Last Sat­ur­day En­er­gy Min­is­ter Franklin Khan an­nounced the gov­ern­ment had re­ject­ed the counter-pro­pos­al of Pa­tri­ot­ic En­er­gies and Tech­nolo­gies Com­pa­ny Lim­it­ed for the ac­qui­si­tion of the Petrotrin re­fin­ery.

Pa­tri­ot­ic En­er­gies and Tech­nolo­gies Com­pa­ny Ltd is a whol­ly owned sub­sidiary of the Oil­field’s Work­ers Trade Union and was se­lect­ed as the pre­ferred bid­der for the moth­balled re­fin­ery.

Ac­cord­ing to Khan, af­ter more than a year of ne­go­ti­a­tions, the de­ci­sion to re­ject the counter-pro­pos­al and seek an­oth­er in­ter­est to run the re­fin­ery was based on three short­com­ings of the OW­TU’s pro­pos­al. Among the is­sues that sep­a­rate the sides is whether the re­fin­ery as­sets are al­ready pledged to bond­hold­ers and who would have first lien of the as­sets.

Ac­cord­ing to Khan the gov­ern­ment came to the con­clu­sion af­ter long and chal­leng­ing ne­go­ti­a­tions.

He said “Let me say from the on­set that this was and has been a very com­plex ne­go­ti­a­tion be­cause we were at­tempt­ing to sell a com­plex as­set in­volv­ing the sale of the mul­ti-bil­lion dol­lar state as­set. As such, due dili­gence by the State was para­mount in this ex­er­cise.”

Not­ing that both par­ties are 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.

Non dis­clo­sure agree­ments are a nor­mal part of ma­jor con­tracts be­tween and among par­ties as it is im­por­tant to pro­tect the in­tegri­ty of the busi­ness­es whether the planned ac­qui­si­tion/merg­er/joint ven­ture etc works or not.

How­ev­er there are two ba­sic ques­tion that have to be asked. The first is whether Pa­tri­ot­ic En­er­gies is like­ly to have what it takes to ac­quire, safe­ly start up and ef­fi­cient­ly op­er­ate this ma­jor state as­set.

In this re­spect the fol­low­ing ques­tions must be ad­dressed.

1. Who are Pa­tri­ot­ic’s fi­nanciers? Does Pa­tri­ot­ic have a signed doc­u­ment, com­mit­ting its fi­nanciers to fund the project?

2. If so, what are the con­di­tions at­tached to the fi­nanc­ing? If, for ex­am­ple, Pa­tri­ot­ic is un­able to re­pay its, who cov­ers/guar­an­tees the debt? If no one is able to re­pay, what hap­pens to the re­fin­ery?

3. Re­fin­ing oil is a risk ac­tiv­i­ty. Who is Pa­tri­ot­ic’s se­nior man­age­ment team? What are their names? Do they have the tech­ni­cal know-how and ex­pe­ri­ence to safe­ly restart and run the plant? Are agree­ments in place with these peo­ple?

4. Where will Pa­tri­ot­ic’s be sourc­ing its feed­stock of crude? Have dis­cus­sions re­gard­ing these arrange­ments be­gun? What is the sta­tus of the dis­cus­sion and what lev­el of com­mit­ment has been reached.

5. The re­fin­ery busi­ness is high­ly com­pet­i­tive and ex­posed to in­evitable in­ter­na­tion­al mar­ket shocks — giv­en the OW­TU’s his­to­ry, will Pa­tri­ot­ic be com­mit­ted to make the hard com­mer­cial de­ci­sions and, if nec­es­sary, cut wages or jobs to keep the re­fin­ery glob­al­ly com­pet­i­tive? If not, who will car­ry the cost?

6. In the event of a plant shut­down or some oth­er un­fore­seen event, what sys­tems will Pa­tri­ot­ic have in place to en­sure that the coun­try (and the re­gion) has a con­tin­ued se­cure sup­ply of re­fined fu­els?

To the best of my knowl­edge these ques­tions have not been ven­ti­lat­ed in the pub­lic, the share­hold­ers of the re­fin­ery and both par­ties have failed to ad­dress them, hid­ing be­hind the NDA.

The oth­er ques­tion that has to be asked is whether the gov­ern­ment ever felt Pa­tri­ot­ic could op­er­ate the re­fin­ery and es­sen­tial­ly used the deal and the OW­TU to as­sist it in its re-elec­tion bid?

You would re­mem­ber when the re­fin­ery was closed thou­sands of per­ma­nent work­ers were sent home from their jobs. In ad­di­tion to their loss of jobs it al­so meant hun­dreds of oth­er peo­ple em­ployed in com­pa­nies that pro­vid­ed ser­vices to the re­fin­ery al­so went home.

Busi­ness­es lost sig­nif­i­cant earn­ings and the con­stituen­cies in the south, par­tic­u­lar­ly the mar­gin­al San Fer­nan­do West and Pointe-a-Pierre were hurt. With an elec­tion a mere months away the gov­ern­ment an­nounced that the OW­TU was the pre­ferred bid­der. Part of the at­trac­tion, ac­cord­ing to Fi­nance Min­is­ter Colm Im­bert was the US$700 mil­lion of­fer made for the re­fin­ery by the OW­TU.

There were many nay say­ers at the time of the an­nounce­ment, with some in­sist­ing the OW­TU lacked the ex­pe­ri­ence and the cred­i­bil­i­ty to op­er­ate the re­fin­ery and make it in­to a busi­ness.

The gov­ern­ment how­ev­er, led by the Prime Min­is­ter spoke ex­ten­sive­ly about the Union’s bold move in­sist­ing that it was pre­pared to do all it could to help the com­pa­ny make a fist of the ven­ture. The gov­ern­ment even of­fered a three-year mora­to­ri­um on the pay­ment of the US$700 mil­lion, in­sist­ing that it would al­low the OW­TU breath­ing space to bring the re­fin­ery up to scratch to op­er­ate.

Im­por­tant­ly, the Min­is­ter of Fi­nance al­so in­sist­ed that the re­fin­ery was un­en­cum­bered and that it was debt free.

Im­bert said the rea­son the re­fin­ery failed and could now be prof­itable is that in the past it was “sad­dled with huge debt, bil­lions of dol­lars of debt.”

“Any per­son tak­ing over the re­fin­ery now will not have to car­ry that debt, which was a tremen­dous drain on the rev­enue be­ing de­rived from the re­fin­ery. The re­fin­ery is go­ing for­ward debt free..Sec­ond­ly, the re­fin­ery had ex­treme­ly high op­er­at­ing costs. It was over­staffed and it was nev­er able to make a suit­able prof­it be­cause of its very high op­er­at­ing costs...We do not ex­pect any en­ti­ty, in­clud­ing Pa­tri­ot­ic, to op­er­ate the re­fin­ery with the same num­ber of em­ploy­ees or the same cost struc­ture that was there be­fore.” Im­bert told a news con­fer­ence in 2019 called to dis­cuss the po­ten­tial sale.

Im­bert said he ex­pect­ed Pa­tri­ot­ic to restart the re­fin­ery with­in 12 months since it does not have to im­me­di­ate­ly come up with the US$700 mil­lion pay­ment.

It has now be­come ap­par­ent that the Fi­nance Min­is­ter’s claim that the re­fin­ery was un­en­cum­bered is not true.

Im­bert has a grow­ing rep­u­ta­tion of be­ing less than hon­est in many of his state­ments, and this col­umn has on nu­mer­ous oc­ca­sions had cause to call him out on it.

That the gov­ern­ment would have mis­led the coun­try and from all re­ports the OW­TU on this mat­ter is shame­ful.

More than that the cit­i­zens who are the share­hold­ers of these as­sets need to know the truth about it and a so­lu­tion found so that the re­fin­ery can be sold to the best en­ti­ty.

If the OW­TU can­not do it then stop the games now and move on. If the OW­TU through Pa­tri­ot­ic has the ca­pac­i­ty to suc­cess­ful­ly run the re­fin­ery and can an­swer the ques­tions I posed then find a way to an agree­ment. At a time when the coun­try deeply needs in­vest­ment, when jobs are be­ing lost every day due to the pan­dem­ic and the fail­ure of this ad­min­is­tra­tion to re-open the econ­o­my we have no time for games with the peo­ple’s as­sets.

We need not say that re­al peo­ple’s lives and rep­u­ta­tions are at stake and as the say­ing goes what is game for chil­dren is death for cra­paud.