THE favoured contender to take over Petrotrin is being stalled by a major financing setback.
Nigeria-based Oando PLC, a debt-ridden energy firm, is seeking to raise capital from the African Import-Export Bank (Afreximbank), but the process is frustrated by legal issues.
Afreximbank, which began Caribbean operations last year with a US $3 billion portfolio, does not have standing in Trinidad and Tobago.
T&T is one of only three regional countries that have not yet opened its doors to Afreximbank, which is anxious to invest in Afro-Caribbean capital projects.
Prime Minister Dr. Keith Rowley has blamed the absence of the bank’s operations in T&T on a request for all employees to earn tax-free salaries.
“I don’t know why the bank is taking that position,” Rowley told a recent post-Cabinet media conference.
“That has far-reaching consequences because it is against the existing arrangements of privileges and immunities and policies,” the Prime Minister stated.
Oando, which is involved in oil and natural gas production, is the short-listed prime candidate to lease or purchase Petrotrin’s operations, which were mothballed in November 2018.
But the corporation has suffered heavy financial losses in recent years and was banned by South Africa’s Johannesburg Stock Exchange for several months for financial breaches.
The value of the company’s stocks slumped as a result of the crisis and some investors are attempting to bail out.
Oando is the preferred candidate to acquire the Pointe-a-Pierre plant even though a Government Committee, headed by former Permanent Secretary Vishnu Dhanpaul, has not yet submitted its report to Cabinet.
In meetings at the Ministry of Energy, the 12-member Committee interviewed representatives of the main contenders.
Company officials were primarily quizzed on financing arrangements, but also on technical and marketing matters.
Oando emerged as the frontrunner after Indian industrialist Naveen Jindal withdrew, blaming local critics for his decision.
Energy experts are raising several crucial questions about an Oando takeover of Petrotrin.
The Nigerian firm is currently producing some 20,000 barrels per day (bpd) of crude oil and has a capacity of 43,000 bpd.
“Would it be able to sustain a 175,000 bpd refinery?” a knowledgeable source queried.
The required funding for the plant’s turnaround is expected to be between US $300 million and US $500 million.
“No one will know the true cost until there is a thorough inspection of the idle assets,” a source explained.
“The company has no experience in operations outside of Nigeria,” he added.
“This could be a high-risk investment for any financial institution.”
Oando has relied on international funding because its investors are mainly ordinary Nigerians, along with some ex-politicians.
Afreximbank has mainly funded new construction and plant infrastructure, not the restarting of a closedown facility.
Oando’s questionable business practices could also hamper access to Afreximbank funding.
The company was suspended by the Stock Exchange for failure to produce audited financial records.
This has prompted questions about its adherence to ethical business practices and has affected investor confidence.
The Rowley Administration had initially hoped to make an announcement on the Petrotrin divestment at around Republic Day, to whip up national fervour.
Patriotic Energies and Technologies Ltd., a subsidiary of Oilfields Workers’ Trade Union (OWTU), is also seeking to acquire the operations.
The closure of the plant has had a devastating economic impact on former workers, suppliers, associated firms, and fenceline communities.
Scores of small enterprises in Pointe-a-Pierre, Marabella, Vistabella, Claxton Bay, California, San Fernando, Couva and surrounding areas have gone out of business.
