Joshua Seemu­n­gal

Se­nior Mul­ti­me­dia

In­ves­tiga­tive Jour­nal­ist

joshua.seemu­n­gal@guardian.co.tt

Niger­ian en­er­gy com­pa­ny Oan­do PLC, the Gov­ern­ment’s pre­ferred bid­der for the lease of the Pointe-a-Pierre re­fin­ery, has been strug­gling fi­nan­cial­ly.

Ac­cord­ing to Oan­do’s unau­dit­ed state­ments and sep­a­rate fi­nan­cial state­ments end­ing De­cem­ber 31, 2024, the com­pa­ny is in ac­count­ing in­sol­ven­cy.

The fi­nan­cial state­ments, viewed by Guardian Me­dia’s In­ves­tiga­tive Desk, showed the com­pa­ny’s to­tal li­a­bil­i­ties were 7.8 tril­lion Niger­ian Nairas (TT$34.4 bil­lion), while its to­tal as­sets were 7.5 tril­lion Niger­ian Nairas (TT$33 bil­lion). Oan­do has bor­row­ings of 2.8 tril­lion Niger­ian Nairas (TT$12 bil­lion).

Ac­cord­ing to fi­nan­cial ex­perts, ac­count­ing in­sol­ven­cy, al­so known as bal­ance sheet in­sol­ven­cy, oc­curs when a busi­ness is con­sid­ered in­sol­vent on the books, mean­ing it owes more than it owns and can­not meet its fi­nan­cial oblig­a­tions when they come due. It means while op­er­a­tions may be on­go­ing, fi­nan­cial pres­sure is in­creas­ing. While the busi­ness can stay afloat in the short term by low­er­ing prices, di­vest­ing as­sets, sell­ing un­paid re­ceiv­ables, or through cap­i­tal in­jec­tion from its own­ers, the mea­sures are con­sid­ered un­sus­tain­able in the long term.

Restart­ing the re­fin­ery is ex­pect­ed to cost at least $1 bil­lion (TT).

Over the last decade, Oan­do re­port­ed sig­nif­i­cant loss­es in sev­er­al an­nu­al fi­nan­cial state­ments.

2015, a N34.9 bil­lion loss (TT$154 mil­lion)

2016, a N25.8 bil­lion loss (TT$114 mil­lion)

2018, a N28.8 bil­lion loss (TT$127 mil­lion)

2019, a N207.1 bil­lion loss (TT$912 mil­lion)

2020, a N132 bil­lion loss (TT$582 mil­lion)

2022, a N78.7 bil­lion loss (TT$347 mil­lion)

How­ev­er, de­spite these strug­gles, Oan­do re­bound­ed in 2023 and 2024, with a N60 bil­lion (TT$26 mil­lion) prof­it and N65.5 bil­lion (TT$29 mil­lion), re­spec­tive­ly.

Al­though these gains mark a pos­i­tive shift for Oan­do, the com­pa­ny still faces sub­stan­tial li­a­bil­i­ties. Should ac­count­ing in­sol­ven­cy per­sist, cred­i­tors and lenders could force the com­pa­ny to de­clare bank­rupt­cy or sell its as­sets.

When asked if the Gov­ern­ment sought in­de­pen­dent ver­i­fi­ca­tion of bid­ders’ fi­nances, Prime Min­is­ter Stu­art Young, who is al­so the En­er­gy and En­er­gy In­dus­tries Min­is­ter, said on Fri­day, “The Cab­i­net eval­u­a­tion com­mit­tee went through a rig­or­ous process which in­clud­ed the use of in­de­pen­dent in­ter­na­tion­al ad­vis­ers and rec­om­mend­ed Oan­do, which was ac­cept­ed by Cab­i­net. There­after it is TPHL (Trinidad Pe­tro­le­um Hold­ings Lim­it­ed) as own­er of the re­fin­ery that de­cid­ed to pro­ceed with Oan­do. TPHL is ne­go­ti­at­ing with Oan­do, and that process will de­ter­mine pro­posed terms and con­di­tions.”

So far, the Gov­ern­ment has not dis­closed whether Oan­do’s ac­count­ing in­sol­ven­cy was flagged in this eval­u­a­tion process, nor has it clar­i­fied how it fac­tored in­to the fi­nal de­ci­sion.

Al­though Oan­do has ex­pe­ri­ence in the re­fin­ery sec­tor, it had no pri­or ex­pe­ri­ence op­er­at­ing a ma­jor re­fin­ery.

Fi­nan­cial con­cerns

Fi­nan­cial con­cerns about Oan­do were al­so raised in a 2023 in­de­pen­dent fi­nan­cial au­dit by BDO Glob­al, one of the world’s lead­ing firms.

“There is sig­nif­i­cant un­cer­tain­ty that the group and com­pa­ny may be able to con­tin­ue as a go­ing con­cern and, there­fore, may be able to re­alise its as­sets and dis­charge its li­a­bil­i­ty in the nor­mal course of busi­ness,” the au­dit stat­ed. Ac­cord­ing to BDO Glob­al’s 2023 re­port, “The re­ver­sal of this trend is de­pen­dent on the suc­cess­ful out­comes of its planned ac­tions to re­fi­nance its debts in or­der to man­age the fund’s gap of N3 tril­lion (TT$1.3 bil­lion) and N1.4 tril­lion (TT$614 mil­lion).

“As stat­ed in the note, if the planned ac­tions are suc­cess­ful, it will on­ly ad­dress 53.6 per cent of the group’s pro­ject­ed fund­ing gap short­fall through eq­ui­ty rais­es un­til such a time that prof­it and healthy cash flows from prof­itable op­er­a­tions will be achieved.

“The group and com­pa­ny have go­ing con­cern in­di­ca­tors which in­clude re­port­ing con­sis­tent to­tal com­pre­hen­sive loss­es in the last three years, neg­a­tive work­ing cap­i­tal, in­abil­i­ty to set­tle loan fa­cil­i­ties.”

Sources close to the bid­ding process are puz­zled as to how and why Oan­do was cho­sen as the Gov­ern­ment’s pre­ferred bid­der a month ago by Cab­i­net. The CRO Con­sor­tium, Oan­do’s main com­peti­tor, has not dis­closed its fi­nan­cials pub­licly. How­ev­er, sources close to the process claim its fi­nances are in or­der. Un­like Oan­do, no reg­u­la­to­ry in­frac­tions or fi­nan­cial mis­con­duct have been pub­licly doc­u­ment­ed for CRO’s part­ners.

The CRO Con­sor­tium com­pris­es the lo­cal com­pa­ny DR Com­modi­ties, the in­ter­na­tion­al oil and gas com­pa­ny Ocala (of Venezue­lan ori­gin), and the In­di­an en­gi­neer­ing com­pa­ny Chemie-Tech.

No fur­ther in­for­ma­tion was avail­able on CRO Con­sor­tium’s plans and track record.

Top con­tenders

Oan­do and the CRO Con­sor­tium are the top con­tenders in the Gov­ern­ment’s third bid­ding round for the re­fin­ery, with IN­CA En­er­gy LLC al­so in the mix.

Ac­cord­ing to for­mer fi­nance min­is­ter Colm Im­bert, pre­vi­ous bid­ders failed to prove their fi­nan­cial ca­pac­i­ty to restart op­er­a­tions. Among them were Pa­tri­ot­ic Ser­vices Com­pa­ny Ltd (a joint ven­ture of the Oil­field Work­ers Trade Union).

Naveen Jin­dal (In­di­an bil­lion­aire who with­drew af­ter fac­ing crit­i­cism over cor­rup­tion al­le­ga­tions).

DR Com­modi­ties (a sub­sidiary of lo­cal en­gi­neer­ing firm D Ram­per­sad, en­gaged in oil and gas in­vest­ments).

Ocala (this Mi­a­mi-based firm, led by Venezue­lan en­gi­neer Luis Ramirez, has ex­pe­ri­ence in re­fin­ery op­er­a­tions and main­te­nance).

Chemie-Tech (an In­di­an en­gi­neer­ing firm spe­cial­is­ing in bulk stor­age and petro­chem­i­cal plants, with US$2 bil­lion in rev­enue).

The bid­ding scor­ing ma­trix

Ac­cord­ing to the bid­ding scor­ing ma­trix ob­tained by Guardian Me­dia’s In­ves­tiga­tive Desk, the as­sess­ment was con­duct­ed as fol­lows.

“(a) Of­fer­or or its fi­nan­cial af­fil­i­ates have a proven track record of pro­vid­ing fi­nanc­ing to cov­er the fund­ing for its restart plan, in­clu­sive of an as­set in­tegri­ty as­sess­ment (10 % of scor­ing)

(b) The Of­fer­or has pro­vid­ed a plan to fund the Work­ing Cap­i­tal re­quired for their restart plan (10% of scor­ing)

(c) Of­fer­or has pro­vid­ed a re­al­is­tic long-term fi­nanc­ing plan for fund­ing full op­er­a­tions of the re­fin­ery (10% of scor­ing).”

As seen in the scor­ing ma­trix, “The Of­fer­or and its af­fil­i­ates/part­ners have demon­stra­ble ex­pe­ri­ence and ca­pa­bil­i­ty in op­er­at­ing and main­tain­ing re­finer­ies (demon­strat­ed through Lead­er­ship & Man­age­ment Team org chart and sup­port­ing re­sumes with ref­er­ences)

(a) Less than 10 years = 0

(b) 10 – 12 years = ~7% (of score) (20/3)

(c) 13-15 year = ~14% (of score) (20/2)

(d) >15 = 20% (of score).”

Oan­do’s CEO speaks on Pointe-a-Pierre re­fin­ery, fi­nances

Oan­do is one of Africa’s largest in­te­grat­ed en­er­gy so­lu­tions providers and is Nige­ria’s largest in­dige­nous oil­field ser­vice provider. It is list­ed on the Niger­ian and South African stock ex­changes and is led by CEO Wale Tin­u­bi. It has a mar­ket cap­i­tal­i­sa­tion of around US$1.3 bil­lion.

Com­ment­ing on the im­pend­ing ac­qui­si­tion of the Pointe-a-Pierre re­fin­ery, Tin­u­bi told the Niger­ian In­de­pen­dent last week that it was a tes­ta­ment to Oan­do’s es­ca­lat­ing pres­ence on the glob­al en­er­gy stage.

“We are ho­n­oured by the con­fi­dence the Trinida­di­an Gov­ern­ment has placed in us with this award. This strate­gic in­vest­ment aligns with our op­er­a­tional foot­print, lever­ag­ing our vast tech­ni­cal ex­per­tise and glob­al part­ner­ships to fi­nance projects. We recog­nise the sig­nif­i­cance of this op­por­tu­ni­ty and look for­ward to work­ing with all stake­hold­ers to de­liv­er max­i­mum val­ue for all par­ties in­volved,” he said.

The sto­ry said, “With a pro­cess­ing ca­pac­i­ty of 175,000 bar­rels per day and a Nel­son Com­plex­i­ty In­dex of 8.0, it is adept at re­fin­ing re­gion­al crude oils to sup­ply both do­mes­tic and re­gion­al mar­kets with pe­tro­le­um prod­ucts.”

Oan­do’s re­cent “im­pres­sive” fi­nan­cial re­sults, he said, “re­flect its strate­gic ini­tia­tives and ro­bust growth tra­jec­to­ry.”

“These im­pres­sive fi­nan­cial re­sults are part­ly at­trib­uted to Oan­do’s strate­gic ac­qui­si­tion and in­te­gra­tion of the Niger­ian Agip Oil Com­pa­ny Lim­it­ed (NAOC Ltd). This ac­qui­si­tion sig­nif­i­cant­ly en­hanced Oan­do’s pro­duc­tion ca­pac­i­ty, achiev­ing peak op­er­at­ed pro­duc­tion of 103,206 boepd and net en­ti­tle­ments of 45,000 boepd,” Tin­u­bi shared.

“2024 was a year of trans­for­ma­tion for Oan­do, the key high­light be­ing our suc­cess­ful ac­qui­si­tion and sub­se­quent in­te­gra­tion of NAOC Ltd, which sig­nif­i­cant­ly en­hanced our pro­duc­tion ca­pac­i­ty.

In 2024, Oan­do in­vest­ed $18.1 mil­lion in cap­i­tal ex­pen­di­tures for the de­vel­op­ment of oil and gas as­sets, along­side ex­plo­ration and eval­u­a­tion ac­tiv­i­ties. This strate­gic cap­i­tal al­lo­ca­tion aligns with the com­pa­ny’s cost op­ti­mi­sa­tion and ef­fi­cien­cy goals,” he added.

He out­lined Oan­do’s pri­or­i­ties ahead of 2025, say­ing the com­pa­ny aims to dri­ve cost op­ti­mi­sa­tion, en­hance op­er­a­tional ef­fi­cien­cy, and lever­age tech­nol­o­gy to boost pro­duc­tiv­i­ty.

On Wednes­day, Afrex­im­bank told a dai­ly news­pa­per that it was will­ing to fi­nance Oan­do’s lease of the Guaracara Re­fin­ery.

How­ev­er, the terms of this fi­nanc­ing, in­clud­ing whether the loan is con­tin­gent on op­er­a­tional suc­cess, have not been dis­closed.

Oan­do’s trou­bles

2024 - Oan­do pur­chas­es Agip Nige­ria Oil from Ital­ian firm Eni for US$783 mil­lion. It was pur­chased through a US$650 mil­lion loan from Afrex­im­bank.

The pur­chase was viewed as con­tro­ver­sial be­cause the Niger Delta Re­gion, where Agip op­er­ates, has suf­fered from se­ri­ous en­vi­ron­men­tal degra­da­tion, af­fect­ing liveli­hoods and the health of thou­sands of res­i­dents.

2021 - Oan­do reach­es a set­tle­ment with the Niger­ian Se­cu­ri­ties and Ex­change Com­mis­sion (NSEC) fol­low­ing an in­ves­ti­ga­tion by the com­mis­sion. Oan­do pays an undis­closed amount and does not have to ac­cept or de­ny li­a­bil­i­ty. The set­tle­ment re­solved al­le­ga­tions of mis­stat­ed fi­nan­cial state­ments and in­sid­er trad­ing.

2019 - In­ves­ti­ga­tions by the NSEC found that there were in­frac­tions of se­cu­ri­ties and oth­er laws com­mit­ted by Oan­do. The com­mis­sion found that the dis­pos­al of Oan­do Ex­plo­ration to Green Park Lim­it­ed was done with­out com­mis­sion ap­proval; fi­nan­cial state­ments in 2013 and 2014 were mis­stat­ed; there was sus­pect­ed in­sid­er trad­ing; and de­clared div­i­dends in 2013 and 2014 were de­rived from un­re­alised prof­its. The com­mis­sion called for the res­ig­na­tion of all board mem­bers and the bar­ring of the CEO and deputy CEO for five years.

2017 - Al­ha­ji Mun­gal, 18 per cent own­er of share cap­i­tal, com­plained to the com­mis­sion about neg­a­tive work­ing cap­i­tal and on­go­ing con­cerns by au­di­tors.