-- Posts Summary: Airlines and Airports operating and not operating --

[Barbados, Fuellers] A playing field steeper than Horse Hill

Those who pump that vital juice into the wings...
User avatar
Forum Administrator
Forum Administrator
Posts: 32834
Joined: Fri May 12, 2006

[Barbados, Fuellers] A playing field steeper than Horse Hill

Unread post by bimjim » Mon Apr 03, 2017

https://www.bsjbusiness.com/single-post ... Horse-Hill

[Barbados, Fuellers] A playing field steeper than Horse Hill
April 2, 2017
Patrick Hoyos

The high court of Barbados last week granted a temporary injunction to Rubis Caribbean, putting on hold the proposed sale of the Barbados National Terminal Co. Ltd. to Sol Caribbean Inc.

The High Court granted Rubis the interim injunction applied for until April 3, 2017 but the parties were expected in court last Thursday, March 30, 2017 to determine whether the interim injunction should be extended or discharged. This article was filed before the decision arising from that court date was announced.

Whether or not it was granted, it is the substantive grounds on which Rubis seems to be standing that I want to talk about today, because they target, in my view, a policy decision by the current administration which needs to be scrutinised more closely.

Before I paraphrase Rubis’ press release, which is pretty lawyerly, let me remind you of the situation: The government, through its national oil company subsidiary, has not only decided to sell the oil terminal to Sol over Rubis, but wants to force the latter to remain a client of the new owner.

How to do this? Simple. Just bake a moratorium or two into the pie you are flogging off which would state that nobody, including Rubis, is going to get permission to build another oil terminal any time soon here in Barbados.

And the irony is that, not only would Rubis like to buy half of the terminal, but if this is not approved, it would then apply to build a new terminal on the old Texaco site at Spring Garden. Millions more in investment, extra capacity for the country, in short, a win-win situation, no?

No. The economics of the terminal require that not only will the throughput fees be raised and you and I will continue to pay those subsidies because the government will make the “temporary” oil cess permanent (raising $35 million a year), but since Sol does not need the whole facility, Rubis, as the only other oil marketer here, will simply have to stay.

By the way, the clause being complained of by Rubis is not only to stop them from getting permission to build a new terminal themselves if they wanted to, but would also give Sol “a moratorium on the grant of licences for the storage of gasoline, diesel or fuel oil and aviation or jet fuels used for industrial and commercial purposes in Barbados, other than those that currently exist by the Energy Division or other Governmental Authority for a 15-year term,” says the Rubis press release.

Rubis’ position is that such a moratorium “would constitute an illegal restriction of the right which the Minister of Energy has been granted by law to decide on such matters.”

Last Monday, March 27, 2017 Rubis filed another claim against BNOCL, according to the release, “challenging the fairness of the tender process in respect of the sale of BNTCL on the basis that the conditions offered to SOL were never offered to Rubis.”

So here is the policy decision, as I interpret it, that has informed the government’s decision on the terminal sale: We are going to sell to Sol and try to force Rubis to remain a paying tenant by removing the actual basis on which we normally make decisions on energy matters. We will give up to Sol the right to allow any other player in the industry permission to construct any new oil terminal or store oil-based fuels, even if you already had somewhere to put them.

In short, we will ensure that Sol holds the monopoly on oil terminals here in Barbados. For 15 years.

Of course, if Sol ever decided it wanted to add another facility somewhere, there doesn’t seem to be anything stopping it, all long as the company went through the usual procedures specifically being denied to Rubis.

Can anyone not agree that this would be something like allowing a landlord to take a tenant hostage in business terms?

Is this really the only way the government of Barbados could get Sol to buy the terminal company? Was there no other way?

In this process of capitulating to Sol, I wonder if the Stuart administration stopped to consider the damage they would be doing to the country as a place for international business investment?

You encourage people to invest here and then you give up some of your rights to another party, and in so doing implicate the first party into the bargain, because those rights you are giving up become direct restrictions to their normal hopes and plans for business expansion and, on a larger scale, turn the sector you are dealing with into a big Monopoly board where one player has all the hotels and utilities, while the other just has to keep paying rent.

Barbados’ energy sector should not become a game controlled by one player, and I hope, for the sake of future investment into this country that the court rules in favour of justice for all.

At the end of the day this is not about Rubis or Sol, but about Barbados’ reputation internationally as a fair jurisdiction where investors are all treated equally and fairly under the law.

Right now, the playing field in the oil marketing sector seems to be steeper than Horse Hill.

Post Reply

Return to “Fuellers”