Govt, Vetro Energy to start Albpetrol contract negotiation

TIRANA, Oct. 15 – Patton Boggs, the U.S based law firm which the Albanian government hired as a consultant on Albpetrol’s sale, says the winning consortium has to deposit a 20 percent irrevocable guarantee, Euro 170 million, before starting contract negations. In an interview for Voice of America in the local Albanian service, Patton Boggs representative David Farber, says the payment of the cash amount by the winning Vetro Silk Road Equity consortium will not be a problem.
Asked if the consortium already possesses the money, Farber said. “What we have seen up to know makes us understand this will not be a problem. The question here is how they intend to finance this deal, if they have the cash in hand or are going to borrow it. This mainly depends on them”.
The Patton Boggs lawyer says the consortium and its companies Silk Road Equity, Ypo Holding, Huddleston Energy and Home Creek Energy were evaluated as a whole based on the five-year business plan and not based on the technical experience of specific companies.
The U.S based consultant expects the contract negotiations to start as soon as possible but does not have a specific date.
Patton Boggs will charge a 2.5 percent fee or around Euro 22 million for the successful privatization of Albpetrol.
Sokol Dervishaj, Deputy Economy Minister and head of Albpetrol’s evaluation committee says the contract negotiation process will be carried out by the Economy Ministry which will determine reciprocal obligations between the Albanian government and the winning consortium, and penalties for failure to fulfill them. Dervishaj described the Euro 850 million winning bid by Vetro Energy consortium as “extraordinary positive precedent in these times of global economic crisis and liquidity difficulties financial institutions are facing. “The careful use of this amount in the state budget to make public finances healthier, the reduction of public debt levels and investments in priority sectors of the economy to increase people’s welfare would be precious service to the current and future situation of Albanians.
Albanian oil tycoon Rezart Taci is the owner of the majority 51 percent stake in the U.S based Vetro Silk Road Equity consortium which has been announced as the winner of an international tender to buy Albpetrol’s above-ground assets and the right to explore and exploit oil and gas in Albanian territory for 25 years.
Representatives of the consortium said they planned to invest USD 220 million in the next five years when they expect the domestic market to meet all oil demand.
US-based consortium Vetro Silk Road Equity has benn given the okay by government to start negotiating the Albpetrol contract after an evaluation committee rated its bid first with 97.7 points. The winning bidder who has already deposited 10 percent of the bid as financial guarantee will need to place another 20 percent guarantee before starting contract negotiations, which means a total of Euro 255 million which goes to the Albanian government even if talks fail.
In a tender held on Sept.7 U.S-based Vetro Silk Road Equity consortium outbid Canadian, Russian and Chinese potential buyers by offering 850 million euros, more than double the amount the Albanian government had been advised by its U.S based consultant Patton Boggs.
Only six bids were submitted in the Sept. 7 tender from an estimated 19 companies who had expressed interest to take over Albpetrol.