69
STC/MANGALORE REFINERY – PETROLEUM PRODUCTS – CONTRACT
(No. 1B/305) Mr R. Uteem (Second Member for Port Louis South & Port Louis
Central) asked the Minister of Industry and Commerce whether, in regard to the supply of
petroleum products for the period 2010-2013, he will, for the benefit of the House, obtain from
the State Trading Corporation, information as to -
(a) the terms and conditions of the contract signed between the Corporation and the
Mangalore Refinery Petrochemicals Ltd;
(b) if there was any -
(i) tender exercise; or
(ii) request for quotation and, if so, give the details thereof, and
(c) if any company has been awarded the contract for the conveyance of the
petroleum products to Mauritius and, if so, the terms and conditions thereof.
Mr Soodhun: Mr Deputy Speaker, Sir, on 01 July 2010, the State Trading Corporation
and Mangalore Refinery and Petrochemical Limited signed an agreement for the supply of
petroleum products during period 2010-2013, amounting to 1.2 million metric tonnes per annum,
at a total value of USD 2 billion for three years at current fuel prices. The agreement was signed
in the presence of the Minister of State for Petroleum and Natural Gas of the Government of
India, as well as the Chairman, Oil and Natural Gas Group of Companies.
I wish to inform the House that MRPL is a subsidiary of the Oil and Natural Gas Group,
in which the Government of India holds majority equity.
As regards the terms and conditions, there is a confidentiality clause within the agreement
which prevents the Government from disclosing its contents.
With regard to part (b) of the question, in order to obtain a benchmark with regard to the
market price, this year, quotations were sought from various companies which dealt with the
STC in the past. I am going to place the relative documents in the Library of the National
Assembly. Only one company submitted an indicative proposal which was not fully responsive,
as it could not supply all the products from one source.
70
Regarding the contract for the conveyance of petroleum products, I wish to refer the
House to the reply made on 16 June 2009 in reply to PQ No. B/542. I wish to remind the House
that the decision to purchase a tanker was taken in the year 2005, and a study carried out in 2007
by a specialised firm concluded that it would be advantageous for the country to acquire a tanker.
In view of the high investment required for the acquisition of a tanker and the need for
the experienced professionals to manage and operate such a tanker, Government decided that
local firms be invited to participate in the project with a 15 years guarantee of operation. Based
on this decision, 400 local firms were contacted through the Mauritius Chamber of Commerce
and Industry and only six showed interest for the project. These firms were invited to submit
formal proposals and were informed of the 15 years guarantee. Only Betamax Ltd in joint
venture with Executive Ship Management of Singapore made a formal proposal.
On 12 January 2009, Government agreed to the proposal of the company subject to the
conditions inter alia that -
(i) the company should fully finance the purchase of a double hull tanker vessel,
without any financial commitment of the Government;
(ii) the vessel should be registered locally, and
(iii) freight rates would have to be agreed with STC, based on rebates available with
regard to the indicative market rate.
Mr Uteem: Mr Deputy Speaker, Sir, the agreement relates to the supply of petroleum
products worth USD 2 billion. Last year, the then Minister of Business Enterprise stated in this
House that he was prepared to allow the contract to be inspected by Opposition Members at the
State Trading Corporation. May I know from the hon. Minister why is it that this year for the
same contract with the same party, the Minister has decided to have a confidentiality clause and
not disclose its terms to this House?
Mr Soodhun: Mr Deputy Speaker, Sir, I mentioned in my answer that we are dealing
with Government to Government, not with a courtier, not with a trader or an agent with due
respect to the Government of India. In Mauritius, we cannot just question this agreement.
According to the information that I have, the former Minister invited the hon. Member, including
71
myself – I was in the Opposition – nobody went to the office of the Minister to see the terms and
conditions.
Mr Uteem: Mr Deputy Speaker, Sir, in view of the importance of this agreement, may
we know whether the price is fixed, is it fluctuating, do we have an exit clause if the world price
crashes? We are completely in the dark as to what we have committed ourselves.
Mr Soodhun: I do not know what price the hon. Member is mentioning. Can he give
more precision?
Mr Uteem: The price at which we are buying petroleum products. You yourself stated
that the contract was worth USD 2 billion.
Mr Soodhun: The hon. Member is completely in confusion because he cannot
differentiate the price of petrol. This is the premium and freight. We have to differentiate it. I
would like to give the hon. Member a good explanation for all. This price of petroleum products
rises on a daily basis as per ‘Platts’ publication. There is no control over the price of petroleum
products, but the premium is the fixed element and comprises the following: freights, insurance,
profit margins of refinery, that is, when we purchase on CIF. This is what the hon. Member do
no….
(Interruptions)
Why not? It is the freight. Let me tell you if you don’t know. The price …
The Deputy Speaker: The hon. Minister should address the Chair, please!
Mr Soodhun: Mr Deputy Speaker, Sir, I am only addressing the Chair, but it was for
those who do not know. They cannot now ask me the question, because I personally negotiated; I
know there is no way of getting back.
(Interruptions)
Mr Uteem: Have I heard correctly the hon. Minister saying that the petroleum product
that is being purchased is on a CIF basis because if this is the case then that includes by necessity
freight; ‘F’ in CIF stands for freight and, therefore, the contract for transport would be included
in the price of petroleum products?
72
Mr Soodhun: I just explained that we don’t buy petroleum as such. What we discussed is
the premium, a fixed element. This is what we used to discuss and this is what we call FOB, Free
On Board. It is on this basis.
(Interruptions)
The Deputy Speaker: Order, please! Order!
Mr Guimbeau: Mr Deputy Speaker, Sir, the hon. Minister just stated that there is a
confidential clause because it is a Government to Government deal. Mr Deputy Speaker, Sir, we
are here talking about taxpayers’ money and I feel we have the right to know, Mr Deputy
Speaker, Sir, where our money is going.
Mr Soodhun: Mr Deputy Speaker, Sir, this…
(Interruptions)
The Deputy Speaker: Address the Chair, please!
Mr Soodhun: This is because we are dealing with India. This is the only reason. There
is no other reason. The hon. Member must sit down. He has asked me and I want to give him the
answer.
(Interruptions)
The Deputy Speaker: The hon. Leader of the Opposition can address on a point of
order.
Mr Bérenger: Our Standing Orders are perfectly clear that no Member can impute
improper motives to anybody in the House. The hon. Minister is imputing improper motives that
we want a copy of that agreement because it is India. This is improper, he should withdraw.
(Interruptions)
Mr Soodhun: Mr Deputy Speaker, Sir, he mentioned the word ‘mafia’.
(Interruptions)
The Deputy Speaker: I should first rule on the point of order and I think that it is not
proper to impute motives. If ever the hon. Minister has imputed motives, he will have to
withdraw.
73
(Interruptions)
Mr Soodhun: The hon. Member used the word ‘mafia’.
Mr Guimbeau: The hon. Member referred to India. This is not the case, Mr Deputy
Speaker, Sir. I am talking about taxpayers’ money, taxes which are coming from the pockets of
the people of this country. We have the right to know whether we have got the best quotation
from the STC and Mangalore.
(Interruptions)
The Deputy Speaker: Order! Order, please!
(Interruptions)
I understand that the hon. Minister…
(Interruptions)
Order, please!
I understand that the hon. Minister explained that there is a confidentiality clause which
prevents him from disclosing whatever has been stated and the hon. Member made his point and
we listened to the Minister.
Mr Soodhun: Mr Deputy Speaker, Sir, I just want to explain the position of this clause.
(Interruptions)
The Deputy Speaker: Silence, please!
Mr Soodhun: The fact that, in Mauritius we do have contracts at the CEB. We know
that the hon. Leader of the Opposition was Prime Minister and he knows very well. There are
certain clauses in the contract that we cannot disclose and now let me explain why we cannot
disclose. Mangalore Oil Refinery is a producer. We negotiated for a better price and we got it
thanks to the good relationship that the hon. Prime Minister, Dr. Navinchandra Ramgoolam has.
On this basis we had a very good price which we cannot officially put on the world market
because it is going to embarrass the Mangalore Oil Refinery when they export their products to
other countries. This is the only reason.
The Deputy Speaker: I will allow a last question from hon. Guimbeau!
74
Mr Guimbeau: Mr Deputy Speaker, Sir, I maintain it; we are talking here about
taxpayers’ money and we have a right to know. This is why we are asking the hon. Minister to
table the agreement signed between the STC and Mangalore, if he has nothing to hide, Mr
Deputy Speaker, Sir.
Mr Soodhun: Mr Deputy Speaker, Sir, I am ready to show all the files if the hon.
Member comes and sees me. If he can get cheaper than we have received, I am ready to again
consider this.
Mr Guimbeau: Mr Deputy Speaker, Sir, if I can see the files, why not table it and let the
public see the file? The hon. Minister just said that I can see the file. Does that mean that he is
going to table the file?
(Interruptions)
The Deputy Speaker: Silence, please! Order! Order! I will allow, exceptionally, a last
question from the hon. Member who sets the question. Hon. Uteem!
Mr Uteem: Thank you, Mr Deputy Speaker, Sir. I have heard from the hon. Minister
that there has been a contract signed between STC and Consortium of Betonix and ESM, and he
also mentioned some of the clauses and one of them is that the STC will agree the price for the
transport. May we know from the hon. Minister what price has been agreed between the STC
and the promoters of this tanker for the transport of petroleum product for the Mangalore
contract?
Mr Soodhun: The hon. Member must come with a very proper question and then I will
answer to that.
The Deputy Speaker: We move on to the next question, please! Hon. Baloomoody!

Sitting of tuesday 13th July 2010

(No. 1B/305)

Mr R. Uteem (Second Member for Port Louis South & Port Louis Central) asked the Minister of Industry and Commerce whether, in regard to the supply of petroleum products for the period 2010-2013, he will, for the benefit of the House, obtain from the State Trading Corporation, information as to -

(a) the terms and conditions of the contract signed between the Corporation and the Mangalore Refinery Petrochemicals Ltd;

(b) if there was any -

(i) tender exercise; or

(ii) request for quotation and, if so, give the details thereof, and

(c) if any company has been awarded the contract for the conveyance of the petroleum products to Mauritius and, if so, the terms and conditions thereof.

Mr Soodhun: Mr Deputy Speaker, Sir, on 01 July 2010, the State Trading Corporation and Mangalore Refinery and Petrochemical Limited signed an agreement for the supply of petroleum products during period 2010-2013, amounting to 1.2 million metric tonnes per annum, at a total value of USD 2 billion for three years at current fuel prices. The agreement was signed in the presence of the Minister of State for Petroleum and Natural Gas of the Government of India, as well as the Chairman, Oil and Natural Gas Group of Companies.

I wish to inform the House that MRPL is a subsidiary of the Oil and Natural Gas Group, in which the Government of India holds majority equity.

As regards the terms and conditions, there is a confidentiality clause within the agreement which prevents the Government from disclosing its contents.

With regard to part (b) of the question, in order to obtain a benchmark with regard to the market price, this year, quotations were sought from various companies which dealt with the STC in the past. I am going to place the relative documents in the Library of the National Assembly. Only one company submitted an indicative proposal which was not fully responsive, as it could not supply all the products from one source.

Regarding the contract for the conveyance of petroleum products, I wish to refer the House to the reply made on 16 June 2009 in reply to PQ No. B/542. I wish to remind the House that the decision to purchase a tanker was taken in the year 2005, and a study carried out in 2007 by a specialised firm concluded that it would be advantageous for the country to acquire a tanker.

In view of the high investment required for the acquisition of a tanker and the need for the experienced professionals to manage and operate such a tanker, Government decided that local firms be invited to participate in the project with a 15 years guarantee of operation. Based on this decision, 400 local firms were contacted through the Mauritius Chamber of Commerce and Industry and only six showed interest for the project. These firms were invited to submit formal proposals and were informed of the 15 years guarantee. Only Betamax Ltd in joint venture with Executive Ship Management of Singapore made a formal proposal.

On 12 January 2009, Government agreed to the proposal of the company subject to the conditions inter alia that -

(i) the company should fully finance the purchase of a double hull tanker vessel, without any financial commitment of the Government;

(ii) the vessel should be registered locally, and

(iii) freight rates would have to be agreed with STC, based on rebates available with regard to the indicative market rate.

Mr Uteem: Mr Deputy Speaker, Sir, the agreement relates to the supply of petroleum products worth USD 2 billion. Last year, the then Minister of Business Enterprise stated in this House that he was prepared to allow the contract to be inspected by Opposition Members at the State Trading Corporation. May I know from the hon. Minister why is it that this year for the same contract with the same party, the Minister has decided to have a confidentiality clause and not disclose its terms to this House?

Mr Soodhun: Mr Deputy Speaker, Sir, I mentioned in my answer that we are dealing with Government to Government, not with a courtier, not with a trader or an agent with due respect to the Government of India. In Mauritius, we cannot just question this agreement.

According to the information that I have, the former Minister invited the hon. Member, including myself – I was in the Opposition – nobody went to the office of the Minister to see the terms and conditions.

Mr Uteem: Mr Deputy Speaker, Sir, in view of the importance of this agreement, may we know whether the price is fixed, is it fluctuating, do we have an exit clause if the world price crashes? We are completely in the dark as to what we have committed ourselves.

Mr Soodhun: I do not know what price the hon. Member is mentioning. Can he give more precision?

Mr Uteem: The price at which we are buying petroleum products. You yourself stated that the contract was worth USD 2 billion.

Mr Soodhun: The hon. Member is completely in confusion because he cannot differentiate the price of petrol. This is the premium and freight. We have to differentiate it. I would like to give the hon. Member a good explanation for all. This price of petroleum products rises on a daily basis as per ‘Platts’ publication. There is no control over the price of petroleum products, but the premium is the fixed element and comprises the following: freights, insurance, profit margins of refinery, that is, when we purchase on CIF. This is what the hon. Member do no….

(Interruptions)

Why not? It is the freight. Let me tell you if you don’t know. The price …

The Deputy Speaker: The hon. Minister should address the Chair, please!

Mr Soodhun: Mr Deputy Speaker, Sir, I am only addressing the Chair, but it was for those who do not know. They cannot now ask me the question, because I personally negotiated; I know there is no way of getting back.

(Interruptions)

Mr Uteem: Have I heard correctly the hon. Minister saying that the petroleum product that is being purchased is on a CIF basis because if this is the case then that includes by necessity freight; ‘F’ in CIF stands for freight and, therefore, the contract for transport would be included in the price of petroleum products?

Mr Soodhun: I just explained that we don’t buy petroleum as such. What we discussed is the premium, a fixed element. This is what we used to discuss and this is what we call FOB, Free On Board. It is on this basis.

(Interruptions)

The Deputy Speaker: Order, please! Order!

Mr Guimbeau: Mr Deputy Speaker, Sir, the hon. Minister just stated that there is a confidential clause because it is a Government to Government deal. Mr Deputy Speaker, Sir, we are here talking about taxpayers’ money and I feel we have the right to know, Mr Deputy Speaker, Sir, where our money is going.

Mr Soodhun: Mr Deputy Speaker, Sir, this…

(Interruptions)

The Deputy Speaker: Address the Chair, please!

Mr Soodhun: This is because we are dealing with India. This is the only reason. There is no other reason. The hon. Member must sit down. He has asked me and I want to give him the answer.

(Interruptions)

The Deputy Speaker: The hon. Leader of the Opposition can address on a point of order.

Mr Bérenger: Our Standing Orders are perfectly clear that no Member can impute improper motives to anybody in the House. The hon. Minister is imputing improper motives that we want a copy of that agreement because it is India. This is improper, he should withdraw.

(Interruptions)

Mr Soodhun: Mr Deputy Speaker, Sir, he mentioned the word ‘mafia’.

(Interruptions)

The Deputy Speaker: I should first rule on the point of order and I think that it is not proper to impute motives. If ever the hon. Minister has imputed motives, he will have to withdraw.

(Interruptions)

Mr Soodhun: The hon. Member used the word ‘mafia’.

Mr Guimbeau: The hon. Member referred to India. This is not the case, Mr Deputy Speaker, Sir. I am talking about taxpayers’ money, taxes which are coming from the pockets of the people of this country. We have the right to know whether we have got the best quotation from the STC and Mangalore.

(Interruptions)

The Deputy Speaker: Order! Order, please!

(Interruptions)

I understand that the hon. Minister…

(Interruptions)

Order, please!

I understand that the hon. Minister explained that there is a confidentiality clause which prevents him from disclosing whatever has been stated and the hon. Member made his point and we listened to the Minister.

Mr Soodhun: Mr Deputy Speaker, Sir, I just want to explain the position of this clause.

(Interruptions)

The Deputy Speaker: Silence, please!

Mr Soodhun: The fact that, in Mauritius we do have contracts at the CEB. We know that the hon. Leader of the Opposition was Prime Minister and he knows very well. There are certain clauses in the contract that we cannot disclose and now let me explain why we cannot disclose. Mangalore Oil Refinery is a producer. We negotiated for a better price and we got it thanks to the good relationship that the hon. Prime Minister, Dr. Navinchandra Ramgoolam has.

On this basis we had a very good price which we cannot officially put on the world market because it is going to embarrass the Mangalore Oil Refinery when they export their products to other countries. This is the only reason.

The Deputy Speaker: I will allow a last question from hon. Guimbeau!

Mr Guimbeau: Mr Deputy Speaker, Sir, I maintain it; we are talking here about taxpayers’ money and we have a right to know. This is why we are asking the hon. Minister to table the agreement signed between the STC and Mangalore, if he has nothing to hide, Mr Deputy Speaker, Sir.

Mr Soodhun: Mr Deputy Speaker, Sir, I am ready to show all the files if the hon. Member comes and sees me. If he can get cheaper than we have received, I am ready to again consider this.

Mr Guimbeau: Mr Deputy Speaker, Sir, if I can see the files, why not table it and let the public see the file? The hon. Minister just said that I can see the file. Does that mean that he is going to table the file?

(Interruptions)

The Deputy Speaker: Silence, please! Order! Order! I will allow, exceptionally, a last question from the hon. Member who sets the question. Hon. Uteem!

Mr Uteem: Thank you, Mr Deputy Speaker, Sir. I have heard from the hon. Minister that there has been a contract signed between STC and Consortium of Betonix and ESM, and he also mentioned some of the clauses and one of them is that the STC will agree the price for the transport. May we know from the hon. Minister what price has been agreed between the STC and the promoters of this tanker for the transport of petroleum product for the Mangalore contract?

Mr Soodhun: The hon. Member must come with a very proper question and then I will answer to that.

The Deputy Speaker: We move on to the next question, please! Hon. Baloomoody!