GOVERNMENT expects that by the end of the year, the Pointe-a-Pierre refinery will either be sold or leased to an acceptable operator.
Speaking to reporters at a press conference at the Ministry of Finance yesterday, Finance Minister Colm Imbert said there had been 70 expressions of interest in the refinery, which was shuttered last November.
Acceptable parties deemed capable of running the refinery were allowed to access to the data room at Pointe-a-Pierre, and formal bids with plans to purchase or lease the plant are due by June 16.
“Because of the number of expressions of interest, we are reasonably confident that we can finalise an arrangement either for lease of purchase and we’ll see with an operator by the end of the year. That is a very important thing,” he said.
Since Petrotrin was restructured last year, Imbert said its successor, Trinidad Petroleum Holding Company Ltd, had received updated credit ratings from Standard and Poor’s (BB) and Moody’s (Ba3), which while are still considered “speculative” or non-investment grade, are a notch above what Petrotrin was rated.
On Monday, Trinidad Petroleum announced it had started the refinancing process, and were offering current Petrotrin bondholders the opportunity the exchange bonds for a new facility, including in some instances, cash.
Petrotrin, now Trinidad Petroleum has a US$850 million bond due in August. “By all accounts (the refinancing) is going quite smoothly we will know in the next week or so how successful the bankers are, led by Credit Suisse, but I have no reason to feel they won’t resolve this (issue),” Imbert said. Apart from refinancing the bond, which was a heavy load on the country, there was also have the question of profitability.
“Petrotrin was losing $2.5 billion a year. (Paria and Heritage) have moved into profitability.
It looks fairly certain that the companies can finance the bond and removes that deadweight from (the country’s) credit rating,” Imbert said. He said during his discussions with S&P and Moody;s during his recent trip to Washington, DC, he learnt that on its own, TT had an investment grade rating well within the middle-tier for investment grade ratings, but when Petrotrin was factored in, it dragged the rating down into speculative, since the state had to guarantee any debts.
He said ratings agencies were sceptical that the government could solve the Petrotrin issue, but the two new companies, Heritage Petroleum and Paria Fuel Trading, had moved into profitability.
“It looks fairly certain that the companies can finance the bond and removes that deadweight from our credit rating. Over the next year we will have in-depth discussions and I am confident we will have favourable outlook.”
Paria had been profitable from the start, he said, since its business was just buying and selling fuel.
About 50 per cent of its sales were to throughout the Caribbean, where the company makes a profit of about six or seven per cent. The domestic mark-up is very small because the Government has been trying to keep the company as revenue neutral as possible.
Heritage had made a small loss in the beginning, but has moved to profitability, although Imbert could not immediately say what the profit was.