Hylton: No response to claim for Petrojam shares - Government awaiting attorney general’s decision, says energy minister

Jamaica is yet to acknowledge Venezuela’s letter seeking US$250 million in compensation for that country’s 49 per cent stake in Petrojam, which was taken back by the Government under the Compulsory Acquisition (Shares in Petrojam Limited) Act of February 2019.

In June, Queen’s Counsel Michael Hylton, who represents Venezuela’s interest in the matter, wrote the Government as required under the act. The letter demanded, among others things, that the Government pay a minimum of US$50 million (J$6.5 billion) in core share value as compensation. The claim includes supplementary add-ons in relation to dividends and prospective value that brought the total compensation package sought to US$250 million (J$32.5 billion).

Last week, Hylton told The Sunday Gleaner that there has been no acknowledgement of the letter.

“We wrote a letter making a claim in accordance with the requirement of the act. There has been no response,” Hylton said.

Section (3) of the act states that the minister shall, within 30 days after the date of the act, issue a notice advising to whom claims of compensation should be made. Claims must be made within a 30-day to three-month period. After the expiration of the period, the minister must consider each claim made under the act and determine the amount of compensation payable to each interested person.

Unless an ‘offence’ is committed by a claimant, the minister is required to “serve written notice of the determination of the interested person”.

Reiterating that there was no response, Hylton said that, given the requirement under the legislation and the time that has elapsed, “it was more than unusual”.

Minister of Science, Energy and Technology Fayval Williams said last week that the relevant notices were issued within the time stated. She was unable to indicate the date of issuance and an expansive search of the Gleaner’s archives of daily papers for the months of March and April yielded no notification.

“Two claims have been received from two different entities that have written to us concerning the compulsory acquisition. The Ministry of Science, Energy and Technology has turned over all documents, all correspondence that we have received to the Attorney General’s Office, for their assessment,” she told The Sunday Gleaner.

“As of now (Thursday) we don’t have an opinion back from them yet to the path down which we should go,” she disclosed.

“The notice was published within the time frame. We had to put it out so that anybody who felt that they had a claim would be able to come forward and state that claim,” she insisted.

Up to Friday, the notification was not located.

Opposition Spokesman on Energy Phillip Paulwell said he, too, was unaware of the notification.

“I did ask the minister the question in Parliament and she did not answer. I also asked if people had made submission in relation to the claim on the ownership of the shares and she was also not able to provide me with an answer,” he said when contacted overseas.

INITIAL OFFER REJECTED

Jamaica made an initial offer of US$40 million, which was rejected by Venezuela. The offer was later increased to S$50 million, but was also refused.

Under the act, the Jamaican Government gave itself powers to acquire the 392,490,000 shares owned by Venezuela in Petrojam. After a valuation by Muse Stancil – the full-service, global energy consultancy firm specialising in the mid- and downstream sectors of the petroleum industry – Jamaica expropriated the shares. During the debate on the takeover, Williams, who replaced Dr Andrew Wheatley as energy minister on February 14 this year, said Petrojam’s market value eroded by nearly US$100 million because of a decade of broken promises, delays and inaction on the part of the Venezuelan government.

She told Parliament then that Petrojam’s market value was listed at between US$126 million and US$128 million by Muse Stancil in 2006, when Jamaica signed a joint-venture agreement with Petróleos de Venezuela SA (PDVSA), Venezuela’s state-owned oil company and parent to PDV Caribe. That agreement was expected to finance a major upgrade of the 55-year-old refinery, among other things. However, Williams said that an evaluation carried out in 2018 by the same consultants listed Petrojam’s market value at US$34 million.

Muse Stancil has still not responded to The Sunday Gleaner’s request for an interview seeking an explanation for the massive variance in the sale-as-is price, and the investment value.

Sunday Gleaner sources have said there would be no response “because of the non-disclosure agreement between them and Jamaica”.

At the time of the share buyback, Petrojam was jointly owned by the governments of Venezuela and Jamaica. Jamaica’s shares – 51 per cent – were held by the Petroleum Corporation of Jamaica (PCJ). Venezuela valued the refinery at just under US$90 million, which included the initial sum paid for shares at the time of the joint-venture agreement, plus unpaid dividends and retained earnings.

erica.virtue@gleanerjm.com