Cabinet agreed yesterday to select Patriotic Energies and Technologies Company Ltd (PETCL)—a company wholly owned by the Oilfield Workers’ Trade Union (OWTU)—as the preferred bidder for the US$700 million sale of Petrotrin’s refinery, and Energy Minister Franklin Khan is denying that the move by Government is a 2020 general election strategy to win back the vote of the trade union movement.
The announcement of the sale was made yesterday by Finance Minister Colm Imbert in Parliament.
Imbert said following Petrotrin’s closure last year, the Government had indicated its intention to offer for sale or lease of the refinery and associated fuel trading facilities through two stages.
The first stage attracted 77 expressions of interests.
Of the 77 potential bidders, 25 were elected to sign non-disclosure agreements which were narrowed down to eight submitting non-binding offers.
After an evaluation, a shortlist of five bidders were identified-Beowulf Energy, Glencore Ltd, Edgewood Holdings, Klesh and PETCL.
Imbert stated that in June, Cabinet agreed to the appointment of an evaluation committee chaired by Vishnu Dhanpaul to make a recommendation on a select preferred bidder, negotiate and finalise a binding offer, negotiate and execute a definitive agreement (lease of sale), initiate negotiations of critical commercial agreements and negotiate any Government incentive.
At the close of bids on August 20, Beowulf Energy, Klesh and PETCL submitted compliant binding offers for the purchase or lease of the refinery.
The committee reviewed the three proposals on 12 criteria which included upfront consideration, history of refining, financial capability and union involvement among others.
In terms of the upfront cash consideration, Imbert said PETCL was the only bidder that proposed “upfront cash of US$700 million for the refinery assets plus US$300 million for the non-core assets of legacy Petrotrin, for instance, the hospital.”
However, Imbert pointed out that Petrotrin’s core assets were not offered for sale by the Government.
Beowulf offered no upfront consideration but instead proposed a lease payment of US$42,000 per month over a 15-year initial term and a 50/50 profit-sharing contingent.
Klesh proposed that the only payment to the Government would be through taxes.
Imbert said PETCL which has as its sole shareholders the OWTU also proposed the introduction of staff incentives through a performance-based framework, gave a commitment to improving the work culture and indicated its intention to secure an equity and debt provider.
After reviewing the facts, Imbert said, “Cabinet agreed to select Patriotic Energies and Technologies Company Ltd, a company wholly owned by the OWTU, as the preferred bidder for the sale of the Guaracara Refining Company Ltd and Paria Fuel Trading Company Ltd on terms.”
Those terms include that PETCL be given one month to present to the committee a satisfactory and comprehensive work plan, among them, how they intend to complete the process in going forward, confirmation of its ability to finance the purchase and operation of the refinery, a draft sales purchase agreement, a finalised business plan, a statement of any fiscal incentives or tax concessions required from the Government and a refinery start-up plan.
Imbert said PETCL would also “be granted a three-year moratorium on all payments of principal on interest toward the purchase of the refinery and a further ten years, at a fair market interest rate, to complete the payment of the sum of US $700 million it has offered for the refinery.”
The committee has been mandated to submit its findings and recommendations to Cabinet in six weeks. (See Page A8)