Gorst asks for review over what went wrong with fuel farm lease

Wednesday 23 March 2016

A review is being carried out into why the States missed the chance to put the fuel farm out to an open tender two years ago – a move which would have avoided the controversy over the recent renewal of Rubis’ exclusive lease of the site.

To put the lease of the land that the fuel farm sits on out to tender, the tenants would have had to be notified around two years ago – but no notification was given, meaning that there was effectively no option but to renew Rubis’ tenancy, or face a £10 million lawsuit against the States.

The new deal has added protections in place to avoid anti-competitive practices and excess charges, but that hasn’t stopped concern over high margins being charged for the use of the site. The margin charged to other companies using the facility to import and store fuel is said to be 3.4 pence per litre, which is in excess of the average of around 1 pence per litre in similar places.

To give notice to quit, the States would have had to buy the fuel farm infrastructure, and would have had to allocate money to do so in the Budget the year before.

Responsibility for the lease appears to sit somewhere between the Economic Development department (responsible for the ports at the time), the Treasury department and Property Holdings.

During States questions yesterday, Assistant Chief Minister Philip Ozouf – who has responsibility for competition policy – said that the Chief Minister had asked for a review of what had happened.

He added that the new lease added significant protections in terms of transparency and fairness to other operators, including the power to go to the Royal Court to have the lease annulled if there were breaches.