HOVENSA silent on governor's demand that refinery be sold or reopened
Published: September 3, 2012
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Almost a month after Gov. John deJongh Jr. rejected a HOVENSA proposal to operate as a petroleum storage facility and called on the company to reopen its St. Croix refinery or sell it, the negotiating table remains silent.
"There has been no response by the owners of HOVENSA to the governor's letter of August 6, 2012," Government House spokesman Jean Greaux Jr. said last week in an emailed response to a Daily News telephone inquiry. "The letter was the subject of a televised address by the governor the same day."
HOVENSA spokesman Alex Moorhead said he could not comment on whether HOVENSA had made a decision about the governor's counter-proposals.
"All I can tell you is that the company received a letter from the governor and expects to issue a formal response directly to him," Moorhead said. He said he did not know when that might occur.
On Friday, Greaux said the governor "looks forward" to receiving the response.
In his televised speech, deJongh said that the HOVENSA proposal to operate as a petroleum storage facility under a proposed modification to the current agreement between the company and the government offered little benefit to the territory and gave strong advantages to HOVENSA.
Those advantages, he said, included a major reduction in HOVENSA's property tax payments and a "lengthy extension" of its submerged lands permit at a rent of only $1 per year.
The governor also contended in his speech that operating the storage facility would allow HOVENSA to "maintain the fiction" that it might reopen the refinery and thereby avoid triggering expensive closure obligations in federal environmental protection laws.
DeJongh also asserted that the storage facility would provide HOVENSA with a "free option" to hold the refinery until sale conditions and prices improve - and that a modification to the agreement as HOVENSA had proposed would allow it to tout to potential buyers benefits that could enhance the price of the refinery at the territory's expense.
The governor said during the speech that the counter-proposals he offered were:
- For Hess and Petróleos de Venezuela S.A., the two companies that formed HOVENSA, to make plans with the territory to reopen a more efficient refinery, jointly working to get the benefits of a lower-cost fuel supply for the refinery that can also provide a cheaper fuel supply for the V.I. Water and Power Authority.
- If the owners do not agree, the governor asked for HOVENSA to work with the territory to find new owners who would work with the territory to reopen a more efficient refinery, providing jobs and revenue and using a fuel that would also provide a cheaper fuel supply for WAPA.
If HOVENSA rejects both counteroffers, deJongh said in the speech that he expects the company to "fully and completely comply with all of the requirements" of the contract that is in place, and indicated he is willing to sue to enforce the terms of the contract.
He noted that there is a possibility that HOVENSA could try to avoid its obligations under the contract entirely by filing for bankruptcy.
HOVENSA is continuing to supply fuel to WAPA and gasoline to local retailers through an interim agreement with the government that lasts until Dec. 31.
- Contact Joy Blackburn at 714-9145 or email jblackburn@dailynews.vi.
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