Andrea Perez-Sobers
Senior Reporter
andrea.perez-sobers@guardian.co.tt
While there is some optimism about the nine potential bidders for the refinery at Pointe-a-Pierre, the question that is being asked is whether those interested companies can raise the capital required to pay for the facility and finance its refurbishment.
Last week, Sunday Business Guardian reported that the new process to find a buyer for the refinery has received nine potential bidders.
The bidders are CRO Consortium, IEM Refinery Company, GN Fenceline, Columbus Refining Trinidad and Tobago, Integritus Group of Companies, Oando PLC, Nautical Partners, Patriotic Energies, and INCA Refining.
The refinery was mothballed at the end of November 2018 and there have been three attempts by the Government to dispose of the assets.
Speaking on this new development, former Energy Minister Kevin Ramnarine said there will always be companies that will express interest and submit proposals. But, he said, the important issue is if those bidders can raise the funds to bring the refinery back to production, the cost of which is estimated to be between US$600 million and US$1 billion.
Ramnarine also questioned the condition of the refinery is after six years of being mothballed and the reputation of the potential bidder.
“Too often we hear names being bandied about and the next questions are who are they and where do they come from? What we don’t want are suitcase-trader investors. It’s difficult to say what the refinery is worth now but obviously, there has been depreciation in the last six years. The refinery was shut down and there was no plan beyond that action because here we are six years later and it’s still down and depreciating,” he lamented.
Ramnarine said that the public should not stand by and watch the refinery decay further. He pointed out this country spent US$1.6 billion on the upgrade of the refinery between 2006 and 2014.
“There were five new plants and an upgraded Catalytic Cracking Unit. Its closure was based on a misunderstanding of the financials including expenditure on bonds, depreciation, and write-downs of inventory value (2014 to 2016) and the high level of turnarounds that had to be done (2012 to 2014),” the former minister said.
Giving his thoughts on the matter, energy expert Gregory McGuire said he was quite surprised that there were still nine companies interested in the refinery.
In 2019, the first refinery process received 77 proposals with 25 of those signing non-disclosure agreements.
Asked whether he thought all nine of the companies this time were serious bidders, McGuire said, “We have to wait and see. I am optimistic. I think the industry knows the details of this asset and if a company, with that knowledge, still indicated interest, I think that is a good reason for optimism.”
In the first request for proposals (RFP) the Oilfields Workers Trade Union’s (OWTU) company, Patriotic Energies and Technologies Ltd, offered an upfront cash payment of US$700 million for the refinery asset.
Questioned on what he thought the refinery is possibly worth now, McGuire said he did not have a factual basis for commenting on the value of the asset.
On whether the government will agree not to accept an upfront payment to get the refinery restarted, McGuire noted that the Government needs to accept the best proposal to get the refinery operating again.
“That may well mean leasing the refinery to the company that is best placed with the financial capital, technical capability, and access to markets to make this a viable refinery. Once the investment is made, the Government can earn its returns from duties and corporation taxes to be paid by the entity. An upfront payment would be a bonus but to my mind should not be a heavily weighted factor in the determination of the preferred buyer,” he added.
Union upset
Last Friday, OWTU president general Ancel Roget, held a media conference outside the Pointe-a-Pierre Refinery, where he expressed disgust with the acquisition process. He and his team burned photographs of Prime Minister Dr Keith Rowley and Energy Minister Stuart Young.
Roget said that since the refinery’s shutdown, the government has spent $43 billion importing fuels, robbing the country of a major foreign exchange earner.
The burning of the photographs was strongly condemned by Minister Young, who stated, “That type of behaviour is, unfortunately, a reflection on the individual carrying it out.”
The union head disclosed that Patriotic never had the chance to do a full site visit of the refinery before submitting its bid on May 10.
“We were not afforded a full tour of all of the plants in the refinery. Look how they are deceitful and deceptive. They expected us, in three hours, to assess the refinery to put in a proper bid. A refinery that has been shut down since November 2018,” Roget said.
Chamber optimistic
Greater San Fernando Chamber of Commerce president Kiran Singh said the fact that nine companies have expressed interest in acquiring the refinery is exciting news for South Trinidad.
He said this means that potential investors see the refinery as a valuable asset that can be monetised in the short to medium term.
“The possibility exists that not all may be serious inquiries but it remains the responsibility of the due diligence team to shortlist those who qualify for the final bid,” Singh explained.
He said the chamber is of the view that it is extremely important to get the refinery restarted.
“It has the potential to be a net foreign exchange earner. In addition, it will immediately generate hundreds of direct jobs in the plant. There will also be positive benefits to employment creation and investment in the downstream industries,” Singh highlighted.
Asked whether Patriotic Energies should be given another chance in the process, the chamber head said once it can demonstrate its financial strength in being able to purchase the refinery and satisfy the due diligence process, then it should be allowed to reenter the bidding process.
With the closure of the refinery in 2018, Singh disclosed that the surrounding communities were negatively affected, and the reopening of the refinery will breathe new life into the districts that surround it.
Decetiful games
MP for Pointe-a-Pierre Dr David Lee said the Opposition has always maintained that the Government’s deceitful games to break its election promise to give Patriotic the refinery has not just jeopardised T&T’s fuel security, foreign exchange income and the revenue of the country but has reduced the value of the refinery.
“The Opposition’s biggest concerns are the “behind the scenes” games of the Government, which seems to be operating a parallel proccess in contradiction to procurement legislation and the agreed closed process,” he detailed.
Further, Lee said it is quite concerning that while reports indicate that Patriotic Energies has not been able to tour the refinery due to the deadline being closed, others have.
“Why is an unfair advantage being given to some? Why is data being given to some and not all? Is this part of the agenda to outplay the OWTU? If the Government refuses or declines any upfront payment from any bidder, then this Government never had any intention of selling the refinery to OWTU. If the Government does this, it will show that they have yet again deprived this nation of millions in revenue,” the MP added.