The National Administration of Fuel, Alcohol and Portland (Ancap) faces millions in losses due to the scheduled maintenance shutdown at the refinery The Tile, the most important of Uruguay; losses that could be even greater in the midst of a union conflict that prevents the fulfillment of the agenda planned by the state oil company.
The Portland business is a headache for the government, but it also seems that it will be a great pain in the pocket: on Monday, September 4, the date marked in red on the calendars included in all the planning involved, Ancap may not shut down the refinery from La Teja, no matter how much design there is in advance. And with that, the expenses could start to add up. Expenses that do not start from scratch, but from a loss base calculated in 200 million dollars.
The main problem is that it is already known that this original date cannot be met, so the four months of work will be postponed. With the taking of the plant the table by Ancap Federation (Fancap) —in rejection of the opening of the portland and lime business to private parties, a tender that the government has already postponed until September—, it was not possible to advance with the necessary preparations at the refinery, and the more the conflict extends, the more it is reduced the margin in which maintenance operations can still be started.
The costs that accumulate on Ancap
In the state company they already handle, at least, a delay of 15 days, and a cost of $300,000 for each of those two weeks of delays, in concept of loss of profits to the companies that it contracted to carry out the works. The additional difficulty is that there is also no certainty regarding how long the technical stoppage could take: initially it was scheduled to take place in a period of three to four months if working every day in two 12-hour shifts; but if Fancap decides shifts of eight hours, from Monday to Friday, the shutdown could take up to nine months.
This would also impact millions in figures for Ancap and for the government, in various ways. On the one hand, because the refining margin —$20 for each of the 1.2 million barrels that are processed per month—for more than double the time initially proposed—it will also be necessary to see how this situation will affect fuel prices, which are currently subsidized by surpluses from the oil company—; and, on the other, because the company is exposed to having to pay fines for non-compliance with the contracting firms, which number around 16.
These expenses are added to the 200 million base dollars that the stoppage of production will cost and the 77 million dollars necessary for the acquisition of new equipment and the execution of maintenance work. It must also be considered that Ancap will import 600,000 cubic meters of fuel to guarantee the supply in the country, to which is added at least 600,000 dollars for the two weeks of delay that are already contemplated for the start of operations.
On this, one could calculate a loss of refinery margin that part of the 96 million dollarsin the best of cases —with a stop of four months—, and reaches around the 216 million dollars in the worst case scenario, with maintenance extending for nine months. In addition, the impact that this will have on the growth of the country’s economy, as well as on prices for the final consumer at the pumps, cannot be ignored.
Meanwhile, there is also the possibility that the closure of La Teja may even be brought forward. This could happen in the event that Fancap carries out a general stoppage of activities on the day the meeting is called. Parliament to the authorities of Executive power and the Ancap Board of Directors for the Portland issue.
As today there is no collective agreement, there is no regulatory framework on union guards for the continuous processes of that industry and that must be negotiated. If the union does not grant union guards for the normal operation of the refinery, the oil company plans to shut down the industrial complex, empty the refinery and place it in a “safe condition.” The plant would not work again given the proximity to September and, therefore, with the estimated date to start maintenance.
This scenario also supposes economic and financial impacts that accumulate on the millions that are coming red for Ancap in the coming months.
Source: Ambito
