The Tribune

By RASHAD ROLLE

Tribune Staff Reporter

rrolle@tribunemedia.net

AN overlooked clause in the Oban Energies heads of agreement frees the developer from any obligation to build the $5.5 billion-dollar oil refinery and storage plant, according to attorney Wayne Munroe, QC.

Section 16.2 of the agreement describes the process the government must undertake to terminate the agreement, but Mr Munroe said observers should notice a key caveat at the end of the clause.

The section says: “If, for any reason other than force majeure, the developer is in default of any material obligations of the developer under these heads of agreement for more than 180 days after the government has written notice of such default to the developer, then the government may, at the government’s option, terminate these heads of agreement; provided, however, that the government agrees to give written notice to the developer’s project lenders and allow such lenders an appropriate cure period (not less than 30 days) before exercising its right of termination; provided, further, that the parties agree that neither the estimated investment in the oil refinery or the terminal referenced in the recitals of this agreement shall be deemed to create or imply any material obligations herein with respect to any specific investment by the developer, nor shall any provision in Section 3 hereof be deemed to create or imply any material obligations of the developer.”

The “recitals of the agreement,” its introductory paragraphs, describe the developer’s application to the government and the estimated cost of the project.

Section three of the agreement outlines the nature of the proposed development, including a “terminal consisting of up to 20-million-barrel multi-purpose liquid bulk storage facility for crude and other oil products” and an “oil refinery.”

Mr Munroe said this clause means failing to build an oil refinery and storage plant would not put the developer in material breach of the contract or be grounds for the government to terminate the agreement; he said the developer would still walk away with Crown land and tax concessions.

The Minnis administration disagrees.

Anonymous government officials yesterday insisted the agreement is a contract to lease Crown land only to construct the terminal and refinery.

The administration believes Section 16.2 means the developer would not be in material breach of the contract if it invests less than the estimated investment for the project, such as $4 billion instead of $5 billion; nor would the developer be in material breach of the contract if the storage terminal ends up storing a bit less than the stated 20m barrels of crude and other oil products.

The administration believes the fundamental objective of the agreement, to build a storage facility and refinery, is a material obligation for the developer, even if the stated terms of doing this are not fully adhered to.

Mr Munroe called foul on this view yesterday.

“If the clause was concerning itself with only the amount of the investment, it would have said the developer could vary the investment, but it does not say that. Furthermore, if we have not committed the developer to any amount of investment, does it also mean the plant could not be built at all? Just like I could build one storage plant that stores 15m of crude rather than 50m of crude, I could build something that doesn’t store any barrels of oil at all. The agreement does not say what the floor is in terms of the level of investment by the developer.”

On the government’s reasoning, he said: “It’s just like what happened in the beginning. When they thought they would get away with it, no one said there was a ceremonial signing. When y’all started to show them up then the explanations began. It’s clear what this clause says but when you draw it to their attention they try to put a spin on it. The words say what the words say. They have signed off on language that says none of what is in section three creates material obligations. I don’t know if someone from the Office of the Attorney General vetted that for them. And if that happened I don’t know who. This agreement is a one-sided affair. It’s embarrassing. The developer can do whatever it likes but the government has undertaken to give them certain concessions; they don’t have to do what they say but we have to do what we say. It’s either very poor judgment or corruption and I fail to believe they can be that inept.”

Notably, Section 12.2 G of the agreement says tax concessions under the deal would be “reduced on a proportionate basis” if the developer fails to create a certain number of jobs or misses other performance milestones.

Nonetheless, Mr Munroe, addressing Section 16.2, said: “These things are approved by Cabinet. You have people who are supposed to be savvy businessmen sitting around the table. Brent Symonette is supposed to be a savvy businessman. Dionisio D’Aguilar is supposed to be one. Even if you forgive Dr Minnis because he’s a medical doctor, all these people sat around the Cabinet table and read this agreement. How could all of them agree to this? I think it’s unfair to lay blame only at Dr Minnis and Peter Turnquest because all of them had to agree to this.”

Section 16.2 is not the only one Mr Munroe criticised.

He knocked the government for waiving sovereign immunity in Section 17.13, which means the government could be sued outside the country under the deal.

He knocked Section 5.2 as well, a clause about the environmental management plan which mandates that the developer pay no more than $150,000 for the government to engage qualified independent experts to monitor its compliance with the plan during the construction and commissioning phases of the development.

“One hundred and fifty thousand dollars for inspectors on a project that’s supposed to cost $5b is not a lot of money,” he said. “The project is supposed to be completed by 2030 so that’s about $15,000 per year for experts to make sure you are doing everything right. What sort of professionals could you hire for that amount of money per year? We pay Bahamian inspectors more than that per year to inspect single storey homes.”