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National Oil Refinery president resigns in dispute over China-backed refinery

June 21, 2013

National Oil Refinery (RECOPE) Executive President Jorge Villalobos resigned Thursday after the Comptroller General’s Office ordered a halt to plans to build a new oil refinery in Moín, on the northern Caribbean coast, citing conflicts of interest in the planning stage of the project.

After an investigation, the Comptroller General’s Office said that Huanqiu Contracting & Engineering Corp., the company that conducted a feasibility study of the project, is a subsidiary of the China National Petroleum Corporation, a partner with RECOPE in the construction of the refinery.

The conflict of interest is a violation of the concession’s contract, the office said.

“I think it’s an unacceptable error,” Environment Minister René Castro said at a press conference on Thursday.

Negotiations for the project, which largely would have been funded by China, started under the administration of President Oscar Arias, from 2006-2010.

 As RECOPE’s executive president, Villalobos directed the initial stages of the project, which was projected to cost $1.3 billion. The Chinese government had promised a $900 million credit, pending completion of the feasibility study.

The Moín refinery project sparked a fierce national debate over whether it would help ease fuel prices over the long term, as Villalobos had argued. Critics said taxpayers would foot the bill for a project that ultimately would drive fuel prices up.

In a fiery debate on TV’s Channel 7, opposition leader and former presidential candidate Ottón Solís blasted Villalobos, accusing him of lying to lawmakers to cover up the relationship between the Chinese companies. Villalobos denied the accusations. He resigned a day later.

“We have asked RECOPE for a Plan B that includes a feasibility study open for international bidding, and other options such as the use of biofuels or maintaining the status quo,” Castro said.

He added that officials would consider biofuels if studies show they can be used for up to 15 years, which is the estimated time the government will need to pay off the cost of the refinery.

RECOPE has 6 months to present a new plan.

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