Governor Informs Hovensa Deal is Off, Concession Agreement in Force

Gov. John deJongh Jr. sent a letter to the owners of Hovensa Friday informing them of the 30th Legislature’s rejection of the proposed deal that would have governed a sales process for the shuttered St. Croix refinery and that government expects the company to abide by terms of the Third Concession Agreement.

The governor’s action was announced Saturday in a news release from Government House.

The governor’s letter, along with a letter from Attorney General Vincent Frazer to Louis W. Harrigan, port director for U.S. Customs and Border Protection, can be seen here.

Wednesday, the 30th Legislature voted against ratification of the proposed Fourth Amendment Agreement that would have governed the sale of the refinery on St. Croix. Voting against ratification were Sens. Terence Nelson, Nereida O’Reilly, Alicia Hansen, Diane Capehart, Kenneth Gittens, Shawn-Michael Malone, Janette Millin Young, Tregenza Roach, Myron Jackson, Clifford Graham and Clarence Payne III. Voting in favor were Sens. Sammuel Sanes, Judy Buckley and Donald Cole. At-large Sen. Craig Barshinger was absent from the session.

DeJongh’s letter was addressed to Lawrence H. Ornstein, executive vice president of Hess Corporation, and Director General Omar Bravo of the Venezuelan national oil company, Petroleos de Venezuela, S.A.

In his letter, the governor noted that despite the best efforts of Hovensa and those of his administration and many members of the Virgin Islands community, the Legislature declined to approve the proposed amendment to the concession agreement. The governor informed the owners of Hovensa that the effect of the Legislature’s vote is that the current interim agreement between the parties will expire Thursday, at which time the provisions of the Concession Agreement that binds the parties will go back into effect.

“The Government expects Hovensa to comply fully with all its obligations under that Concession Agreement,” deJongh wrote.

The governor noted that upon expiration of the interim agreement, “The Government will take all necessary measures to enforce those obligations and protect its rights.”

DeJongh restated the long-held position of the government that a stand-alone storage terminal business operating free from generally applicable import duties is not permitted by the existing concession agreement and is not in the longterm interest of the Virgin Islands.

In anticipation of the expiration date, deJongh instructed Frazer to write to U.S. Customs and Border Protection and asking them to resume collecting duties on non-exempt shipments of petroleum products for storage at Hovensa. The six-percent customs duty will go into effect on Friday, the day after the interim agreement expires.

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