Imbert confident Patriotic can run refinery

FINANCE Minister Colm Imbert is confident Patriotic Energies and Technologies Ltd will be capable of proving its suitability to operate the refinery of former state oil company, Petrotrin.

The refinery assets are currently held by Guaracara Refining Co Ltd.

Imbert said on Wednesday, the bid process was done with transparency by a professional team and the “population could have a lot of confidence in the decision because it’s not a one-man show.

“If we thought they couldn’t do it, we wouldn’t have given it to them. Yes, I think they can do it and we wish them all the success. It’s going to be good for the country, the workers, and the trade union.”

He was speaking at a press conference at the Eric Williams Financial Complex, Port of Spain to clear the air on issues about Government’s decision to select Patriotic as the preferred bidder for the refinery over Beowulf Energy of the US and the Klesch Group based in Switzerland.

In Parliament last Friday, Imbert announced that Government has accepted a US$700 million proposal by Patriotic – a wholly-owned company of the Oilfield Workers Trade Union (OWTU).

He said previously the OWTU presented an “unsolicited proposal” to own the refinery which was unsatisfactory and was declined. “This is a far cry from that,” Imbert said, “this is an official response to a comprehensive request.”

Beowulf offered a US$42,000 lease per month over a 15-year term and the Klesch proposal indicated the only payment to Government would be through taxes. He said the ability to secure financing was considered during the bidding process where all three bidders said they will look at financing during the next phase of the process.

Patriotic offered an upfront consideration of the money, however, Government granted them a three-year moratorium on all payments of principal and interest towards the purchase of the refinery and a further ten years, at a fair market interest rate, to complete the payment.

When asked why the request for immediate cash payment on the proposal was deferred, Imbert said Cabinet made this change so that, “it would guarantee the success of the restart of the refinery, if Patriotic was not burdened with that requirement to come up with upfront cash.” He then asked the public to consider what would have been be the cost to Patriotic to refurbish the refinery.

Imbert denied any illegality or favouritism during the tendering process. He compared the deal to a mortgage loan saying even though the refinery will be sold to Patriotic, Government will have a charge on it until full payment is made.

“The refinery has a profound effect on the national GPD of TT, so our primary focus is to get it up and running as soon as possible. We felt that if we relieved Patriotic of that responsibility to go secure the cash for the purchase, then they would be in a better position to raise the cash to restart the refinery.”

Imbert also addressed issues raised by several public figures on Patriotic’s ability to revive a refinery closed under a high debt profile. He said the refinery will not have a high operating cost preventing it from making a profit, and any person taking over the plant will not have to carry that debt.

“That debt was a tremendous drain on the revenue being derived from the refinery. So the refinery is going forward debt free.”

Imbert said restarting the refinery under a low operating cost with a debt-free profile are the ingredients to success. He said he doesn’t expect Patriotic to operate the refinery with the same operating cost.

He reiterated that Petrotrin became a burden and was deemed unprofitable to TT as its weak financial condition resulted in a $16.5 billion in losses before the company was restructured.

Patriotic is expected to restart of the refinery in less than 12 months. The company now has less than a month to convince Cabinet of its ability to finance the deal, along with a workable plan to fulfil the requirements to successfully operate and develop the refinery.

Imbert said the successful restart of the refinery will relieve TT of the US$240 million a year bill to Praia Fuel Trading, for the importation of fuel.

He said the Procurement Act was not used in the selection process, instead tender rules were used.

Imbert was asked about comments by former minister of trade Vasant Bharath that the refinery will end in “catastrophe” in the hands of OWTU. In response, he said there is no such thing considering, “right now we have a refinery that is not functioning, it has been closed down for almost a year, it’s not producing anything. If the status quo remains, the refinery will continue to produce nothing.”