It was since last year that the Citgo made very clear that it would not be able to comply with the commitments in the agreement due to the sanctions imposed by the Government of the USA. This led to the initiation of the termination negotiations. In May 2019, both parties signed a MoU to set forth the termination negotiations. Citgo officials notified the Government that they had no investment money nor money to pay rent or the employees. The Prime Minister emphasized that they demanded Citgo to pay all the employees’ service years, including the owed taxes.
The termination negotiations concluded with these final conditions:
Citgo will pay $16 million in due taxes (of a total of Afl 28,800,000.-)
The Government waives all environmental claims. According to the agreement, Citgo is responsible only for contamination caused during their operations, which is very limited. In addition are not be able to pay these fees anyway.
The Government waived the claim to dismantle the refinery. The commitment of the Citgo should the Government decide to have it dismantled, is also impossible to claim since Citgo is not in a position to pay. There is a guarantee of $150 million by the PDV Holding but they are also out of cash. PDV Holding indeed has assets but then we will have to stand in line behind larger claimers like ConocoPhillips, who have mega claims. Only once these mega claims are settled they can dismantle the refinery, before Aruba can proceed.
The RDA waives all unpaid rents since 01/03/2019
The Prime Minister stated that this was an expensive deal for Aruba to pay. That is why it took 10 months to negotiate and now it is time to move out of the deadlock. The need to terminate the agreement and to start exploring new opportunities will exceed this expensive deal by much more.
The Prime Minister said however that this termination agreement required the Parliament’s approval first. On March 27, 2020, the Citgo law was sent to Parliament. The approval of the authorization ordinance will grant the Government the authority to terminate the agreement with the Citgo.
According to the Prime Minister: “The best thing to happen to Aruba is for this agreement to be terminated. The Government needs money and negotiations took 10 months. Now the parliament has the last word; if the Parliament approves this termination agreement with the Citgo, it allows the Government to find new developers for San Nicolas”