What Part Of “Hovensa Doesn’t Legally Owe Us Anything” Don’t We Understand?

What is the Hovensa refinery required to provide to the Virgin Islands now that it has shut down its operations?

Nothing.

What provisions are there in the Third Extension Agreement that define any compensation Hovensa owes the Virgin Islands if it decides to stop refining oil?

None.

It’s not a lease. It’s not a contract. It’s an agreement. And that agreement does not speak to any of the issues that the Senators insisted on asking repeatedly today in their hearing with refinery officials.  All it really says is that as long as the refinery operates, it will benefit from certain tax and other benefits awarded to it by the Virgin Islands.

So the bottom line is this. Hovensa is going to store the products that other facilities refine.  Some 1,100 full time and between 700-900 contract employees will be out of work.

And, according to Commissioner of Labor Albert Bryan, the unemployment rate on St. Croix will rocket to 18%.

And what can the Virgin Islands government do about it? Not a blessed thing.

There were times when it was embarrassing to listen. It was as if the Senators were being deliberately obtuse about the simple fact that the Agreement does not bind Hovensa to a blessed thing. And those who were there representing the refinery repeated it over and over again.

When asked why Hovensa did not owe the Territory “compensation” now that it has changed its business model, former Hovensa VP and now contractor Alex Moorhead responded to a line of questioning from Sen. Nellie O’Reilly.

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Many more questions beat on this same dead horse. Sen. Terrence Nelson grilled Atty. George Dudley about whether he felt the requirements of the agreement had been met.

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There was also confusion about the relationship between Hovensa, LLC and its parent company, Hess Oil. Hovensa Oil Virgin Islands Corporation (HOVIC) is a wholly owned subsidiary of Hess Oil. It operated in partnership with Pedevesa VI, a subsidiary of the Venezuelan government owned Pedevesa, with a 50/50 split in the ownership of Hovensa.

But despite numerous attempts to define the corporate relationship to the senators, questions continued to be asked that the representatives could not answer. Finally, in response to questions first raised by O’Reilly and continued by Sen. President Ronald Russell, Moorhead tried once again to explain.

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But still, it wasn’t enough. And finally, when the question was raised again by Nelson, Dudley and Brian Lever, Hovensa President and CEO, made their point once again.

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And Sen. Louis Hill, after telling us he wasn’t so good with this “financial” stuff, used his time to restate the obvious.

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When the refinery announced last week that it would be ceasing operations next month, reducing its business to a storage facility, the Territory came to a standstill. Although information has been apparent for some time that this was coming, no contingency plans had been made and now the prospect of 1,100 plus employees out of work, and the impact on their families, and the businesses that depended on the refinery for their livelihood has put our elected officials into a tailspin.

And while we understand while this is a shock to an already staggering economic system, and that the refinery may indeed have a moral obligation to assist in the transition their departure will make, there is no contractural obligation, as the agreement is silent on the manner in which the company must operate.

And we all know what trouble we get into around here when the word “moral” comes into the conversation.

What we have here is one more poorly negotiated contract that neglected any basic protections for the Territory, and gave away the advantage to the Company.

So we recommend that the government get to the table with Hovensa, and see what can be worked out. There is much to discuss. What are the details of the employee severance and outplacement packages the refinery is offering? What are the arrangements being made with the labor unions to meet the contract provisions that exist when a company makes this type of a decision?

How are we going to deal with the spike in unemployment, in a system where Labor is already borrowing to meet the current financial demands of the unemployed, with more government terminations on the horizon in addition to the impact of the Hovensa employees? We heard Bryan talk about retraining – retrain people to do what? Where are the jobs they’re going to be trained for?

Is anyone really looking into what this is going to do to Human Services and the other agencies, like the hospitals, who are going to feel the impact of this situation sooner than later?

And what about the Water and Power Authority (WAPA)? The day of the announcement we heard from WAPA Executive Director Hugo Hodge that contingency plans were in place and that the utility – you know, the one that left St. Thomas without water for a month – was prepared to deal with the crisis.

Well what are those plans? And what can we really expect to happen to the cost of energy now that the sole supplier is pulling the plug?

And by the way – might there be a couple of environmental issues you need to discuss before those who ran the refinery leave the area for good?

These are the issues we need for our elected officials to address, not the futile, non-productive badgering we heard from our Senators today.

We leave you with perhaps the most curious analogy spoken today, offered by Nelson.

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Well that, Sen. Nelson, is why you don’t lie down with a man without a guarantee, and expect him to assume the responsibility without a little encouragement.

Do what the women usually have to do. If you think you can prove “Daddy Hovensa” is responsible, take him to court.

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