MONROVIA – SRIMEX Oil & Gas Company (the “Company” or “SRIMEX”) issues this statement in response to recent statements made by Eco Fuel SA (“Eco Fuel) in the media. Eco Fuel has made claims that SRIMEX owes it money and is trying to dupe it out of a partnership arrangement, that SRIMEX is illegally operating a terminal, that SRIMEX personnel are unqualified to operate said terminal, and that SRIMEX’s operation of the terminal poses a safety risk to lives and property. SRIMEX categorically denies all allegations made by Eco Fuel and wishes to set the record straight about the misinformation being disseminated by Eco Fuel to the media and provide clarity regarding the its business relationship and ongoing legal case with Eco Fuel.
The SRIMEX/Eco Fuel business relationship began as a petroleum trade relationship in 2014. Between 2014 – 2017 Eco Fuel supplied petroleum products to SRIMEX. SRIMEX paid Eco Fuel a certain amount for the product supplied, however the costs of the products have been overstated by Eco Fuel. SRIMEX requested an audit of the accounts, a request that Eco Fuel refused. At no time did SRIMEX dispute indebtedness to Eco Fuel, however SRIMEX disputes the amount that Eco Fuel is demanding.
In 2015, after several successful petroleum trade transactions, SRIMEX and Eco Fuel agreed to undertake a joint venture project for the construction of a storage terminal. Both entities would have 50/50 partnership in a company to be created and named SRIMEX Eco Fuel FZE (FZE) and registered and incorporated as a holding company in the United Arab Emirates (UAE). FZE would have three (3) subsidiaries registered in Liberia as follows: (1) SRIMEX Eco Fuel FZE, Inc. (Terminal Holding), (2) Liberia Oil Company – LOC (Petroleum Trading) and (3) Liberia Petroleum Storage Company – LPSC (Petroleum Storage).
Registration of FZE in the UAE would be handled by Eco Fuel. Registration of the 3 entities in Liberia would be handled by SRIMEX. SRIMEX and Eco Fuel would both jointly own, manage, operate FZE and its subsidiaries and share in revenue generated by FZE on a 50/50 basis. SRIMEX would provide, as its equity for 50% ownership in the company, its existing land lease with NPA, its existing franchise with LPRC through the Concession Agreement, and payment of all local costs associated with taxes, government obligations, local accommodations, and transportation, registration, etc. Eco Fuel would provide, as its equity for 50% ownership in the company, costs associated with construction of the terminal. This verbal agreement would be consummated in a Joint Venture Partnership Agreement (“JV Agreement”). Upon finalization of the JV Agreement and registration of the company as described above, SRIMEX would transfer its rights under the NPA and LPRC Agreements to the FZE.
Construction of the terminal began in 2015. In early 2015, Eco Fuel informed SRIMEX that the company had been registered in the United Arab Emirates (UAE) as a 50/50 partnership but that share certificates could not be provided because UAE required all partners to be present at the same time to sign the registration documents and due to conflict in travel schedules of the partners, this could not be accomplished. Subsequently Eco Fuel told SRIMEX that one of the partners was unable to travel due to poor health and this further delayed the process. SRIMEX, acting in good faith, and despite the fact that FZE’s registration and share certificates process had not been regularized, petitioned the National Port Authority (NPA) to transfer its leasehold right to FZE through a Substitution and Novation Agreement. As the Substitution and Novation Agreement presented to NPA referenced the JV Agreement, which had also not been completed at the time, NPA informed SRIMEX that it could not honor the request in the absence of the signed JV Agreement. However, due to the urgent need to have the Substitution and Novation Agreement ,as it was necessary for Eco Fuel to acquire financing for construction, NPA agreed to conditionally grant SRIMEX’s pending the submission of the JV Agreement within 90 days or the Substitution and Novation Agreement would automatically cancel. SRIMEX, again acting in good faith, and with the assurance given by Eco Fuel that FZE had been registered as a 50/50 partnership, authorized its lawyers to register the three entities in Liberia in April 2015 as being owned 100% by FZE, and provided Ecofuel with registration certificates.
In December 2017, SRIMEX brought on a new CEO. As part of the CEO’s plan for organizational realignment, she undertook a review of all SRIMEX’s existing relationships and obligations and reached out to business associates for individual discussions. This exercise included discussions with Eco Fuel. In December 2017, with the understanding that SRIMEX and Eco Fuel would finalize the JV Agreement, SRIMEX & Ecofuel signed a Supplemental Debt Acknowledgement and Reschedule Agreement which acknowledged SRIMEX indebtedness to Ecofuel, subject to reconciliation, and stipulated a reimbursement scheme deriving from SRIMEX’s portion of sales proceeds and throughput fees at LPSC. Also, with the understanding that LOC was 100% owned by FZE, which was 50/50 owned by both entities, the parties agreed that SRIMEX would transfer its importation rights to LOC. Based on this, SRIMEX petitioned the Liberia Petroleum Refining Company (LPRC) to transfer importation rights however, due to pending Government of Liberia (GoL) management changes, LPRC did not act on the request. SRIMEX informed Ecofuel that it was awaiting the naming of the new LPRC management.
In January 2018, SRIMEX and Eco Fuel held a meeting in Monrovia and during that meeting, Mr. Nick Brady, FZE Operations Director, informed the SRIMEX CEO that FZE was registered in the UAE as 100% owned by Eco Fuel, without listing SRIMEX as owners. The explanation given was that UAE regulations prohibited persons with political affiliation from having shares in a UAE registered company. Firstly, Eco Fuel has always been aware of Mr. Musa Bility’s, SRIMEX’s owner, political affiliation in Liberia. Secondly, this action was in direct contradiction of the previous explanations given to SRIMEX by Eco Fuel regarding FZE’s registration. Lastly, this was done without the knowledge or consent of SRIMEX who were supposed to be 50% partners. This action by Eco Fuel effectively negated SRIMEX’s rights as owners in FZE. The CEO informed Ecofuel that barring the proper registration of FZE as a partnership naming SRIMEX as a 50% partner and the setting up of a joint governance, management and operation structure, she could not proceed with discussions. Ecofuel promised to correct the situation around the partnership and provide the relevant documents.
In February 2018, based on Eco Fuel’s promise, SRIMEX submitted a second request to the new management of LPRC to transfer importation rights to LOC. LPRC did not approve the request on grounds that the contract between LPRC and SRIMEX did not allow third party transfer of rights and SRIMEX did not show any evidence of a relationship between itself and LOC. SRIMEX informed Eco Fuel of this and reiterated the importance of regularizing the legal ownership status of FZE. SRIMEX later learned that LOC applied for a license on its own without the knowledge or approval of SRIMEX.
In April 2018, LPRC again informed SRIMEX of the need to provide evidence of the partnership between the two entities within 60 days, absent of which SRIMEX could be in violation of its contract with LPRC. SRIMEX informed Eco Fuel and reiterated the urgent necessity for resolution.
Between April – June 2018 a series of discussions took place between SRIMEX and Eco Fuel regarding the matters of the debt and legal status of the partnership and terminal. In June 2018,SRIMEX Chairman, Mr. Musa Bility, met with Eco Fuel in London for in person discussions. These discussions continued between June – July 2018 at which time Ecofuel proposed that SRIMEX’s partnership in FZE be subject to repayment of its debt. SRIMEX maintained that its partnership status in FZE was in no way contingent upon repayment of the debt and reiterated its position that its share of proceeds from the terminal operations, which should have been paid to SRIMEX, be used towards liquidating the debt. Both entities agreed to develop draft partnership agreements for review and finalization. SRIMEX retained a lawyer locally to draft a partnership agreement as agreed.
In August 2018, contrary to agreements to finalize the JV Agreement and audit all accounts, Eco Fuel again requested payment of the debt from SRIMEX. SRIMEX again reiterated to Eco Fuel that this needed to be settled holistically as part of the larger discussions of monies owed to Eco Fuel from petroleum sales and monies owed to SRIMEX from the terminal operations. SRIMEX subsequently received a demand letter from Eco Fuel’s lawyers for full payment of debt owed.
SRIMEX’s position on the relationship between Eco Fuel and itself is, and has always been, very simple:
- Conclude the Joint Venture Partnership Agreement and proper FZE registration which would establish SRIMEX’s ownership in FZE, regularize Eco Fuel’s ownership in the terminal, allow SRIMEX to transfer rights as agreed, establish a joint Board of Directors to steer the company, and establish a joint management team to handle operations.
- Undertake an audit to review all financial transactions, including petroleum sales, revenue generated from the terminal, and the amount of the investment made by both entities in the terminal construction in order to understand and reconcile all accounts related to the SRIMEX/Eco Fuel relationship. SRIMEX has never objected to repayment of any monies owed to Eco Fuel and to accepting a lien on any amounts owed to SRIMEX from past and future product sales and throughput, however, that amount must be satisfactory determined through an audit by an internationally recognized audit firm and we will not accept the repayment of debt as a condition for partnership.
To date, Ecofuel has refused to sign the JV Agreement. Eco Fuel has refused to include SRIMEX as partners on the registration documents of FZE and has made several illegal and failed attempts to establish itself as sole owners of the terminal. Eco Fuel’s failure to provide required evidence of the partnership between SRIMEX and itself has directly impacted SRIMEX’s ability to transfer its importation, license and land lease rights and effectively rendered the Substitution & Novation Agreement null and void. Eco Fuel has refused to submit to an audit of the amount spent to construct the terminal.
Independent terminal construction expert assessment has determined that the cost to construct a 16,000 metric ton terminal of similar standard, which is the total capacity of the terminal, is no more than US$10 Million. Ecofuel has refused to submit to an audit of revenue generated from the terminal since June 2017. SRIMEX authorized Eco Fuel to collect and retain all revenue generated from the operation and apply its portion towards any debt owed. Our records show that Eco Fuel has generated close to US$13 Million from terminal operations and, of that amount, SRIMEX has received US$150,000. Eco Fuel has refused to turn over the funds collected and assigned as Road Fund. We have repeatedly informed Eco Fuel that the Government of Liberia has determined that US$0.25 of the US$0.50 collected as storage during the period July 2017 to June 2018 has been allocated as Road Fund and has demanded that SRIMEX refund this amount for all product imported into the terminal. Ecofuel refused, up until recently as a result the Civil Court order, to submit to an audit of petroleum sales transactions.
As a result, SRIMEX and Eco Fuel are currently involved in two ongoing lawsuits. One lawsuit is to ascertain actual amounts owed to each entity by the other and the other is to establish legal ownership of a terminal. Eco Fuel filed a petition of debt in Commercial Court demanding US$22M. SRIMEX responded disputing Eco Fuel’s $22M claim and filed a counter-claim of US$8M. The Commercial Court has ordered an audit of the accounts to determine actual amounts owed, the very action that
SRIMEX tried to get Eco Fuel to agree to outside of court. SRIMEX filed petitions for Injunction and Declaratory Judgment in Civil Court based on Eco Fuel’s repeated refusal to regularize the agreed upon terms of the partnership. The Civil Court, based on evidence submitted by both parties, granted the Injunction, enjoining Eco Fuel from entering or operating the terminal until the matter of Declaratory Judgment is fully decided by the Court. SRIMEX and Eco Fuel have always jointly operated the terminal, contrary to their assertions. Neither Eco Fuel nor LPSC has any license to operate the terminal. The license to operate the terminal is, and has always been, solely in the name of SRIMEX. All product imported into the terminal was done so under SRIMEX import license. Eco Fuel, as a foreign entity not registered in Liberia, does not have any legal right to operate in Liberia. LPSC, a company that was set up as a division of FZE and registered in Liberia by SRIMEX, is a company that should have been jointly owned by SRIMEX and Eco Fuel.
Eco Fuel’s claims that SRIMEX personnel operating the terminal are not qualified and present safety concerns is incorrect. All personnel are fully ISPS trained and certified, which is the requirement under Liberian regulations. Copies of ISPS certificates have been presented to the Court for all personnel. All relevant GoL authorities have visited and inspected the ongoing operations by SRIMEX and there are no safety concerns.
Wadei Powell, CEO of SRIMEX stated: “The mistruths promulgated by Eco Fuel are plentiful and intentional. However, I would caution the media to not allow Eco Fuel to use them as its propaganda tool. The truths are simple. Eco Fuel repeatedly refused to subject itself to a financial audit of transactions with SRIMEX. It refused to sign the Joint Venture Agreement to establish ownership. It illegally registered the company as 100% owned by itself when the company should have been jointly owned as a 50/50 partnership between itself and SRIMEX. These are the reasons we are in court today. As Eco Fuel has been unable to substantiate and defend its claims through the legal channels, it has chosen instead to embark on a smear campaign. I ask all media practitioners to get both sides of the story before disseminating information about this matter. SRIMEX consciously decided not to engage in any public trial of this case but, rather, to let the matter take its course through the Courts and the facts. However, this latest attempt by Eco Fuel to use the media to spread misinformation has the propensity to cause irreparable damage to the Company’s reputation and we can no longer remain silent on the misinformation and outright lies being disseminated.”
Musa Bility, Chairman of SRIMEX Stated: “We have no intention of extorting Eco Fuel, as is being alleged, nor will we allow ourselves to be extorted by Eco Fuel. We had an arrangement that Eco Fuel has refused to honor. The reasons why it would evade signing the Joint Venture Agreement, but rather want us to continue operating as a company 100% owned by Eco Fuel, are clear. This illegal behavior on Eco Fuel’s part is a blatant attempt to intimidate and extort SRIMEX. As to the matter of debt, we have stipulated that we will accept the outcome of an audit conducted by an internationally accredited firm. We are not running from this but rather have been asking Eco Fuel for this for almost a year. I want to be clear in saying that SRIMEX is within all its legal and ethical rights in all actions that we are taking. We have always been, and we remain, open to settling these matters in a fair and equitable manner. However, we will not be intimidated by any attempt by Eco Fuel.”
Welcome Questions from all credible news outlets, and the general public, about this matter. For further information, please contact:
SRIMEX Oil & Gas Company
Chief Executive Officer
Musa Hassan Bility
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