Citing a need for more review and concerns over the shallow financial resources of the prospective buyers, the V.I. Legislature Wednesday voted unanimously to send an agreement to sell and reopen the Hovensa refinery for further review in committee.
In September, Government House announced the tentative sale of the refinery, which closed in 2012, costing the V.I. economy more than 2,500 jobs. It announced Atlantic Basin Refining Inc., a recently created V.I. company, had negotiated the purchase of the refinery. On Nov.1, Gov. John deJongh Jr. released a legislative proposal codifying the negotiated operating agreement for the refinery. [ABR-GVI Operating Agreement and Transmittal]
The operating agreement requires legislative ratification before the sale can be closed, because it includes legislative action on taxes and other issues. DeJongh called a special session of the Legislature for Wednesday to act on the agreement.
On Monday Senate President Shawn Michael Malone held a hearing of the Committee of the Whole to get testimony on the proposal, at which senators expressed doubts about the plan.
After gaveling in Wednesday’s session, Malone rose out of session and continued Monday’s hearing, giving senators time to ask questions of ABR and V.I. government officials. Monday’s hearing began at 4 p.m. and wasn’t stopped until midnight, but the testimony was very lengthy, so senators had little time to ask questions Monday, and said they wanted more time.
Most senators remained skeptical Wednesday too.
Sen. Nereida "Nellie" Rivera-O’Reilly asked if the agreement would release Hovensa and its parent companies from liability in an ongoing tax dispute with the V.I. government.
"Yes it will release them," Attorney General Vincent Frazer said.
Sen. Clifford Graham asked Frazer and ABR officials about seeing the actual sales plan between Hovensa and ABR and other documents that were not made available to the Legislature. Frazer said one document had been sent and one needed to be discussed with ABR before disclosure. Graham said he needed to do his "due diligence," and that he thought the plan was not ready for a vote yet, as senators still had not seen all the information they requested.
Sen. Donald Cole too said he had "grave concerns" about the agreement, and found aspects of the agreement absolving the previous owners "disturbing."
Several senators raised questions about the lack of money behind ABR, asking how it could meet the payments required of it under the contract.
ABR Managing Director William Forster said the company’s potential financiers were confident of its ability to perform and that the business plan is reasonable and practical and the company would be able to pay its obligations out of refinery revenues.
He did not directly address the question of how ABR would make the payments if it was not able to obtain financing or was unable to reopen the refinery for some other reason.
Sen. Craig Barshinger said he believed "the intent is not to open up a refinery," but instead to relieve Hovensa and its deep-pocketed owners from responsibility for cleanup and dismantling the refinery.
Frazer flatly disputed Barshinger’s allegation. He said he "respected the need of the senators to do their due diligence," But Frazer said the agreement needs to be approved soon, in part because Hovensa has informed the government it is losing money on the oil storage facility and its parent companies intend to stop subsidizing. If there is no agreement, Hovensa expects to run out of cash in December and shut down the storage facility and all operations at the refinery.
A letter from attorney George Dudley, who has represented Hovensa in previous hearings before the Senate, was later read into the record, repeating and confirming Frazer’s statement that Hovensa was planning to shut down completely. There was no statement from Hovensa and no one from Hovensa was present at the hearing.
Sen. Kenneth Gittens moved to send the bill to committee, saying his personal preference would be to vote it down and kill it. The Senate voted 15-0 to send it to committee.
Upon news of the vote, Gov. John deJongh issued a statement expressing his displeasure with the voted and urging quick action in committee.
"While I accept the Senate’s stated need for further consideration of this most important matter, I trust that they and the community understand how critical the time factor is, especially now that we have been more fully informed of Hovensa’s timetable," deJongh said.
In support of the agreement, deJongh cited a recent article in Bloomberg News indicating the positive reaction in the financial markets when the potential sale of the refinery was announced.
"This demonstrates the positive impact that the sale will have on the economy and on the government’s future financing needs," deJongh said.
The governor said he hoped the Senate did not plan to have the bill "languish in committee," given Hovensa’s purported assertion it will not put any more money into operations past mid-December. He said he looked forward to working with legislators to get the agreement approved.
I’m glad others see it for what it is, a smoke and mirrors stunt to get Hess/PDVSA off the hook for their tax/environmental obligations.
And don’t get sucked into the strong arm tactic the owners are using with the threat of shutting down the storage facility (and subsequent fuels rack) in December. They would like for you to think this would be the end of the world as you know if for St. Croix. But hey, you know what? Fuel will be delivered by another mechanism. If they shut down, so be it. At the end of the day, Hess/PDVSA would still be responsible for their tax and remediation obligations.
You can tell the storage facility is hurting. Just look at the rack rate they are making distributors pay for fuel. While fuel costs continue to decline in the US and have been doing so for weeks now, the fuel cost on STX has for the most part remained unchanged. The STX rates have certainly not decreased in line with the rest of the US. My only guess is that while the cost of fuel to HOVENSA has gone down, they have not passed those savings on to the consumer which translates into a higher margin for them…..they’re trying to squeeze a profit somewhere and that squeeze is from the people on STX. Nice guys…..not!
Appears the Governor is getting his big payday after leaving office from Hovensa. He is already selling his expensive home with all the improvements paid for by the VI taxpayers. How is it that they let Hovensa come to the island and do all this destruction, spread all this toxic air that affects everyone, especially the children, and then they get to ride out of here as if they actually brought something positive to the VI? Yeah, they brought lots of money to the VI, but at what cost? Is money really worth the health of your children and the destruction to your crop-growing soil and drinking water? Is it worth a life of suffering? Government and Corporate corruption – will it ever stop? The Governor is getting paid, and big time, and probably already has been paid big time by Hovensa. A whole lot of folks on this island have more than likely been paid off by Hovensa, and it has certainly provided nice incomes for all the lawyers on island. The select few always benefit from things like this. It is a disgrace, and I cannot believe anyone would let Hovensa off the hook for anything. They made a killing off slave labor down here and caused a lot of medical problems for the citizens, and now they only want more. Shame on all of you. You are a disgrace to the people of the VI, and none of you should hold any type of office.