The Government has rejected the counter-proposal submitted by Patriotic Energies and Technologies Company Limited for the acquisition of the Petrotrin refinery.
Making the announcement at a virtual press conference on Saturday, Energy and Energy Affairs Minister Franklin Khan said the Government was now considering its options on the way forward. These options, he said, could include considering the second and third bidders for the refinery or giving consideration to another proposal from Patriotic.
The second and third bidders for the refinery were Klesch and Beowulf Energy respectively.
Patriotic had submitted their counter-proposal on October 29, two days before the deadline given by the Government. However, the minister said their proposal failed to address the key issues that could lead to the sale of the refinery.
“Patriotic is cognisant of what the key outstanding issues are and made a final proposal ahead of the deadline on the 29th of October. Today I regret to say that this final proposal does not address the outstanding issues that could lead to a signed contractual agreement and that is the state of play as we speak,” Khan 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. “After much toing and froing, 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.”
The minister assured that the Government was committed to restarting the refinery with the assistance of the private sector. “The Government is committed to restarting the refinery with private capital injectors, mindful that if we restart if will have a positive, significant impact on the economy, on GDP, employment etc and we will move expeditiously to do so.
“The Government will be in a position to consider its options and we will have some discussions among the Government and the Cabinet as to what these options are and the public will be informed as soon as possible once we have greater clarity on this matter.”
Khan said the State would now have to search for an alternative entity to take over the refinery because the fence line communities have experienced a considerable degree of decline in their economic activity.
However, he said the Government would have to be aggressive in that process as it has been two years since the refinery was mothballed. “It would also now have to consider the possibility that the mothballed refinery may not be opened and think about ways in which to encourage economic activity in and around the Petrotrin area.”
He encouraged policymakers to let Heritage invest from its profits towards the financing of a micro-financing institution parallel to what BP formed in Mayaro or Atlantic formed in Cedros to stimulate economic activity in the fenceline communities. He also suggested an Eteck park in Reform and Claxton Bay to boost and provide substitute levels of economic activity to workers and businesses. “Heritage may at this point need to think about their CSR strategy because it would probably now have to be deeper and more impactful in terms of keeping the fenceline communities afloat whist a Plan B is now put in place.”
September 2019: Patriotic beat out 77 other competitors
It was in September 2019 the Government announced that Patriotic Energies had won the bid to purchase the refinery, beating out 77 competitors. The first rounds of negotiations with the Government’s ministerial team began in February and visit at the refinery was done in March. In July the Prime Minister had announced that the Government was ready to sign the deal with Patriotic. However, in the months that followed the union and the ministerial team were at loggerheads. On September 28 the Prime Minister gave the parties until October 31 to come to an agreement.
In a press release following the submission of their counter proposal, Patriotic director Ozzi Warwick said, “Patriotic earnestly hopes that this proposal will lead to the swift completion of the acquisition process, paving the way to the reopening of the refinery in the interest of the People of Trinidad and Tobago.” Patriotic had promised to create 6,500 jobs once they acquire the refinery and port.
Neither Warwick nor OWTU president general Ancel Roget could be reached for comment on Saturday.
The OWTU will be hosting a press conference on Sunday at its San Fernando office to address the matter.
Economist: A tremendous setback
Meanwhile, economist Dr Roger Hosein said this was another blow and a tremendous setback to the restart of the economic growth process in the country. “This week we would have had two major blows in the energy sector. The first was the broadside (exploration) being unsuccessful in terms of its turning up a dry hole in the deepwater search for hydrocarbons and now this news with regards to Patriotic and the restarting of the refinery.”
Asked what effect the failed broadside exploration would have on the upcoming deepwater bid round, the minister said they could not release any information on those wells because they would be in breach of international protocol. “The success or failure of these wells have a lot of far-reaching consequences especially as it relates to company stock price. We are not authorised to release any information on those well,” he said.