After being rejected three times by the Government in their quest to acquire the Pointe-a-Pierre Refinery and port, Patriotic Energies and Technologies Limited is again seeking an urgent meeting with Finance Minister Colm Imbert to thrash out “serious misunderstandings.”
Last evening, Patriotic’s directors issued a statement saying it had access to the US$1 billion needed to acquire and restart the refinery.”
The declaration was made in response to a letter issued by Imbert that if the Government proceeded with the Patriotic proposal, the company would be getting the refinery for “free”, which would not be in the interest of the public.
However, Patriotic’s directors said they needed to meet with Imbert to clear up misunderstandings.
The directors said they have tried meeting with Imbert twice—on February 5 and February 9—but attempts were futile.
“In complex financial arrangements such as the one contemplated, Patriotic understands that there is a need for dialogue to ratify positions of parties since the parties may have varying expectations. One party may request of another, terms which may, in this instance be partially acceptable to the other. However, in good-faith dialogue, parties can reconcile those preferences to arrive at a mutually beneficial compromise,” the directors said.
The company, which is wholly owned by the Oilfield Workers Trade Union, requested that the Government provide the company with tax credits that are provisioned in the incentive package offered for investment in the oil and gas sector.
“Patriotic would further like to note that the Government currently offers tax credits of 140 per cent of the investment made in the sector. The minister raised an issue with the transferability of the Tax Credit; it is important to note that this model of financing is commonplace in International Financial Markets and as such has been proposed to the Government as a path forward,” the Patriotic directors said.
“The terms of any Tax Credit requested are subject to negotiations and Patriotic is ready to address all related concerns,” the directors said.
The company’s directors also said, “There is absolutely no doubt that Patriotic has access to the US$1 Billion required to acquire and restart the refinery. There is also no doubt as it relates to its partners to adequately support Patriotic in restarting and profitably operating the assets. The parties now need to work together to finalise the terms under which the Government is prepared to receive the upfront payment of US$500 million.”
If they met with Imbert and arrived at an agreement, Patriotic said it will make its upfront payment of US$500 million and invest another US$500 million to restart the Refinery.”
But Imbert in a letter on Saturday said there was a “complete misunderstanding of the true nature of transferable tax credits as compared to tax concessions or incentives to industry.”
“Patriotic has said that the tax credits are nothing new and are given to multinational companies making a foreign direct investment in T&T. However, what is being missed is that the tax credits given to other companies investing in T&T are not transferable or tradeable. It is only non-transferable tax credits that are given to other companies making investments, and these non-transferable tax credits can only be used to offset tax on income from their own operations, and cannot be used by other unrelated companies and therefore do not represent any financial outlay on the part of Government,” Imbert said.
He explained, “The problem with a transferable tax credit is that it is not linked in any way to the activities, income or operations of the company involved and is in effect a form of cash or revenue foregone.”
He also noted, “ A transferable tax credit can be sold on the open market for cash and is a legal and binding obligation of the Government, which in this case would have no relationship or connection to the restart or operation of the Refinery. “
Imbert explained that whether the refinery was restarted or not, the proposed transferable tax credits would be sold for cash.
“Simply put, the fundamental conditionality in the financing proposal from Credit Suisse was that the Government was required to issue to Credit Suisse, through Patriotic, US$750 million in fully transferable and tradeable tax credits in exchange for the US$500 million that would be paid to Trinidad Petroleum Holdings for the Refinery and Paria,” Imbert revealed.
This would mean if the government gives Credit Suisse US$750 million in fully transferable money market instruments, these could be sold on the open market.
“ Patriotic would then get the Refinery and Paria for free, having put up no money, collateral or security and could mortgage the Refinery and Paria as they saw fit,” Imbert revealed.
He added, “This was not what was envisaged or stated when the Request for Proposals for the sale or lease of the Refinery was issued in 2019. It is also completely inconsistent with the general criteria and conditions associated with the procurement process for the disposal of the Refinery and certainly not in the public interest.”