The Irish National Petroleum Corporation (INPC), which operates the Whitegate Oil Refinery and the Whiddy Oil Terminal in Cork, is to be sold to US oil giant Tosco Corporation for $100 million (#116 million). The 235 staff of INPC are to get the equivalent of £30,000 (#38,000) each under the terms of the deal. The Minister for Public Enterprise, Ms O'Rourke, updated her Cabinet colleagues at their special meeting in Kerry yesterday on the talks with Tosco. A sale agreement was signed on Saturday between representatives from Tosco, which is itself currently being bought out by Phillips Petroleum, and INPC chairman Mr Ed O'Connell.
Tosco, which has frequently clashed with environmental groups in the US, is guaranteeing the jobs and conditions of INPC employees for 15 years.
The workers will be offered shares in Phillips Petroleum as part of the deal. An employee share ownership trust (ESOT) similar to the one in operation at Eircom will be established. It will receive £8 million from the Government that will be used to buy Phillips shares on behalf of INPC staff. The shares will then be passed on to the employees over three years in a tax-efficient manner.
The ESOT represents the equivalent of a 5 to 8 per cent per cent stake in INPC depending on how the company is valued, according to SIPTU sources. Union officials had originally sought a 15 per cent holding in the Irish oil company but said they were pleased with the outcome of the negotiations. Cork-based SIPTU representative Mr Martin Leahy pointed out that workers had not yet signed up for the deal. The State's 90-day oil reserve, kept to see it through an oil crisis, is not included in the sale though much of it will be stored at Whitegate and Whiddy.
Welcoming the deal, Ms O'Rourke said Tosco was bullish about the Irish economy. "They are guaranteeing the jobs for 15 years, but they have made it clear that that is a conservative estimate."
The Government has agreed to pay the outstanding debt left by the £60 million refurbishment of Whitegate in 1999, which has up to now been financed by a £14.5 million annual levy on petrol prices.
The ending of the mandatory levy should cut 0.4p off the price of a litre of petrol later this year. "It isn't a huge amount, but we would like to think that it will have an impact on inflationary pressures," said the Tanaiste, Ms Harney.
It was unclear last night how much debt still remained on INPC's books but it could be as much as £40 million. The Government will also cover any bills caused by failures in INPC's existing environmental standards.
Tosco has annual revenues of $25 billion and refines 1.2 million barrels of oil throughout the US. However, this is the first time the company has invested overseas. Later this year, it will become a wholly-owned subsidiary of Phillips Petroleum following a surprise $7 billion all-share deal in February.
Last night, Fine Gael TD Mr Jim Higgins called for a special meeting of the Joint Committee on Public Enterprise to quiz Ms O'Rourke and senior officials on the deal. "We have to be satisfied that the deal is right for the economy, the consumer and the workers. Fine Gael is also concerned that, while Tosco is paying $100 million, a substantial portion of this may be wiped out because the State has agreed to take on the outstanding debt in the event of INPC being unable to discharge its liabilities.
"We must know the exact amount of these outstanding liabilities. Again the State is guaranteeing that it will cover certain potential environmental liabilities and the Minister for Public Enterprise must spell out the exact details of what is involved," said Mr Higgins.
