ST THOMAS, USVI -- On Thursday, Governor John de Jongh resubmitted to the US Virgin Islands Legislature the fourth amendment agreement to the HOVENSA concession agreement, together with certain clarifications requested by the senate.
Governor John de Jongh
The bill of ratification would require HOVENSA and its owners to initiate a bona-fide process to sell the oil refinery on the south shore of St Croix, which de Jongh said was “our best chance to jump start the economy and create jobs in the territory.”
Since a previous bill to ratify the fourth amendment was rejected by the legislature last August 7, de Jongh has engaged in ongoing discussions with members of the legislature in an effort to address their concerns. On October 1, the legislature adopted a resolution making several recommendations which were intended to “resolve the issues” raised by the senate during the July hearings and the subsequent discussions between the senators and the governor.
Upon receipt of the senate resolution, the governor began negotiations with HOVENSA and its owners to secure the assurances and clarifications requested by the legislature.
De Jongh said that, following weeks of discussions, he succeeded in obtaining from HOVENSA and its owners a formal document setting forth the requested assurances and clarifications. In that document, HOVENSA and its owners specifically confirmed that:
• The temporary adjustment in property tax payments under the agreement is only a deferral of the unpaid amounts until the refinery is sold, or ceases to operate an oil storage facility, or until August 15, 2019, whichever occurs first. Upon any of the foregoing, HOVENSA will make a lump sum payment to the government of all amounts deferred, plus interest at the statutory rate.
• In the event the refinery is sold, HOVENSA will pay the government the greater of (i) the amount of property taxes deferred, plus interest at the statutory rate, or (ii) 20 percent of the gross sales proceeds up to $50 million.
• HOVENSA will consider purchase offers by potential buyers interested in utilizing the refinery for non-refining industrial or commercial purposes, subject to the approval of the government.
• HOVENSA will operate and continue to make fuels available to the government and the public at the fuel loading rack for so long as HOVENSA is operating an oil storage terminal at the site, with fuel supplied by HOVENSA or a third party supplier approved by the Government. If the refinery is not sold within a year, HOVENSA will agree to open up the Limetree Bay Channel to commercial vessels en route to the St Croix Containerport, subject to any necessary approvals by the US Coast Guard or US Department of Homeland Security and receipt of indemnification and proof of acceptable insurance coverage by transiting vessels.
• HOVENSA has no objection to the government taking over exclusive control of the nearly $5 million in Supplemental Environmental Project (SEP) funds, plus interest, that HOVENSA has paid as part of its Clean Air Act Consent Decree.
• The agreement does not cause a loss of legal rights by either party if the refinery does not sell.
De Jongh said that the document, which has been executed by HOVENSA and each of its owners, confirms that the clarifications included in the document are, if the fourth amendment agreement is ratified and enacted into law, binding on the company.
In addition, the governor announced that, at the request of several senators, he had secured a commitment from HOVENSA to provide health insurance to all employees of the contractors working at the HOVENSA site, at a cost to the company estimated at more than $1 million annually.
“I am pleased that, by working together, we were successful in achieving these commitments and clarifications which I hope will now pave the way for ratification of the fourth amendment agreement and the beginning of the bona fide sales process. This is our best chance of getting the refinery restarted and getting our economy moving again,” de Jongh said.