The Barbados-headquartered Rubis Caribbean wants its own oil terminal in the wake of the recent announcement that Government had reached an agreement with the Sir Kyffin Simpson-led Sol Group for the sale of the Barbados National Terminal Company Limited (BNTCL).
Rubis’ Chief Executive Officer Mauricio Nicholls said the company was in the process of seeking Government’s approval for the reactivation of the decommissioned oil terminal at Spring Garden, St Michael previously operated by Texaco.
Nicholls told a press conference at Rubis’ headquarters in Warrens, St Michael this morning, the idea of relinquishing control of storage and distribution capabilities to Sol was unprecedented and had the potential to cripple his company’s standing in the market.
“We are prepared to invest the sums that are required to rebuild and re-develop our Spring Garden facility. We have the terminal already, we just need to build the tanks that are required to import our own fuels and that would mean an additional investment for Barbados.
“This would also result in additional employment because we would have to hire people to manage a new activity at the Spring Garden terminal. So it’s additional investment, it’s additional employment and it’s additional reliability,” Nicholls stressed.
The Rubis boss argued an additional terminal would solidify the country’s fuel safety, as no contingency measures had been put in place in the event there were major problems at the lone facility.
“We are of the view that allowing the country to have two import fuel terminals would be greatly beneficial to the country . . . from several points of view. What if there is only one terminal in the country? What happens if it goes up in flames? There is no alternative; there is no other location to which you can bring those fuels. We can say that is never going to happen but other terminals that went up in flames thought like that, so it could happen,” he added.
Minister of Finance Chris Sinckler had announced last April that the sale of the oil terminal was almost complete with Government simply “waiting on the cheque” to finalize the deal.
Government has not said how much it is getting for the BNTCL, which was valued at more than $70 million up to last year, but for which investigations by Barbados TODAY revealed Government could take in as little as $60 million.
It has emerged that Rubis had itself made a bid for the terminal, although Nicholls today maintained his company had been averse to the idea of a monopoly of oil distribution and storage here.
The oil executive contended that had his company won the bidding process, it was prepared to offer part ownership to Sol.
“We participated in the BNTCL divestment process – we signed some confidentiality agreements so I cannot reveal any of the particulars of the offer. [However] we have always have proposed to the Government from the get-go that in our view the best outcome for Barbados was to sell the terminal jointly. We believe that it would be best for the country – we proposed that to the Government but that was rejected. Had we been successful in our bid, we had included in it an offer to sell a stake in the terminal to Sol,” he said.
Nicholl repeated his previously expressed concern that should the sale of the BNTCL become allowed to proceed by the Fair Trading Commission (FTC), regulation of the industry would not be enough to protect Rubis’ stake in the market.
“It is very difficult to regulate these things. The FTC is there for grievances; when somebody abuses their dominant position, you can go the FTC and complain that the abuse is taking place. But I would suggest to you when that abuse takes place it is too late because the damage has already been done.
“You also have to have evidence that the abuse has happened and that is usually very difficult to prove and it would take time for the FTC to assess the complaints and it would be very difficult to verify that whatever the FTC has mandated is actually implemented. Sometimes the authorities think that by simply implementing some regulation that those rules would be followed and that is not always the case,” he complained.
However, the former Chairman of Government’s Council of Economic Advisors, Sir Frank Alleyne, today suggested that the sale of the BNTCL was a move to “buffer” the foreign exchange reserves.
“I will have to know from Government whether the priority is selling it to get foreign exchange. I will have to know because it is what I call the crown jewel. It may very well be the case that the intention is to sell that so as to get foreign exchange,” Sir Frank told Friday’s Democratic Labour Party (DLP) lunchtime lecture on Fiscal Consolidation in Small Developing Economies.
“If you can buy that with foreign exchange that is a lot of money you got there. And use that foreign exchange as a buffer to support that exchange rate,” he reasoned.
Asked if he was confident that the sale could bring in enough foreign exchange for that to take place, Sir Frank said: “It depends on if the buyer has a deep pocket and I have no doubt he [Sir Kyffin] has a deep pocket.”
Recalling that there was a dip in the foreign reserves a few years ago, Sir Frank said “when you are going to sell [BNTL] . . . the crown jewel, you sell it to somebody who can pay the foreign exchange for it.
“That is my thinking,” the senior economist said, while suggesting that “in the case of the BNB [Barbados National Bank] the same situation held”.
In January last year Governor of the Central Bank of Barbados Dr DeLisle Worrell called for the BNTCL to be sold.
At the time, Worrell, who was delivering his economic review and outlook report for 2016, said Government was on course to achieving its 2015-2016 financial year target of reducing the fiscal deficit to four per cent of GDP.
However, Worrell said that depended on completion of the planned divestment of the BNTCL.