Sol Petroleum (Barbados) Ltd, has appealed a recent decision by the Fair Trading Commission (FTC) which found the hemispheric energy supplier liable for abusive business practices.
In a four-page landmark decision dated June 14, the FTC ordered Sol to “cease the abusive practices” and make restitution to the state-owned Barbados National Oil Company (BNOCL) which had complained of “exclusionary abuse”.
The ruling came after an FTC investigation into the practices of Sol, a significant player in the Caribbean and Central and South American energy markets. The regulator found that Sol had, without notice, decommissioned one of its heavy fuel oil (HFO) storage tanks at its Holborn, St Michael facility leased by BNOCL and delayed its replacement. It also accused Sol of delaying repairs to the pipeline running from Holborn to the Bridgetown Port Inc. (BPI), which negatively affected ships relying on BNOCL’s bunkering services at the port.
But Sol General Manager Roger Barrow told Barbados TODAY the company is appealing on the basis that the FTC erred in both law and fact in finding that Sol acted anti-competitively.
He said the energy company did give notice to BNOCL of its plans to decommission the storage tank, and that while one of the storage tanks, known as Tank 2, has indeed been decommissioned, another smaller tank has been repurposed for use by BNOCL until Tank 2 can be rebuilt.
Barrow argued that after working closely with both the port and the BNOCL, a decision had already been made to rebuild the pipeline. That, he said, is scheduled to be completed by the end of 2024.
The senior management official explained that the decision to repurpose one of its tanks for BNOCL follows a professional, comprehensive engineering assessment which the company says provides valid reasons to support the removal and replacement of Tank 2.
He also pointed out that the company is still in discussions and working closely with the state-owned oil business to agree on an “acceptable” throughput rate, particularly factoring in the island’s strategic move towards replacing petroleum-based energy solutions with renewable energy solutions such as solar energy.
The GM said it is Sol’s position that investing heavily in increased storage capacity for HFOs while the demand for HFO is naturally expected to decrease in the near future, requires careful consideration. And he said that in order to rebuild the tank and restore supply inputs, clarity on the throughput rate is required.
“The FTC ruling indicates Sol should rebuild the facilities without due consideration to the recovery of the investment being made. While Sol firmly believes in its case and has appealed the FTC decision, the company remains committed to Barbados and has been actively involved with all parties in an effort to resolve the issues and rebuild the tank due to its importance to energy supply in the country,” Barrow said.
The FTC had claimed that Sol’s actions in the storage and transport of its HFO are injurious to its operations, national security and competition in general.
“The impact of Sol’s action is believed to be far-reaching, given HFO is an essential component in both the generation and provision of electricity to households and businesses,” it said. “The aforementioned actions threaten BNOCL’s ability to fulfill its obligation to clients, and have negative repercussions on the market for the supply of HFO to the Barbados Light and Power Company, the market for the supply of storage of HFO, and the market for the supply of HFO to the BPI.”
The FTC had further declared the Holborn facility “an essential facility” – underscoring its importance to national energy security – and said it may appoint a monitor to oversee compliance, with Sol responsible for associated fees.
The commission concluded that Sol had breached the Fair Competition Act by “denying its competitor access to adequate facilities at its Holborn site for the storage of heavy fuel oil”. It also found that Sol denied BNOCL access to the storage facilities at its Holborn site and to the pipeline that connects the Holborn site to the Bridgetown Port, “except at prices that are significantly less favourable to the extent that the prices do not correspond with the service to be delivered”.
The FTC directed Sol to take steps that would allow BNOCL to honour its supply contract with BLPC and the Bridgetown Port without causing any disruption in the continuous supply of heavy fuel oil to either party.
Within six months, it said, Sol must restore its supply inputs to BNOCL that would allow BNOCL to honour its supply contract to its clients to the level it did before the removal of the tank at Holborn. (EJ)
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