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Refinery investor eludes Muloni
While, officially, technocrats continue to down play the magnitude of the problem and the potential consequences, some insiders are genuinely concerned. And the constant flip-flopping seems to bare them out.
For instance, when on Feb.14 Energy Minister Muloni said she now hoped to announce the potential investors for the refinery in March, it was clear government was still struggling to find the ideal investor. Previously, officials at the same ministry had promised to do this in February and before this government had promised to finalise this process by the end of last year 2016.
While the official position is that the process has been so rigorous owing to many companies expressing interest and making it complex for the government to zero on one, insiders say that government is struggling because all the companies that expressed interest are small players with no experience and money.
The government has struggled with attracting a suitable investor for the refinery since RT Global Resources, the Russian consortium that had been selected to be the lead investor pulled out under unclear circumstances.
Efforts to get South Korea’s SK, which was the alternate bidder, also collapsed forcing government to look for new investors. At the time, the lead investor was supposed to invest 60 percent in the project. Government has since reversed this and is ready to be the lead investor and shoulder the bulk of the cost but still it is yet to attract a suitable investor.
As The Independent revealed previously (see “Oil Refinery Trouble” [The Independent October 21-27, 2016]), the government had zeroed on negotiating with an obscure company because it was making rosy promises. It had pledged to finance the US$4 billion refinery 100 % and give government carried interest of 20 % for free.
Possibly following our expose or for other reasons, the dubious company is now not amongst the top companies government is considering. Insiders say government is evaluating at least five companies but Muloni said the number is eight and out of these three are to be picked of which the best would take the deal. That means it will take another several months to pick the best.
But Muloni is seeking to reassure interested parties. “We are fast-tracking the refinery and hopefully there will be a launch of the FEED for the refinery soon so that these projects move on concurrently to enable us achieve first oil in 2020,” Muloni said recently.
She said the decision would be made by the end of March. Given the caliber of the small players being engaged, there are no certainties the best company would go ahead and construct the refinery. Even if, that company did, at the very least, it would have to start sometime in 2018, which would still be late especially given that a refinery of the magnitude being talked about cannot be constructed in less than three years, according to experts. As such, it appears, the government has to revise its target for first oil to the refinery beyond 2020.
As the government struggles to raise money and meet its scheduling targets, the international oil companies and their contractors are busy chasing their own targets. They appear unbothered because the refinery is none of their business—they have always wanted to just pump out export crude.
