Sun, 21 Jul 2019

Morocco's sole oil refinery battles for survival

News24
24 Jun 2019, 22:11 GMT+10

Three years after it was liquidated for racking up billions of euros worth of debt, Morocco's sole oil refinery and one-time economic flagship is struggling to attract a buyer and survive.

A self-declared "national front" - comprising employees, economists and union leaders - is leading the charge to salvage refining company SAMIR, while a trade court desperately seeks a new owner.

They face a tough battle, including a court deadline of July 18 to seal the refinery's fate.

The firm was liquidated in 2016 after it was unable to honour some 4bn euros ($4.5bn at current prices) in borrowing.

The refinery was set up in 1959 by the Moroccan government and sold in 1997 to the Corral group, a Saudi-Swedish enterprise that holds a majority stake of more than 67 percent.

Work at the refinery, which had a capacity of more than 150 000 barrels a day, had already wound down a year before it was dissolved.

But nearly 800 employees remain on the payroll, albeit on slashed salaries scratched together from company coffers and creditors.

The workers' fate now hangs in the balance, according to staff representative Houcine El Yamani, who has spearheaded efforts by the "national front" to salvage the facility.

"We have made tremendous efforts" to pressure the state into reviving SAMIR since work stopped in 2015 at the plant in Mohammedia, between Rabat and the economic hub Casablanca, El Yamani said.

Such efforts include sit-ins and press conferences.

"We still have hope of finding a solution," he added.

A "national front" report submitted last year to Moroccan authorities denounced the 1997 privatisation of the refinery as a "big sham" and the sale to Corral as "totally lacking in transparency".

"The Corral group did not respect any of the terms of the contract (including pledges to invest funds to develop the refinery), dragging the sole national refinery into an infernal spiral," said the report.

The drop in global oil prices in 2014 affected SAMIR, but the "national front" says bad management was the main factor behind the firm's woes, as debts mounted and attempts to satisfy creditors failed.

'Sold to scrap'

After its liquidation in March 2016 by a Casablanca court, a committee of trustees was set up to find a buyer and safeguard jobs for employees.

"Around 30 international groups showed an interest," but nothing materialised, El Yamani said.

The "national front" also said the government could have been more pro-active.

"In the absence of any government action, the refinery's assets risk being sold to scrap by the kilogram," the coalition of employees, economists and union leaders said in its report.

Minister of Energy and Mines, Aziz Rebbah, dismissed claims that the government has no interest in salvaging the oil refinery.

"We have nothing against it," he told AFP. "If a buyer comes forth we will examine the proposal," he added.

Morocco is totally dependent on oil imports and the winding up of SAMIR's operations has left the North African country more reliant than ever on imports of refined oil products.

A report earlier this year by the International Energy Agency noted that "the closure of the country's only refinery... has clear implications for the security of oil supply" in Morocco.

The court that liquidated SAMIR three years ago has extended a deadline to keep the refinery open a dozen times.

The last extension expires on July 18, when SAMIR will know if it has a buyer or if it will be sold "in bits and pieces", according to Moroccan media reports.

As the battle for SAMIR's survival plays out, another legal fight is underway between the refinery's main shareholder, Saudi-Ethiopian billionaire Mohammed Al Amoudi, and the government.

Al Amoudi - who was arrested in Saudi Arabia in 2017 as part of a vast anti-corruption campaign - is demanding $1.5bn in compensation from Morocco over SAMIR's demise, according to Moroccan news website Media24.

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