former Petrotrin refinery

up for grabs: An aerial view of the former Petrotrin refinery at Pointe-a-Pierre. —Photo: RICHARD CHARAN

Patriotic Energies and Technologies Company Ltd’s bid for the Petrotrin oil refinery has been rejected for a second time.

This was confirmed this morning by a senior government official.

The Express was told that Cabinet deliberated on the issue at length yesterday.

However, the fresh proposals put forward by Patriotic were still found to be inadequate.

Patriotic head and President General of the Oilfields Workers' Trade Union (OWTU) Ancel Roget was contacted yesterday by Government officials and informed of the decision, the Express was further told. The Express tried to contact Roget this morning but calls and messages went unanswered.

Today at 11 a.m Energy Minister Franklin Khan and Finance Minister Colm Imbert will host a joint virtual news conference to announce the details of the latest rejection.

When Patriotic's bid was first rejected in October 2020, Khan explained that Patriotic's $700 million proposal did not address key outstanding issues and, as such, Patriotic does not meet the criteria necessary to lead to a signed contractual agreement.

Speaking to the Express this morning, Pointe-a-Pierre MP David Lee said Government's latest rejection of Patriotic's bid for the Petrotrin refinery comes as no surprise as at the end of the election last year it was clear that this administration has been doing all it can to derail the negotiations.

He said from the start he and Opposition Leader Kamla Persad-Bissessar have been warning the country this would happen.

"This act is yet another slap in the face and betrayal to the people of this nation as it appears these negotiations were all just an election gimmick undertaken by Franklin khan, Prime Minister Rowley and Stuart Young since 2018 to fool the OWTU, its members and more so, the citizens of this nation," said Lee.

"We must ask the Government, what happened to the ‘great offer’ the Finance Minister boasted about in 2018 when they said they were giving the refinery back to the people of this nation," he added.

Lee said from day one the Government knew that they had plans for the refinery which didn't include the people of this nation but they just wanted to "save face" before the election.

He said it is totally detrimental to the national wellbeing that the refinery continues to become "scrap metal" while the country continues to lose valuable forex and fuel security by its closure.

The background

That procurement process for the refinery—which had been in operation for over 100 years when it was closed on November 30, 2018—has been prolonged by mixed signals and a misguided Cabinet.

The formal process began in March 2019, when the Government issued a request for proposals (RFP) for the sale of the refinery.

Some 77 companies responded to the RFP, with the Government’s evaluation team short-listing three companies that submitted compliant binding offers—OWTU’s Patriotic, New York-headquartered Beowulf Energy and German refiner and trader Klesch.

Speaking in Parliament on September 20, 2019, Imbert said the three shortlisted bidders were measured based on 12 criteria, which included financial capability, upfront consideration, history of refining and marketing experience and the refinery restart time.

Beowulf offered no upfront consideration, but instead proposed a lease payment of US$42,000 per month over a 15-year initial term (US$7.56 million), and a future 50/50 profit-sharing arrangement contingent on Beowulf recovering its capital investment and achieving a 15 per cent internal rate of return (IRR). Klesch’s proposal indicated the only payments to the Government would be through taxes.

Patriotic Energies was selected as the preferred bidder because it offered US$700 million for the refinery and the associated trading assets, which are held by Paria Fuel Trading Company.

Imbert told Parliament at that sitting that Cabinet had agreed that Patriotic be granted a three-year moratorium on all payments of principal and interest towards the purchase of the refinery and a further 10 years at a fair market interest rate to complete the payment of the sum of US $700 million it has offered for the refinery.

Cabinet’s decision to offer the OWTU-owned company 13 years to pay for the refinery, with the first three years being no payment at all, was based on the assumption that the refinery and trading assets were not pledged. But those assets were being held as collateral by the bondholders and lenders who financed the restructuring of Petrotrin’s debt to the tune of US$1.17 billion, including the US$850 million bullet payment.

Speaking at a news conference on October 31, 2020, Khan announced that the final Patriotic proposal had not been accepted by the Government and that Government would consider other options for the refinery and the trading assets.

Khan said the Patriotic bid failed to address three key issues: the first priority lien on the asset (the issue of pledging of the assets); the purchase price financing and the restart financing.

The day after Khan’s news conference, OWTU president general Ancel Roget held a news conference of his own at which he requested that the original evaluation committee, which had analysed the bids in August and September 2019, should be reconvened to evaluate Patriotic’s final offer.

Prime Minister Rowley agreed with Roget’s suggestion and directed that the committee should re-examine all Patriotic’s final submissions and make a recommendation to Cabinet by November 30.

Patriotic’s final offer was for an upfront payment of US$500 million for the refinery and the fuel trading assets.

In documents leaked by Opposition Leader Kamla Persad-Bissessar at a UNC Monday Night Forum, it was disclosed that Patriotic had received a letter from RBC Capital Markets in which it indicated it is “interested in assisting Patriotic and its prospective partners in relation to the opportunity,” by raising the US$500 million upfront payment.

Global commodities trader Trafigura, in another leaked document, “reaffirmed its desire” to provide US$500 million to finance the restart of the refinery.

And what about the fact that the refinery and the trading facilities are pledged?

At a post-Cabinet news conference on November 11, 2020, Imbert said the following: “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.”

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