THE PORTUGUESE government has pulled out of a multibillion euro deal to build a crude oil refinery at Sines. Talks between impresario, Patrick Monteiro de Barros, and Minister for the Economy, Manuel Pinho, broke down after the government refused to inject an initial sweetener of 1,200 million euros into the project.
“Any person with a minimum of intelligence would know that a project that demands that the state injects 1,200 million euros upfront isn’t going to get off the ground,” said Pinho. However, Patrick Monteiro de Barros claimed that the deal was strangled by Portuguese red tape. “We did everything by the book, we presented an environmental impact study within seven weeks and that needed investment. It would have been the most modern refinery in the world and had been classified as a Project of National Interest,” he said. “José Sócrates even asked me to call him directly if there were any problems.”
Had it gone ahead, the project would have been the largest investment in Portugal since AutoEuropa, representing nearly one per cent (0.9) of the entire country’s GNP.
Patrick Monteiro de Barros broke his silence recently in press conferences to several national newspapers by accusing the government, and more specifically the Minister of the Economy and the Ministry of the Environment, of “not being capable of managing a portfolio which would have represented 0.9 per cent of Portugal’s GNP”.
The businessman confirmed that it was obvious that the project, put on the table on November 8, 2005, was conditional on the government’s ability to pay upfront monies to treat the emission of CO2 gases (keeping them within the EU legal limits), the necessity of carrying out port alternations at Sines, and finally having all the legal licenses in place by May 30 of this year.
“It’s a pity because Portugal would have been the first to refine crude oil in the Mediterranean and we would have been able to call the shots,” said Monteiro de Barros.
According to the investor, both the Ministry of the Environment and the Portuguese Investment Agency (API), and its then president, Costa Lima, said it would not be possible to meet the May 30 deadline, despite the fact that the Prime Minister had classified the project as “a priority for the country”.
The Minister for the Economy called roundtable talks for all parties involved, on March 31, “but the person driving the talks was the Secretary of State, Castro Guerra, who suggested corporation tax breaks in exchange for financial incentives,” he said. Monteiro de Barros said that he would only accept this type of incentive if it were secured by the bank.
On April 5, he received a letter from the API, the agency responsible for agreeing incentives to investors, announcing its intention to pull out of the project. Manuel Pinho said last week that he understood Monteiro de Barros’ frustration at the government’s decision not to stump up 1,200 million euros in cash, a value that exceeded the total value of incentives given by the API over four years. The minister also said that various studies had been carried out that proved that “the project was not economically viable for the country”.