­sary cri­te­ria.

But af­ter OW­TU pres­i­dent gen­er­al An­cel Ro­get asked the Gov­ern­ment to re­vis­it the deal, Prime Min­is­ter Dr Kei­th Row­ley in­struct­ed the eval­u­a­tion com­mit­tee to take a sec­ond look at the pro­pos­al and make fur­ther com­ments and rec­om­men­da­tions. That re­port was sub­mit­ted to Cab­i­net on No­vem­ber 30, 2020.

The re­fin­ery re­mains closed and there have been ques­tions about the cost of the restart and whether Pa­tri­ot­ic had the re­sources to make it work, both in terms of fi­nan­cial and man­age­ment. There are es­ti­mates that to safe­ly restart the re­fin­ery could cost in ex­cess of US$500 mil­lion and more like­ly close to a bil­lion US dol­lars.

Pa­tri­ot­ic is whol­ly-owned by the OW­TU.

In Oc­to­ber 2018, Gov­ern­ment de­cid­ed to re­struc­ture Petrotrin.

The com­pa­ny was bro­ken in­to sub­sidiaries, in­clud­ing Her­itage, Paria Fu­el Trad­ing, Guaracara Re­fin­ing and Petrotrin.

On May 21, 2019, Guaracara and Paria as­sets went to five short-list­ed bid­ders, in­clud­ing Pa­tri­ot­ic En­er­gies.

The fol­low­ing month, the Cab­i­net ap­point­ed an eval­u­a­tion team head­ed by Vish­nu Dhan­paul, the per­ma­nent sec­re­tary in the Min­istry of Fi­nance.

On Sep­tem­ber 20, 2019, Fi­nance Min­is­ter Colm Im­bert an­nounced in Par­lia­ment that Pa­tri­ot­ic was the pre­ferred bid­der and had of­fered an up­front pay­ment of US$700 mil­lion for the re­fin­ery, plus US$300 mil­lion got its non-core as­sets.