THE PARTNERSHIP between Patriotic Energies and Technologies Company and global commodities trader, Trafigura—by which the privately held Singapore-based trader would provide US$500 million to restart the operations of the Pointe-a-Pierre refinery—goes back more than one year.
Addressing Parliament on September 20, 2019, Finance Minister Colm Imbert spoke of Trafigura—a company with a chequered history of allegations of corruption and bribery—only in terms of its limited role as an importer and supplier of fuels for the local market.
Outlining the ten points that Patriotic was required to present to the evaluation committee in one month’s time, Imbert at point seven had referred to: “...a plan for the supply of petroleum products during the transition to full operationalisation by Patriotic of the refinery, inclusive of the finalisation of an MoU with Trafigura PTE Limited;.”
But documents disclosed by Opposition Leader Kamla Persad-Bissessar, at a virtual political meeting on Monday, revealed that Patriotic and Trafigura entered into a Memorandum of Understanding (MoU) for the financing of the start-up of the facility on October 28, 2019.
In the MoU, which had a duration of one-year, Patriotic and Trafigura “agreed to a non-binding framework to be used by the parties to discuss the potential transactions and negotiate the terms of the certain agreements that may be entered into.”
The MoU was extended for a further 15 months from October 27, 2020, in an amendment agreement entered into by the Oilfields Workers Trade Union-owned company and the commodities trader on October 26, 2020.
The October 26, 2020, amendment is vague as to the specific undertakings of both parties. In the amended MoU, there is no mention of Trafigura providing financing for the restart of the refinery.
But Trafigura’s role in financing the restart of the refinery’s operations is outlined in the October 29 letter by Patriotic’s executive chairman, Okera Thompson, to four Government officials aimed at meeting the October 31, 2020, final deadline set by the Government.
In the letter—which was addressed to Minister in the Office of the Prime Minister Stuart Young, Energy Minister, Franklin Khan, evaluation committee chairman, Permanent Secretary Vishnu Dhanpaul and chairman of Paria Trading and Guaracara Refining, Newman George—Patriotic’s Thompson states: “We are pleased to inform you that as recently as October 26, 2020, Trafigura PTE reaffirmed its desire to provide US$500 million as restart financing via a renewal of our Memorandum of Understanding here enclosed.”
Trafigura’s reaffirmation on October 26, 2020, would have been based on the affirmation of US$500 million in restart financing one year earlier.
Patriotic would have felt that Thompson’s October 29, 2020 letter addressed two of the three stipulations outlined by Government to the company: the US$500 million restart financing to be provided by Trafigura and the US$500 million purchase price financing for which Patriotic letter indicated it had received an “indication of interest” from RBC Capital Markets “to act as lead arranger in our equity and debt raises.”
But Thompson’s October 29, 2020 letter was silent on the issue of the first priority lien on the assets of Guaracara Refining and Paria Trading, two subsidiaries of Trinidad Petroleum Holdings Ltd whose assets are being held as collateral for TPHL’s June 2019, US$1.1 billion refinancing of its predecessor holding company, Petrotrin’s debt.
In turning down the Patriotic offer, Khan had said: “Today, I regret to say that this final proposal does not address the outstanding issues that could lead to a signed contractual agreement.”
But speaking Imbert at a news conference called by Prime Minister Dr Keith Rowley on November 11, Finance Minister indicated that the Government would settle all of the encumbrances on the refinery and the trading assets before selling them.
Imbert said: “The Leader of the Opposition also said we can’t sell it because there is a mortgage. Nonsense.
“Obviously if you are selling someone something, it must be free of all encumbrances.
“If any of you—and I am sure some of you have—are homeowners and would have entered into a purchase agreement to buy property, one of the most basic clauses in a purchase agreement is that the vendor (who is selling it) agrees that on completion of the sale, it would be free of encumbrances.
“We are not selling anything with any mortgage or lien on it. We will deal with that. That is a Government matter. That’s a matter for the Cabinet, for the Corporation Sole.
“If there is a lien, we can get the lien put on other assets. We can get the lien changed to something else. That is a matter for the Corporation Sole.
“It is a nonsense for the Opposition Leader to say that the refinery can’t be sold because at this time, there is a lien on some of the assets.”