Haiti is running low on fuel again as sweet deal with fuel supplier turns sour

·7 min read

Another sweet deal has gone sour in Haiti.

This time it involves a price dispute between the Haitian government and its latest supplier of fuel, Preble-Rish, the politically connected firm that was linked last year to a group of armed American mercenaries who were arrested in Haiti and then later flown to the United States with the help of the State Department.

Now after doing millions of dollars in business with the Haitian government, the company is lashing out amid a contract dispute over price involving recent fuel deliveries. It is not only pushing back on recent comments made by President Jovenel Moïse during a media blitz this week on Haitian Radio in which he was asked about the soured relations, but the firm says it’s currently in legal proceedings in the U.S. against the government and threatens to sue anyone the government taps to replace its fuel-supplying obligations.

The latest standoff between Moïse’s government and another private investor in Haiti comes while Haitians face not just a scarcity of U.S. dollars on the market but another round of fuel shortages and power blackouts.

At most, say industry insiders, there are just four days of diesel left in the country, which heavily relies on the fuel to keep generators running in hospitals, businesses and private homes.

The Bureau of Monetization of Development Aid Programs, or BMPAD, has promised that a ship carrying diesel will soon arrive.

But in a statement issued Friday and provided to the Miami Herald, Preble-Rish Haiti S.A. said it “intends to pursue legal action against any other fuel supplier who attempts to interfere” with its contract rights to provide and receive payment for six monthly shipments.

The company said it normally doesn’t discuss its government contracts. But it felt compelled to do so, it said, after Moïse appeared Monday on Radio Metropole’s Le Point program. The televised interview was part of a media blitz during which Moïse appeared on several Port-au-Prince radio stations promoting his push for a new constitution and defending his leadership and what he described as his reform agenda.

During the Metropole interview Moïse was specifically asked about Preble-Rish, whose deal with the government came under public scrutiny in July during a new round of fuel shortages in Haiti that forced companies to ration reserves and others to temporarily cease operations amid the global coronavirus pandemic.

Last month, the fight escalated. The government’s chief prosecutor went aboard a ship carrying approximately 165,000 barrels of gasoline that was being supplied by Preble-Rish. Preble-Rish had intended to hold off on unloading the fuel until BMPAD paid.

“Instead, BMPAD illegally seized the vessel and confiscated the cargo without paying for it,” the company said in its statement. “Why did it do that? BMPAD stated that it needed the fuel to prevent a fuel crisis. There is no doubt that it is always easier to steal something than pay for it.”

Moïse acknowledged that the government and Preble-Rish are fighting. He blamed the fight on “an error.”

Though Moïse did not provide any details, competitors said the contention has to do with a price discrepancy and the lack of clarity over Preble-Rish’s price. Preble-Rish has claimed that its offer was in dollars per barrel and not cents per gallon, as BMPAD is contending.

Both are listed in the agreement, and BMPAD has contended that the contract, which has it paying less in cents per gallon for diesel, gasoline and kerosene, has priority over the part that lists amounts in dollars per barrel.

Either way, competitors contend that Preble-Rish’s winning bid was low-ball and the price is just one of several points of contention they had with its deal with the government.

Moïse, who has been lashing out at petroleum companies and the profits they make, said “BMPAD asked the company to sign an addendum to permit the problem to be resolved.”

The company refused and the dispute is now in arbitration, he said, defending last month’s fuel seizure.

“I know there was gasoline that entered,” he added. “They asked Preble-Rish to unload it. Preble-Rish said the government owed it. The government unloaded the gasoline. I believe right now the file is in the courts. That’s what is democracy.

“Right now we are working so that there can be another bid because ... the contract with Preble-Rish will end the 13th” of November, the president added.

The Herald was not able to find any record of a filing in New York, which is where Preble-Rish said the dispute is being heard as per its contract.

It also disputes the president’s claim that its fuel contract ended Friday. The company said while Moïse’s statement that there’s currently a dispute between Preble-Rish and BMPAD over the contract price of fuel is correct, “his description of the dispute is completely incorrect.”

“PRH was awarded the fuel contracts on the basis of the terms of its bid. The bid provided that PRH would give BMPAD 120 day credit terms at a stated price in exchange for an international letter of credit. The contracts are very clear on BMPAD’s obligation to provide the international letter of credit,” Preble-Rish said. “BMPAD defaulted on this obligation immediately and has never provided the required letter of credit. Notwithstanding BMPAD’s default, to avoid embarrassing the Moise-Jouthe administration, PRH agreed to provide the required quantities of fuel without the letter of credit, but only if BMPAD paid for each shipment in advance.”

After paying four consecutive months, BMPAD stopped paying, Preble-Rish said.

This is not the first time the Haitian government has found itself in a public dispute over unpaid fuel bills.

In March 2019, after almost monthly fuel crises, the government wracked up more than $37 million in overdue payments to Houston-based Novum Energy. Gas stations were forced to ration fuel while 150,000 barrels of gasoline sat in a ship off the coast of Port-au-Prince in international waters.

By the time Novum was replaced as a supplier, the government owed it more than $50 million in arrears.

Earlier this summer, after Haiti’s government introduced changes that caused its domestic currency to rapidly appreciate against the U.S. dollar while adversely affecting the purchasing power of U.S. dollar remittances, the minister of finance publicly announced that the government would pay some of its bills.

Chris Scott, the chief financial officer for Novum, told the Herald: “We have received some funds from BMPAD, but there is still a substantial amount outstanding. We are hopeful the funds continue to come in.”

Neither Moïse during his Metropole interview nor Preble-Rish is saying how much is owed. But in its press release the company said after the “illegal seizure,” it still proceeded to deliver 190,000 barrels of diesel, making it clear to BMPAD that it is willing to deliver the diesel shipment if BMPAD makes payment as required by the contracts.

The ship, however, waited for 16 days in international waters. “BMPAD has never responded or paid,” Preble-Rish said.

“BMPAD has a long history of defaults. BMPAD failed to pay a previous fuel supplier and has been in arbitration with them for several years. In 2018, PRH entered into a contract with BMPAD to provide 36 monthly shipments of asphalt so that the Government of Haiti could make much needed improvements to the Haitian transportation infrastructure. Yet, in the last 24 months, BMPAD has only accepted two shipments of asphalt, in violation of the terms of that contract. In fact, a ship carrying asphalt waited for over 80 days in Port-au-Prince Harbor for BMPAD to unload the ship,” Preble-Rish said.

The asphalt and heavy fuel deliveries, say several sources, were no-bid contracts given to the company. Asked how it managed to get no-bid contracts in Haiti, Preble-Rish did not respond.

The company in its release insisted that it “does not pay bribes,” and said there are many people in Haiti who would like to see it removed as a fuel supplier.

Even before the current dispute, Preble-Rish’s contract created a lot of questions both outside and inside Haiti after it beat out more established companies, because it had no known experience in the petroleum import business. Fuel competitors wondered how Preble-Rish could expect to make a profit from the contract given its low price offering to exclusively provide gasoline, diesel and kerosene.

Also troubling was BMPAD’s resumption of control of fuel imports, a move that the International Monetary Fund had advised against. But Moïse on Monday defended the measure, stating that it was the recommendation of a commission to remove the middleman and have the government request fuel on behalf of companies in the country.