The Pointe-a-Pierre refinery at sunset. Prior Beharry/AZPNews
UNDER its last proposal, Patriotic Energies and Technologies Company Limited wanted the Pointe-a-Pierre refinery and Paria Fuel Trading Company for free, without money, collateral or security and could mortgage both assets as it saw fit.
This according to Finance Minister Colm Imbert who issued a release on Saturday following a press conference by the Oilfield Workers’ Trade Union (OWTU) on Friday.
For the third time on Thursday, the government blanked Patriotic, a subsidiary of OWTU, from acquiring Pointe-a-Pierre refinery that was mothballed after Petrortin was closed down in 2018.
Imbert said it appeared that OWTU has a complete misunderstanding of the true nature of transferable tax credits as compared to tax concessions or incentives to industry.
Patriotic stated that tax credits are nothing new and were given to multinational companies making foreign direct investment in Trinidad and Tobago, he said.
Imbert said the point that was missed was that tax credits given to other companies making an investment in T&T were not transferable or tradeable.
He said, “It is only nontransferable tax credits that are given to other companies making investments, and these non-transferable tax credits can only be used to offset tax on income from their own operations and cannot be used by other unrelated companies and therefore do not represent any financial outlay on the part of Government.”
Imbert said, “The problem with a transferable tax credit is that it is not linked in any way to the activities, income or operations of the company involved and is in effect a form of cash or revenue foregone.
“A transferable tax credit can thus be sold on the open market for cash and is a legal and binding obligation of the Government, which in this case would have no relationship or connection to the restart or operation of the refinery.
“As a result, whether the refinery was restarted or not, the proposed transferable tax credits would be sold for cash.
“Simply put, the fundamental conditionality in the financing proposal from Credit Suisse was that the Government was required to issue to Credit Suisse, through Patriotic, US$750 million in fully transferable and tradeable tax credits in exchange for the US$500 million that would be paid to Trinidad Petroleum Holdings for the refinery and Paria.”
He said the Government would have been required to give Credit Suisse US$750 million in fully transferable money market instruments, which instruments Credit Suisse had stated up front that they planned to sell on the open market.
Imbert said, “Patriotic would then get the refinery and Paria for free, having put up no money, collateral or security and could mortgage the refinery and Paria as they saw fit.
“This was not what was envisaged or stated when the request for proposals for the sale or lease of the refinery was issued in 2019.
“It is also completely inconsistent with the general criteria and conditions associated with the procurement process for the disposal of the refinery and certainly not in the public interest.”