BNTCL SNAG

GOVERNMENT’S decision to divest its interests in the Barbados National Terminal Company Limited (BNTCL) has hit another snag.

This follows a ruling announced yesterday by the Fair Trading Commission (FTC), the regulator, on the merger application submitted by BNTCL Holdings Limited (SOL) and the Barbados National Oil Company Limited (BNOCL), which owns the terminal.

The Commission, which said it is not challenging Government’s policy to divest its interest in the BNTCL, announced that were it to approve the merger, it would likely cause anti-competitive effects.

Furthermore, CEO of the Commission, Sandra Sealy, said it is probable that the purchaser “could utilise its vertical alignment in the upstream and downstream segments of the market to the detriment of competition in the relevant product markets”.

She stated that the Commission is also of the view that the granting of exclusive importation rights to the purchaser, which has been proposed, is likely to bolster their position in the market.

“As such, the Commission cannot but decide against this proposed merger transaction in its present form. The Commission will assess any substantially altered transaction, including a relevant amended agreement, which may be placed before it,’ she said.

Government is looking to divest the shares so as to raise US$100 million to boost the country’s foreign reserves.

“Additionally, the Commission in its determinations, finds that the substance of the sale as it stands cannot be completed because the moratorium clause and the increase in the throughput fees, which are conditions precedent in the Sale and Purchase (SPA), are inherently anticompetitive,” she said.

According to the FTC: “The Board of the Commission, on November 23, 2017, determined that it would be prepared to approve the completion of the merger ONLY IF:
a. The vertical alignment issues in the current transaction are addressed;
b. The following clauses are removed from the Agreement and transaction :
(i) A moratorium on the construction of any new terminal facilities or new import depots in Barbados for a period of fifteen (15) years from the transaction’s completion date.
(ii) A moratorium on the issuing of licenses for the storage of gasoline, diesel, fuel oil, and aviation or jet fuels used for industrial and commercial purposes in Barbados other than those that currently exist for a period of fifteen (15) years from the transaction’s completion date.
(iii) A 32% increase in throughput fees; and
c. BNTCL Holdings Limited or any of its affiliates do not acquire an exclusive right of importation of oil products into Barbados.