The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

FOCOL Holdings yesterday said it acted “in the national interest” by acquiring half of Sol Petroleum’s stake in Lynden Pindling International Airport’s (LPIA) fuel farm operations, thereby preventing a foreign rival from taking “clear control”.

Sir Franklyn Wilson, the BISX-listed fuel supplier’s chairman, told Tribune Business that the decision to increase its equity to interest to 50 per cent was motivated more by a desire to prevent Rubis (Bahamas) from gaining majority ownership, rather than immediate investment returns.

He suggested it was in the country’s wider interests that no company, and especially a foreign-owned one such as Rubis, have majority ownership of fuel supply to such a strategic infrastructure asset like LPIA.

Sir Franklyn was speaking after FOCOL confirmed, in its financial results for the quarter to end-January 2017, that it had “purchased one half of Sol Petroleum Bahamas” interests in the LPIA fuel storage and supply operation.

The deal, which closed on January 23, has left the BISX-listed company and Rubis as joint 50/50 partners in the Joint Operating Agreement that covers the ‘fuel farm’ operations at LPIA.

Explaining the rationale for the purchase, Sir Franklyn told Tribune Business: “We did that in what we fundamentally perceive to be the national interest.

“When you have a company like FOCOL Holdings, with its standing in the capital markets, there are times when it has to look beyond short-term investment returns for the larger, common good.

“If we had not done that [bought half Sol Petroleum’s interest], Rubis would have had a clear control of the business at LPIA,” he added.

“We just thought we had to, in the national interest, now allow that to happen.”

Under the previous LPIA ‘fuel farm’ structure, the three oil ‘majors’ - FOCOL Holdings (Shell); Sol Petroleum (Esso); and Rubis - each held a one-third equity interest, and took turns in operating the supply of aviation fuel to airlines at the airport.

Rubis and FOCOL each acquired half of Barbados-headquartered Sol’s interest, as the company that entered the Bahamas three-four years ago via the purchase of Esso’s interests exited the LPIA operation.

“Imagine if we had not done that,” Sir Franklyn said of his company’s actions. “Rubis would have had two-thirds and we would have had one-third, and that would have given them a very significant degree of control at LPIA.

“It was important to protect against any company, such as Rubis, and I don’t criticise them, but it is a company not headquartered in the Bahamas. It is a company that does not have a long history in the Bahamas.

“We just thought it was important to leave the country in a position where the citizenry, in an open way, would know there was a degree of protection where Bahamian influence was significant enough that at all times the public interest was protected.”

Rubis, which is headquartered in France, has extensive interests throughout the Caribbean. It entered the Bahamian wholesale and retail petroleum supply market via its acquisition of Chevron Texaco’s operations, continuing a trend begun when FOCOL Holdings bought Shell’s business.

Sir Franklyn suggested yesterday that had FOCOL not acted to ensure an equal partnership at LPIA, Rubis would have obtained too much control through a two-thirds majority equity stake.

This, he implied, could have allowed Rubis to ensure it became the fuel farm’s permanent operator, rather than continue rotating this between the oil companies, as has been the traditional practice.

This would also have permitted Rubis to earn from both the top (revenue) and bottom (profit) lines, while FOCOL would have had to wait for its share from dividends.

“We have our 50 per cent interest, and are in a partnership to ensure there is room to negotiate such matters,” Sir Franklyn said of the fuel farm’s operator.

“That was part of the significance of making this arrangement; to ensure the country is not in one hand.

“Because we are 50/50 partners, and they are the current operating partners, they know there is some private sector non-regulator check on what they can do in terms of operating in that space.”

Declining to disclose how much FOCOL Holdings paid for its share of Sol Petroleum’s equity interest, he added that the company had yet to estimate how much it was likely to earn in returns from its increased stake.

“It’s not our priority right now,” Sir Franklyn said. “The company has a lot of other things on its plate, and will get around to that in time.”

He added that FOCOL Holdings had proven its worth to the Bahamas in Hurricane Matthew’s immediate aftermath by ensuring fuel supplies could still be delivered to Bahamas Power & Light (BPL) and wider New Providence, even though the Clifton Pier jetty was “compromised”.

Praising the company’s Bahamian management and engineers for their work, Sir Franklyn said: “This thing about ‘believe in Bahamians’; that’s not a slogan as far as we are concerned.

“FOCOL is beginning to progressively manage in spaces in this society that are very important.”