One and a half months after a Cabinet-appointed committee was asked to review the proposal from the Oilfields Workers’ Trade Union’s Patriotic Energies Company Limited for the acquisition of Petrotrin’s Point-a-Pierre refinery, Government will today announce its back to the drawing board after rejecting the offer.
Well placed sources have told Guardian Media that the committee was of the view the proposal did not meet the minimum requirements and it was in the country’s best interest to go out and seek to engage another company to take control of the 100-year-old refinery.
The decision is likely to be a major setback for the OWTU, which lost a significant part of its union membership and power when the refinery was shut down in 2018 and has spent millions in consultancy fees as it tried to gain ownership of the refinery.
In the end, it appears the Government could not agree terms with the union and the refinery will continue to remain shut.
Yesterday, a media release announced that Finance Minister Colm Imbert and Energy Minister Franklin Khan will be hosting a joint virtual media conference at 11 am today to address the Cabinet’s decision on the ‘Procurement Process’ for the refinery.
Before last year’s General Elections, the issue of the refinery was a major topic on the platform with the United National Congress announcing its intention to restart the refinery itself, effectively taking it away from Patriotic Energies getting it. At that time, Patriotic was the preferred bidder and in talks with the Government.
This prompted the OWTU to attack the Opposition and to call on Government to conclude the negotiations before the elections. This did not happen and Prime Minister Dr Keith Rowley insisted the Government would not be pressured into a bad deal on the alter of political expediency.
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. -With reporting by Joel Julien