Energy Minister Franklin Khan has announced that Patriotic Energies bid for the Point a Pierre refinery has been rejected by the Cabinet.
A short while ago the Minister who was also flanked by Finance Minister Colm Imbert told a virtual news conference that the government had no choice but to go back out and seek new bids for the refinery.
He said the government had decided to tell Patriotic that it no linger had exclusivity to access of Petrotrin refinery and the state will proceed immediately to return to the open market to see if there is any suitable parties interested.
Khan said there were three major challenges, the first lien, the purchase price financing and restart financing.
This is the second time that the government has rejected the offer from Patriotic.
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 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.
Rowley then 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.
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 500 million and more likely close to a billion 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.