Published On: Mon, Oct 16th, 2017

Nahar: “Charm offensive from Chen Binyang”

Ondertekening_09WILLEMSTAD - Remarkable “charm offensive” from Chen Binyang, representative of Guangdong Zhenrong with his public statement in the local news media in Curaçao:

1st That he has introduced CCIEE (China Center for International Economic Exchanges) as a back-up partner for input of equity capital in the LNG-project. In the meantime, it has become apparent that GZE is only interested in the LNG-project and that there is no doubt that they won’t be able to invest BILLIONS in the modernization of an outdated and decrepit refinery, not with the rapidly dwindling petrochemical branch of the fossil industry. This, because of the advance of the electric car, which entails a worldwide decreasing market share for the sale of the most important end product of the petrochemical industry, being gasoline.

2nd He announces proudly that CCIEE is ranking no.24 in the top 50 of the World as regards assets, meaning financial strength, but he fails to point out to us that he is sneaking in a wolf in sheep’s clothing for the financing of that particular project and that he effectively bulldozes our local banking institutions out of the market for financing this project, and mind you our local banks are burdened by over-liquidity due to the stagnant economic growth of Curaçao.

There is also an attendant (but not imaginary) risk, often caused by project developers worldwide (their standard behavioral pattern worldwide with such large projects-àremember Odebrecht?), which is to contract a loan agreement with the borrower (in this case the entity building the LNG-terminal) for an exorbitant amount which in the present case far exceeds the actual construction costs, but is based on a (fictional!) cost estimate of 800 million USD. Subsequently to do the job then for a considerably lower amount of actual expenditure for construction costs. The difference of 400 million USD then remains available to the project developer to supply its lack of funds in other projects currently being carried out by it, but the amortization of the entire loan of 800 million USD remains the liability of the LNG-terminal at Bullenbaai.

If it turns out afterwards that, due to the proximity and competition of other LNG-terminals in the region,  as are now present in Trinidad, Sto Domingo and Colombia, “our”(?) terminal at Bullenbaai would be unable to fulfill its financial obligations promptly and without fail towards CCIEE, then CCIEE rejoices inwardly because it will then be able to proceed to a foreclosure of the loan agreement, since the loan conditions included a security of the loan by a mortgage lien on the long-term leasehold granted to the developer of the project on the ground where the LNG-terminal has been constructed. Such a foreclosure implies that whenever a borrower fails to promptly comply with his payment obligations in a loan agree­ment, the lender is empowered to call in the loan prematurely and the outstanding balance then becomes immediately due and payable. Subsequently by standard procedure the LNG-terminal is sold by public auction, in order to enable CCIEE to recover the outstanding balance from the proceeds of the sale and in this way the new entity that purchased at the auction, becomes the new owner of the LNG-terminal, including the ground on which it is constructed and the adjacent water parcel through accession, by the operation of law. Then the long-term leaseholder has been in fact succeeded by a freeholder.

And in this way our deep seaport at Bullenbaai surreptitiously transits into the ownership of another entity, probably a Chinese state-owned corporation, for such is the objective of the CCIEE as an integrated partner and the driving force behind OBOR.

Therefore I repeat for the umpteenth time not to give even one square meter of land in a long-term leasehold to GZE or to any foreign entity for that matter. For the same reason (transition of ownership) a B.O.O. construction is to be strongly dissuaded.

He also fails to mention that in this way Curaçao becomes saddled with a much too heavy burden of an overly large and too ambitious LNG-terminal which is unable to compete with other LNG-terminals in the region. With the inevitable result as described above.

3rd He also fails to mention that simultaneously Curoil will be bulldozed out of the market in advance for trading in LNG in the future, for Curoil won’t be able to successfully continue its present core business of oil trading, but out of necessity it will have to switch to gas trading. We must not leave the construction of the LNG-terminal in the hands of GZE, since it has no experience whatsoever with the construction of terminals. It would be utterly foolish of the government to allow this to come to pass, instead of causing Curoil to construct a more modest LNG-terminal, but much more adapted to current and anticipated market developments. And to allow financing by a local banking consortium and to proceed with a more reliable foreign strategic partner who has the necessary know-how and experience, preferably Shell.

It is beyond our control and we lack the technical capabilities to ascertain during the construction how much money is actually spent on the construction.

4th In his charm offensive Chen Binyang states that GZE enthusiastically (indeed, no wonder!) came to  Curaçao and that it was attracted by our legal system and friendly people. He fails to also state that they were first and foremost attracted by the logistic position of our deep seaport at Bullenbay on the maritime highway from Europe and the U.S.A. to the Panama Canal and the opportunity to develop our seaport into a transhipment port, to be compared with Rotterdam.

The reality is that GZE as per today, more than a year since contracting the first MoU, has not invested a single dime in our economy, but somehow did succeed in inserting its fingers in the pie with all our government-owned corporations through cooperative agreements. And furthermore managed to cause

the bid for the construction of the LNG-terminal to be thrown its way by means of negotiations, (which negotiations were not merely conducted by spoken word).

No, the Yellow Menace has not yet disappeared. Up to now, they succeeded splendidly in outsmarting us. That much they achieved without a doubt and in this statement, it appears that they continue in the same vein with promises, promises and more promises and never mind that last year’s promises already proved to have been empty promises.

By Marguérite Nahar 

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