BY DASHAN HENDRICKS Business content manager hendricksd@jamaicaobserver.com
TWO months after becoming the first Antiguan and Barbudan company to list on the Eastern Caribbean Securities Exchange, the West Indies Oil Company (WIOC) has outlined an ambitious plan to become a diversified energy company with renewable energy at the centre of its strategic business plan. While the company is based in Antigua and Barbuda, it also has operations in the nearby Commonwealth of Dominica.
Gregory Georges, chief executive officer of the WIOC, told the Jamaica Observer that the thrust is to diversify its revenue base away from petroleum products in the immediate future was part of a business plan entitled ‘Energising Transformative Growth’.
“One of the key plans for the future is to invest in renewable energy. Obviously, fossil fuel will remain a key part [of the continuing operations], but we are certainly diversifying into renewable energy. We are now looking at the installation of a five-mega-watt solar plant, as we look to sort of reduce our carbon footprint and ensure we have a sustainable future for WIOC, Antigua and the region,” Georges explained.
He declined to say what level of financing will be poured into that project, but research shows it costs between US$800,000 to $1 million per mega watt to set up a solar plant which would put that project at between US$4 million and US$5 million.
“Once we can develop solar opportunities in Antigua, we intend to expand within the region, starting off with Dominica next door, where we have already a business, and then, within the other OECS islands, and then in the wider Caribbean,” he continued.
Georges said his company is now in the process of negotiating a power purchasing agreement with the utility, “so I won’t be at liberty yet to give definitive timelines [on when the project will be implemented], but we are working to get it off fairly quickly.”
But he added: “We have a department of environment in Antigua, and we are partnering with them in terms of becoming an asset manager for some of the charging stations for electric vehicles.” He said he expects that deal to be sorted “within a matter of months”.
The WIOC was incorporated in 1961 but didn’t start operations until 1966 as a refinery before abandoning that quest in 1973 in favour of storage and distribution of petroleum products, listed on the Eastern Caribbean Securities Exchange on July 7, 2022, after raising EC$18 million in an initial public offering (IPO) which closed successfully in May 2021. It was the 14th company to list on the Eastern Caribbean Securities Exchange and the first energy company to do so. The IPO was facilitated by the Government of Antigua and Barbuda selling 10 per cent of its 51 per cent holding at the time. The funds were paid directly to the Government “to fund various capital projects”. WIOC did not receive any of the proceeds.
“When the Government bought WIOC in 2015, under the leadership of Prime Minister Gaston Browne, his vision, his mandate, was for us to grow the business and then list it on the stock exchange.”
“We had to diversify the revenue base because the margins were quite slim on the marketing of petroleum products…The first thing we did was invest in storage tanks. So our capacity from 2015 has gone up over three times. We had 500,000 barrels of storage in 2015, but fast forward to 2022, we’ve got 1.7 million barrels of storage,” Georges told the Caribbean Business Report.
“So what our business model does, is that we lease out most of that storage to a third party, because Antigua being as small as it is, we only need about 300,000 barrels of petroleum products to satisfy our market demands. So the difference of about 1.4 million barrels are leased out to a third party which helps us to extract higher margins and higher returns for the business.”
With more storage, Georges said the company was able to enter the bunkering business, supplying fuel to cruise and container ships in the eastern Caribbean.
While the big plan is to enter the renewables market, Georges said the company, which operates petrol stations in Antigua and Barbuda and Dominica, is preparing to expand that service.
“We have a network of 16 service stations in Antigua and Barbuda and eight in Dominica. So right now we’re sitting, looking at the whole corporate rebranding and service station upgrade. A lot of the service stations don’t have the convenience stores or have stores that need to be upgraded, so we’re looking at that and adding some additional amenities to some of these service stations.”
Georges also said the company is looking at opening new service stations and an additional berth to improve the efficiency of moving petroleum products into and outside of Antigua. Despite expanding storage tank capacity, he also said he is looking at further expansion in that area as well. He adds: “We recently formed a joint operation with Rubis at the airport. In our 50 years of business, we have not been a player at the airport in jet fuel, and now we are a player there.” The airport mentioned is the VC Bird International Airport in Antigua from which 15 airlines operate flights to 22 destinations.
But the energy market is not the only area in which Georges is seeking to diversify revenues for WIOC.
“We are in the process of discussing with a strategic partner [about] putting a business park on some land that’s adjacent to the company on what is considered ‘the golden mile’ in Antigua.” That is an area just outside the capital St John’s where a significant amount of development is taking place, Georges explained. He said the plan is to build a 120,000-square-foot business park that will offer the latest in retail space to prospective tenants.
He said all the projects have been costed but declined to get into details about the funding or the timeline citing negotiations are currently taking place.
And while the entity is newly listed on the Eastern Caribbean Securities Exchange, Georges expressed a desire of seeing it being listed on the Jamaica Stock Exchange as well.
In 2021, the WIOC realised sales amounting to EC$332 million (US$123 million) as it continues to recover from a COVID-19-induced culling of its sales in 2020. The projection is that this year, the company’s sales will exceed EC$344 million (US$127 million) with net income of EC$24 million (US$8.8 million) up from EC$17 million (US$6.2 million) in 2021.
In July, the company paid out its first dividend an EC$2.03 (US$0.75) per share payout amounting to a total EC$11.928 million (US$4.4 million) to shareholders of record as of June 27, 2022.
“This is just a phenomenal story. The Government was able to take ownership of this business seven years ago. And whereas profits in the past were repatriated to a foreign owner, these profits today remain in the country and the Government is a significant beneficiary of the returns.”
“We intend to be, as I say, an energy company, not operating only within our shores, but certainly in the short to medium term regionally, and I have no doubt. The long-term plan is to grow internationally and become a conglomerate,” he concluded.