The government is taking full control of the West Indies Oil Company, with plans to acquire the remaining 75 percent owned by National Petroleum Ltd.
Prime Minister Baldwin Spencer made the announcement Thursday in Parliament, saying the move, part of the government’s "Power to the People" initiative, will herald the rebirth of the Antiguanization Programme.
The PM noted, however, that the acquisition will not increase the government’s debt stock. He outlined how PDV CAB, a private company in which the government is the sole shareholder, will borrow the funds and hold the shares on behalf of the people.
A US$68 million loan has been secured from a Venezuelan firm, PDVSA, to purchase the shares. It has a 20-year payback period, with a two-year moratorium, and a fixed interest rate of 6 percent.
We produce below the full text of the Prime Minister’s presentation in Parliament:
GOVERNMENT OF ANTIGUA AND BARBUDA
Dr. the Hon. W. Baldwin Spencer
ON THE ACQUISITION OF NPL’S SHARES IN WIOC
Thursday 27th May 2010
House of Representatives
Madam Speaker, just over thirty years ago, in January 1980 the Government sold 444,000 shares of WIOC common stock to Natpet, a company owned by Bruce Rappaport. That sale effectively gave Natpet control of the company. The purchase price was US$6 million. However, Natpet was only required to pay a cumulative amount of US$550,000 at the time of closing of the deal with another US$1 million payable once the agreement negotiated and signed by Lester Bird and Bruce Rappaport was ratified by Parliament.
This means that the Antigua Labour Party under a deal negotiated by Lester Bird handed over controlling interest in one of the country’s most valuable assets and hundreds of acres of prime lands when less than 10% of the purchase price had been paid. This was done with the understanding that the balance of the purchase price would be paid from the future profits of the company. Specifically, Lester Bird agreed that Natpet would turn over to the government half of its share of the profits. So, having paid only a small fraction of the agreed purchase price Lester Bird arranged for Natpet to reap the profits from West Indies Oil Company. This is an example of the brilliance that characterized the leadership of Lester Bird and the Antigua Labour Party.
Now, Madam Speaker, Lester Bird would probably tell the good people of this country that he made a judgment call. We are well familiar with the consequences of his judgment – or perhaps it would be more appropriate to say lack of judgment. It was another such judgment call that saw him hand over Guiana Island and hundreds of acres of our patrimony to Dato Tan of Asian Village fame with no performance clause and only a nominal deposit being paid.
Thirty years after Lester Bird masterminded the deal that gave away our patrimony at peppercorn rates, the United Progressive Party with its People First philosophy is about to undo the wrong done by Lester Bird and the Antigua Labour Party. My Government is about to reclaim the People’s heritage, but understandably it will not be accomplished at the peppercorn rates used by Lester Bird and the ALP some thirty years ago.
Madam Speaker, in a matter of weeks my Government will deliver on yet another campaign promise when we acquire the 75% WIOC shares currently held by National Petroleum Ltd. (NPL). This acquisition which is an integral component of the Government’s Power to the People Initiative will herald the rebirth of the Antiguanization Programme. This welcome rebirth comes after the crib death which was presided over by the Antigua Labour Party. Under the ALP, what could have been a significant vehicle for the true empowerment of Antiguan citizens never had the opportunity to realize its true potential. Rather, the very life of the programme was suffocated by the avarice and dishonesty that characterized so many aspects of the ALP administration.
Madam Speaker, unlike our predecessors whose actions were always cloaked in darkness and secrecy, the UPP Administration has no qualms in disclosing to the people of this country the steps that we are taking to safeguard their interests. My Government has negotiated an agreement to buy out NPL and regain the full control of West Indies Oil Company – both the fuel business and the real estate component of the company. Further we will accomplish this without placing any strain on the Treasury.
Madam Speaker, the solution that we are about to implement will not increase Government’s debt stock. Rather PDV CAB, a private company for which the Government of Antigua and Barbuda is the sole shareholder, will borrow the funds for the acquisition and will hold the shares on behalf of the people of Antigua and Barbuda. Therefore, it is PDV CAB and not the Government Treasury which will be responsible for servicing the loan.
After protracted and intensive negotiations, I am pleased to advise that a loan in the amount of US$68 million has been secured from the Venezuelan firm PDVSA to purchase NPL’s shares in WIOC. This loan has a twenty year payback period and is associated with a two year moratorium. The interest rate has been fixed at 6%.
Immediately following the acquisition, the Government will separate out the US$30.5 million worth of non-core business real estate and vest same in a newly created company titled Patriot Land Holdings. Madam Speaker, in collaboration with the Eastern Caribbean Securities Exchange the Government will then offer shares in this new real estate development company to Antiguans and Barbudans at home and abroad thereby giving the power back to the people! The public company owned by Antiguans and Barbudans will then develop the lands for commercial and residential purposes.
In addition to purchasing shares in Patriot Land Holdings Ltd., Antiguans and Barbudans will also have the opportunity to purchase shares in WIOC’s petroleum-related operations when Central Government divests the 25% shares which it holds in the company. The power will truly belong to the people!
Madam Speaker, the Government will also divest the assets held in Dominica. Negotiations geared towards that end have already begun with the Government of Dominica.
Having altered the structure of WIOC to ensure focus on petroleum-related aspects of the business, the Government will then authorize PDV CAB to sell 40% of its shares to the Venezuelan company PDV Caribe thereby creating a joint venture company in which the Government and People of Antigua and Barbuda will retain controlling interests. This aspect of the transaction is in keeping with the objectives of the PetroCaribe Initiative which was signed five years ago.
While the creation of joint venture companies in all participating PetroCaribe countries was one of the original objectives of the PetroCaribe Agreement, Antigua and Barbuda has delayed the implementation of this aspect of the agreement pending the satisfactory conclusion of negotiations designed to ensure that the Government secures controlling interest in the joint venture. The UPP Administration resolved to maintain that position during our negotiations. Therefore, we persisted while other countries signed off on agreements which yielded controlling interest to Venezuela.
Madam Speaker, the labour party government in St. Kitts signed an agreement which gave Venezuela 55% equity in the joint venture company. Labour party administrations in Dominica and St. Vincent and the Grenadines also yielded control to the Venezuelans under similar share structures. It was only Jamaica and Cuba which succeeded in securing controlling interests in their joint ventures with 51% of the shares going to the host country.
Madam Speaker, as I stand before you in this honourable house, I am pleased to tell the people of this fair country that your Government was determined to put their interests above all else. My instructions to our technicians and diplomats were clear – there will be no joint venture agreement until Antigua and Barbuda has clear controlling interests. It is in this context that I advise the nation today that the Government and People of Antigua and Barbuda will own 60% of the shares in the joint venture with the Venezuelans – an accomplishment which is unprecedented in any of the other countries participating in the PetroCaribe Initiative.
I encourage my colleagues on the other side and their dear friend and supporter Dr. Denzil Douglas to take note of how a government which truly puts people first goes about protecting the interests of its citizens.
As a result of our majority shares, the Government will appoint the Chairman and the majority of the directors in the new PDV CAB which will be converted to the joint venture company. This controlling interest will help to ensure that we continue to provide the fund social projects such as the Senior Citizen Utility Subsidy and the People’s Benefit Programme.
Madam Speaker, as I conclude this brief but important statement on my Government’s success in undoing the wrong done by Lester Bird and the ALP some thirty years ago, I want to send a special message to one of our distinguished citizens. Dr. Radcliffe Robins has publicly and eloquently articulated the importance of land ownership to us as a people. I am confident that Dr. Robins will be pleased to hear that the UPP Administration has learnt from the mistakes of the former administration. This Administration will not allow the further disenfranchisement of our people.
While the Antigua Labour Party was content time and time again to hand over prime land to investors and so called investors, this Government absolutely refuses to be so fast and loose with the people’s patrimony. That is why it has taken us this long to arrive at an acceptable purchase agreement with National Petroleum Ltd. and the financiers of the acquisition. Unlike the previous government, we are not prepared to enter into any agreement that is not in the best interests of the people of this country. That is why we insisted that your government must hold the majority of the shares in West Indies Oil Company and any joint venture agreement associated with the operation of that company. I assure Dr. Robins and all other patriotic Antiguans and Barbudans that the country’s patrimony is secure under the watch of the United Progressive Party.
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