Conflict at JT Grup Oil: allegations of non-payment and false information related to the construction of the fuel terminal

The parties involved in the construction of the fuel terminal of the fuel distributor JT Grup Oil, a company listed on the Bucharest Stock Exchange (BVB), are in conflict, with accusations of spreading false information related to the stage of the works, the payments made or the obligations of the parties under the contract.

On the one hand, the contractor of the works, the company E-Dynamic Structures, accuses the beneficiary JT Grup Oil of fraudulent maneuvers, for example, that it refuses to pay for a large part of the works executed to date and uses various methods, including the interposition of other companies in the contract, in order not to honor its obligations. On the other hand, JT claims that according to the information provided to it by the general contractor of the project, E-Dynamic Structures did not fit into the execution schedule of the works, so that it had to be replaced with another team to ensure the continuity of the terminal construction. In addition, it claims to have made all payments to those to whom it actually has contractual obligations.

In this context, E-Dynamic requested, this week, the insolvency of JT Grup Oil, according to information available on the court portal.

How did it get here?

• JT turns to the capital market to co-finance its main project - the fuel terminal in Constanţa

JT Grup Oil debuted on the AeRO Market of the Bucharest Stock Exchange (BVB) on August 6 of this year, following an Initial Public Offering through which the company operating in the fuel distribution market attracted about 20 million lei from investors, a third of what it had proposed at the launch of the operation.

According to the offering prospectus prepared by Interdealer Capital Invest, the money raised from investors was to co-finance the growth of the company's business, including the completion of the fuel terminal within JT Terminal Constanţa SRL, a company wholly owned by JT Grup Oil. The terminal, which will have eight tanks with a total storage capacity of 31,500 tons, is the essential pillar in the company's development strategy. The investment is worth 25 million euros, financed from three sources: equity, a credit line from Unicredit Bank worth nine million euros and a large infrastructure grant of 11.5 million euros, according to a press release from JT Grup Oil in May.

"The issuer estimates the terminal to be operational by December 2024 at the latest," the listing prospectus stated.

• The company announces that five of the terminal's eight tanks are fully completed, and two are 90% complete

At the beginning of October, the fuel distributor announced that, in the first half of this year, it made investments of about 19 million lei for the development and modernization of JT Terminal, which will be fully operational at the beginning of next year, according to a company statement taken over by Ziarul Bursa.

"Currently, the works at the terminal are progressing considerably, with two of the 1,000-ton tanks, as well as three 5,000-ton tanks already completed. In addition, the company has completed 90% of the works for tanks four and five, with a capacity of 5,000 tons each. The sixth 5,000-ton tank is 10% complete," the statement and the BVB's semi-annual report state.

• The contractor of the terminal works accuses JT Oil of disseminating false information regarding the level of completion of the tanks

E-Dynamic Structures claims that the information presented by JT Grup Oil in the press release and in the report from BVB is not in accordance with the reality on the ground. Moreover, the works on the terminal have been stopped since September 10, due to non-payment.

According to E-Dynamic, the contract for the construction of the terminal includes four companies: JT Oil Grup as beneficiary, Klaus Industrial - contractor, Partener Construct General - contractor and E-Dynamic Structures - subcontractor.

According to a September 24 letter sent by E-Dynamic's lawyer to Partener Construct General and JT Oil Grup, as of mid-September, the status of the eight reservoirs was as follows: Basin B6 - 97.8% complete, Basin B8 - 95.6%, Basin B3 - 95.8%, Basin B7 - 94.2%, Basin B5 - 77.7%, Basin B2 - 31.3%, Basin B1 - 10.9%, Basin B4 - 0%. The information is taken from a minutes concluded by E-Dynamic together with representatives of the other three companies involved in the project, following a meeting on the site on September 15.

Among the accusations launched by E-Dynamic against JT Grup Oil are:

- failure to fulfill essential contractual obligations regarding the delivery/making available of the materials and/or technical documentation necessary for the completion and reception of tanks B3, B6, B7 and B8 (those completed in a proportion of over 90%);

- refusal to pay an outstanding amount of almost 1.76 million lei, plus failure to fulfill the obligation regarding the delivery of ten blank promissory notes, which should have guaranteed the payment for the execution of the executed works;

- a fraudulent conduct in relation to E-Dynamic through: (i) repeated, deliberate delays regarding the provision of the materials necessary for the installation of the tanks, with the aim of creating an apparent pretext for non-payment for the executed works; (ii) fictitiously interposing the company Partener Construct General in the relations between E-Dynamic and JT Grup Oil in order to thwart the chances of recovering the price of the works performed; (iii) forcing E-Dynamic to continue the works under the threat of non-payment of the outstanding amounts.

• E-Dynamic requests the amount of 8.45 million lei from JT Oil, representing the value of the work performed, compensation, arrears and penalties

The terminal contractor had requested the fulfillment of some of the above-mentioned contractual obligations by an address dated September 10. Otherwise, invoking the provisions of art. 1.556 of the Civil Code, E-Dynamic considered that Partener Construct General and, implicitly, JT Grup Oil were unilaterally terminating the contract. With the termination, a clause was activated according to which: "The contractor will pay the contractor the value of all works executed to date as well as a penalty/compensation of 50% of the value of the works remaining unexecuted, as a result of its decision to terminate the contract".

Thus, in the letter dated October 24, E-Dynamic requested payment of the debts owed in a total amount of 8.45 million lei (3.17 million lei - works executed to date; 3.17 million lei - compensation of 50% of the value of the works remaining unexecuted; 1.76 million lei - the balance remaining to be paid from a tax invoice; 0.34 million lei - late payment penalties).

E-Dynamic claims that the amounts are jointly and severally owed by both the contractor Partener Construct General and the real beneficiary JT Oil Terminal, invoking in this regard the "simulatory/fictitious nature of the contractual mechanism" and art. 1.856 of the Civil Code according to which: "To the extent that they have not been paid by the contractor, the persons who, based on a contract concluded with him, carried out an activity for the provision of services or the execution of the contracted work have direct action against the beneficiary, up to the amount that the latter owes to the contractor at the time of filing the action."

In addition, E-Dynamic Structures indicated that non-reimbursable funds were accessed for the construction of the tanks through the POIM (Large Infrastructure Operational Program) but the E-Dynamic company had not been declared as a subcontractor, according to the obligations stipulated in the financing contract.

E-Dynamic also claims that the value of the contract for the construction of the tanks, signed by Partener Construct General as contractor, is 21 million lei, while the contract signed by E-Dynamic as executor for exactly the same works is 15 million lei, resulting in a difference of six million lei, an amount that went to Jean Tucan, the majority shareholder of JT Grup Oil and a close associate of his. E-Dynamic also accuses JT Grup Oil of misleading investors by communicating false information, given that the company is "insolvent, the insolvency being revealed by the impossibility of paying current debts".

• JT Grup Oil: "From the information provided by the general contractor, we learned that the contractor did not meet the execution schedule"

JT Grup Oil claims that the accusations brought by E-Dynamic regarding the non-payment of debts to suppliers and the cessation of works at the terminal are false, being formulated by a company that is not in contractual relations with JT, according to a response that the company's management sent to Ziarul Bursa at the end of last month, at our request.

"E-Dynamic Structures was not a contractual party to JT, but an executor contracted by the general contractor. From the information provided by the general contractor, we learned that this executor did not fit into the execution schedule. Thus, due to internal organizational problems and accumulated delays, the contract with this executor was terminated, and all measures to replace and reorganize the work team were adopted (ed. by the contractor), in accordance with contractual obligations to ensure the continuity of the works", JT Grup Oil sent us.

The fuel distributor states that, since the contractual relationship is exclusively between JT and the general contractor, the latter is responsible for the execution of the works at the terminal. "Therefore, we are not aware of the details of the relationship between the general contractor and its subcontractors, including E-Dynamic Structures, as these are not enforceable against JT," the company's management told us.

According to JT Grup Oil, payments for the works performed are made on time, without delay, and the company has all the financial resources to honor all contractual obligations. "We have fully respected our payment obligations to the general contractor, the only one to whom we have a contractual obligation for the execution of this terminal, paying on time and in proportion to 100% all the works performed. Thus, there is no outstanding debt on our part towards him," according to the fuel distributor.

• JT Grup Oil: "We did not receive a request from the general contractor to express our agreement regarding the designation of E-Dynamic Structures as a subcontractor"

The management of JT Grup Oil claims that the works at the terminal have not been stopped, but continue at a brisk pace, and the main contractor has taken effective measures to meet the established deadlines, in full compliance with the contractual provisions and the legislation in force.

"At this moment (ed. end of October), out of the total number of eight fuel tanks, four are completed, one is almost ready, and the last three are to be completely erected in the next period. All tanks will be completed on time, so that in February 2025 the terminal will be completely completed and operational", the fuel distributor told us.

Regarding the declaration of E-Dynamic Structures as a subcontractor, JT Grup Oil states that this responsibility falls entirely on the general contractor, who is obliged to designate and manage its subcontractors, collaborators and executors according to the provisions of the contract and applicable legislation. "As the beneficiary, JT was not a party to this designation process and did not receive a request from the general contractor to express its agreement regarding the designation of E-Dynamic Structures as a subcontractor appointed after the signing of the contract," the fuel distributor's management told us.

• Partener Construct General and Klaus Industrial did not respond to our request to clarify their role in the contract for the construction of the JT Oil terminal

According to information available on the Courts Portal, E-Dynamic Structures filed for insolvency last month against Partener Construct General, the project's contractor. The company was founded in 2013, is headquartered in Năvodari, Constanţa County, and deals with energy and industrial installation works. Last year, it had a turnover of 16.1 million lei, up almost 140% compared to 2022, and a net profit of 6.9 million lei, well above the 0.9 million lei recorded the previous year, according to termene.ro.

According to an article published in April this year by the publication Ziua de Constanţa, Partener Construct General is owned by associates Maria Magdalena Bîlea and Andrei-Iustin Găliceanu, each with 50% of the share capital. The administrator is Maria Magdalena Bîlea.

Klaus Industrial was founded in 2014, is headquartered in Măneşti, Prahova, the company's business activity according to the CAEN code being "plumbing, heating and air conditioning works". Last year, it had a turnover of 55.7 million lei, compared to only 0.87 million lei in 2022, while net profit amounted to 0.69 million lei, compared to 0.24 million lei in the previous year. In 2023, the company had eight employees, according to termene.ro. Nicolae Giunior Onea is the sole associate of the company, and Georgiana Daniela Savu is the administrator, according to the publication Ziua de Constanţa.

Partener Construct General and Klaus Industrial did not respond to the request of Ziarul Bursa to clarify their role in the contract related to the construction of the fuel terminal and to comment on the position of E-Dynamic Structures and JT Grup Oil, respectively.