THE HOYOS FILE: Rubis makes case for terminal inclusion
What, I wonder, would you do if your company had come into a market where there were three large players, only to see one acquired by the other, and a “warehouse” which was operated at arm’s length by the Government be put up for sale, only to find, for some reason, you are being shut out of owning a stake in it?
Add to that the fact that the cost of entry in the market was in the millions, and since coming in you have spent another US$50 million upgrading your outlets and opening new ones. Oh, yes, and now you’re building your headquarters for the whole region here. Because, well, you love it here.
As you try to assimilate all those factors and come up with an answer as to how you might feel, you may be comforted to know that there’s a real company here going through the same thing, not in a role-playing simulation, but in real life.
Its name is Rubis Caribbean. For a long time, Rubis has kept quiet on the dilemma it faces of being shut out of participation in the new ownership of the national oil terminal.
But now the French company which enlivened the local oil marketing scene with its trendy and efficient Rubis service stations (formerly Texaco stations, plus five more), is breaking its silence. Just before the Crop Over weekend, I sat down with the chief executive officer (CEO) of Rubis Caribbean, Mauricio Nicholls, who spoke about what his company clearly feels is unfair treatment from the powers that be, with no response offered to what it considers its own reasonable counterproposal.
In fact, Nicholls says that if his company is not allowed to purchase a stake in the oil terminal it could have an impact on the company’s presence in Barbados. And he goes further, saying it simply did not make sense to exclude Rubis from participation in the oil terminal ownership.
He said: “…Looking at the best interest of the country, there is no reason, so we don’t understand it.…I mean, we cannot accept that the reason is favouritism to a local company, versus being fair to both and sending a message that foreign investment here is also welcome.”
In his budget speech last June, Minister of Finance Chris Sinckler said the long-talked-about sale of the Barbados National Terminal Co. Ltd. (BNTCL), which is a wholly-owned subsidiary of the Government-owned Barbados National Oil Co. Ltd, would soon take place. But he did not say to whom.
However, the deal had not yet closed by April of this year, as the Central Bank of Barbados reported in its economic press release for the first three months of 2016 that “A special dividend related to the sale of BNTCL was included in the Government’s projected Estimates figures; however this sale is yet to be completed and the dividends declared.”
The difference between the Estimates and the actual outturn was $85.1 million, suggesting this was the amount which the Government expected from the sale of BNCTL.
Nicholls said Rubis had made an offer to buy the terminal, and in June had written to the independent firm hired by the Government to handle the divestment of BNTCL to ask what had happened with their bid. He said they confirmed in writing that Government had decided to proceed with negotiations to sell BNTCL with a company other than Rubis, which Rubis has “strong reason to believe is Sol”.
Nicholls said that Rubis feared that its business could suffer under a scenario where one of two competitors on the retail side of the market is also the sole owner of the terminal company, noting that Sol currently had about 70 per cent of the market to Rubis’ 30 per cent.
Rubis had therefore proposed that if it were not selected as the preferred bidder, it should be allowed to jointly own the terminal with Sol. The reasons for this were as follows: “We both have a very large investment here in this country, we both require the infrastructure to import fuels, (and) we both have a strategic interest in it….”
The ironic thing is that Rubis knows the terminal business, as it owns and operates oil terminals not only in France, but in other countries around the world as well as the Caribbean. Says Nicholls: “We have many of them. In addition to the marine import terminals, we have fuel depots at many airports in the region – Grenada, St Lucia (Castries), Guyana (Timheri), Nassau in the Bahamas, because each airport requires its own fuel terminal. And so between the airport and marine terminals we have about 20 in the Caribbean. We understand very well the fuels terminating business.”
So, dear reader, have you come up with your answer yet? What would you do? Pull the plug? Walk away? Try to sell the business? The Rubis CEO chose his words carefully when I asked him about that.
As a company with worldwide experience in operating oil terminals, he said, it simply did not make sense not to include Rubis in the sale of the oil company. “So if the decision is to sell not jointly but to one company which is not Rubis, it would trigger automatically a full and detailed review of our presence here in Barbados….(It) would kind of send us a signal that we need…to decide what our long-term presence here in Barbados looks like.”
For a Government that desperately needs foreign direct investment, this may not seem like the best way to treat an already-enthusiastic investor in our country which has played by the rules and improved the sector it is in.
But then, to quote another frustrated investor, this time a local one, when it comes to how Government makes decisions, “your guess is as good as mine.”