Key date missed in fuel farm farce

Thursday 19 May 2016

It's emerged that the Airport was ready to step in and make sure the Island had enough fuel, if last-minute negotiations over renewing the fuel farm lease with Rubis at La Collette had broken down.

It was called Operation Lyndon, and was a contingency plan put together by the Ports of Jersey, in the middle of a tense period in March this year, when Infrastructure Minister Deputy Eddie Noel was under intense political pressure not to renew the Rubis lease.

Assistant Chief Minister Philip Ozouf was lobbying hard behind the scenes to get the deal pulled over his concerns that it would keep petrol prices artificially high, and was briefing States Members against the renewed deal with Rubis, and against Deputy Noel.

One of Rubis’ competitors – a fuel firm called ATF - was also trying to stop the contract from going through, claiming Rubis was making excess profits, and so they could reduce their charges, bringing down fuel prices for Islanders. Those allegations were strongly denied by Rubis, who pointed to a report by the competition regulator saying the margins were not excessive. 

In the end, the lease was signed and Operation Lyndon was never needed. 

It's existence emerged yesterday afternoon in a Public Accounts Committee (PAC) hearing with the Chief Executive of the Ports of Jersey, Doug Bannister, and the States Director of Estates, Ray Foster. 

Mr Foster said he knew of the existence of the plan, but not the details; Mr Bannister however explained that it was a contingency plan put together by the Ports of Jersey, in the event that negotiations with Rubis broke down. He said it was based on the experience that the Airport had in running a fuel farm, and would have covered 100% of the needs of the Island. 

Rubis' previous lease on the La Collette Fuel Farm came to an end on January 31st this year, but was a renewed lease was registered in the Royal Court for a further ten years on the 11th March; it emerged during the PAC hearing that there is no 'breakpoint' in that fresh lease, just an opportunity to reset the rental against current market levels on 1st February 2021. 

The PAC is reviewing why a decision as to why the decision was left so late, and whether the public would get a better deal if the States ran the equipment on the site, as well as owning the land.  

To put the lease of that land 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.

Yesterday's hearing focussed on why the last date at which Rubis could have been given notice of the States' intention not to renew the lease, 31st July 2014, seems to have been passed with no actual decision being taken, or even a formal discussion about the best way forward. 

Ray Foster confirmed that no report had been produced by his department, no valuation of the equipment on the site which is used to supply fuel was done, and that in this particular case, there was no process in place for making a decision. 

"I am not aware of discussions that may or not have taken place. I can't comment. There were discussion at a political level, but I was given no instructions....in terms of the narrow decision (to renew the lease) there would have needed to be notification from our department...did we issue a formal notice? No we didn't. Were government aware? Yes they were."

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.

PAC Chairman, Deputy Andrew Lewis descibed the new lease as "...a very good job, too late."

He was sitting with Deputy Scott Wickenden, Robert Parker, and Constable Chris Taylor.