It’s a yes, with conditions!
The Fair Trading Commission (FTC) has completed its review of the proposed US$100 million sale by the state-run Barbados National Oil Company Limited (BNOCL) of the Barbados National Terminal Company Limited (BNTCL) to the Kiffin Simpson-led SOL Group.
However, the two parties now have to meet to determine whether they can live with the FTC’s stipulations, including that there could be no 15-year moratorium on the construction of new terminal facilities.
The regulatory body has also rejected Sol’s call for a 32 per cent pre-sale increase in throughput fees at the Fairy Valley storage site, on the basis that it could impinge on the provisions of the Fair Competition Act, which prohibits post-merger increases in prices. With the controversial deal, there were also concerns that costs would likely be passed onto consumers and that SOL could end up with an energy monopoly.
“We are not fundamentally opposed to the deal, but it still must respect the laws of the land . . . [even] as we considered the national interest of Barbados,” said one well-placed source, who added that “the deal is obviously important to the country”.
However, he stressed that the deal, which was given the green light by the FTC’s board on Thursday, still could not go through until the prescribed conditions were met.
With these stipulations, which were previously spelt out by the FTC in its June 14 preliminary ruling, it was not immediately clear whether the energy pact would still prove attractive to SOL and whether Government would be able to fetch the original asking price of US$100 million.
Efforts this afternoon to reach Minister of Finance Chris Sinckler were unsuccessful and when contacted for his reaction Minister of Commerce and Industry Donville Inniss, who has responsibility for the FTC, declined comment, stating that he was not aware that the approval had been made public.
“I have no comment to make. I am not aware that an approval has been made public so I have nothing to say on that,” said Inniss when told that a deal had been reached with conditions.
Barbados TODAY also reached out to SOL but was told that its entire management team was travelling on company business and would not return to office until next week.
However, Chief Executive Officer of Rubis West Indies Mauricio Nicholls said while he was yet to be officially informed of the FTC’s decision, the company, which currently competes with SOL on the energy market, was still prepared to legally defend its position in the matter.
“This [the judicial review] is something that we would have said to our lawyers that we would review once the FTC has made its final ruling, so I think it is fair to say that our legal challenge is still on the table.
“The key is to know what the conditions of the deal are and if we understand those then we can better know how we can proceed in this matter,” Nicholls told Barbados TODAY.
Back in March, Rubis’ attorney Leslie Haynes, QC, had said his client, which has also filed a claim against the BNOCL challenging the fairness of the tendering process, had put Government on notice
that Rubis was prepared to go as far as triggering the articles of a bilateral investment treaty between the United Kingdom and Barbados.
He had contended at the time that because Rubis West Indies Limited was incorporated in Britain, the treaty protects it from unfair practices in view of the planned merger, which is expected to see BNOCL continuing to source, import, own and distribute gasoline, diesel and fuel oil to all local marketers.
When the merger was first announced, the state-owned energy parent had also sought to assure that the sale to the Sol Group would not translate into a hike in petroleum prices.
However concerns abound that SOL, which is to have full control of the national terminal, would also ultimately control the domestic fuel price at a time when Government is shifting its attention away from fossil fuels to renewable energy generation.
With these concerns in mind, Director General of the Barbados Consumer Research Association (BCRA) Malcolm Gibbs-Taitt today deemed it “a sad day for Barbados” while calling for the FTC to be dismantled until “integrity” could be restored to the institution.
“If indeed the FTC has caved to Government’s pressure and agreed with them, it is a sad day for Barbados,” he told Barbados TODAY, while warning that the US$100 million proceeds from the deal “was only going to be a temporary stopgap” for Government which is desperately seeking to shore up its dwindling reserves of under $600 million.
“It is my belief that the Government’s mismanagement of our financial affairs is not going to stop. You can’t run a Government for nine years and expect to get it right in two months,” the consumer rights activist further cautioned, adding that “I have long had my concerns about the FTC within the last two years and to tell you the truth it is my belief that the FTC wants closing down.”