Subject: Free Trade Zone
From: [email-masked]
To: [email-masked]
Cc: [email-masked]
Date: Wed, 16 May 2001 07:00:12 -0700 (PDT)

I met with Johnny R. Fern?ndez, Esq., Executive Director of Codezol, C.D. (Corporaci?n para el Desarrollo de la Zona Libre de Ponce, C.D.).  Codezol, C.D. is the Foreign Trade Zone #163 at Ponce, PR.  I requested information regarding the license to operate a sub zone under the Foreign Trade Zone #163.

Codezol presents the application form to the Free Trade Zone Board in Washington.  The paperwork needed is very extensive, requires specific information and is prepared by a law firm that is specialized in these matters.  He recommends two law firms: Miller & Company, Marshall V. Miller in Washington, DC which as per Codezol is the more experienced in these matters and Phelan & Mitri from Connecticut which where the ones that helped Peerless Oil & Gas get their sub zone.

A good start would be a letter from us which should include our location, legal description of the property, the exact a creage, number of tanks and their capacities, if we are a local company or subsidiary of a US firm.

When I mentioned to Mr. Fern?ndez if we can have a sub zone for ProCaribe and EcoEl?ctrica he doesn't see much problem but he needs to know more details of ProCaribe and EcoEl?ctrica to see if we can ask for one or two sub zones.

BENEFITS OF A SUB ZONE

v	No import tax "Crudita" paid until the sale is done.  You don't pay "Crudita" while the propane is in our tanks or when there is a re export.  It helps with the cash flow.

v	You don't pay personal property tax.  ProCaribe pays around $150,000 per year.

v	You don't pay "Patentes" (%of yearly revenue tax) for any volume of re export.  Only for local sales. 	Patentes are paid to the Pe?uelas Municipality.

Fees of around $25,000 per year have to be paid to Codezol.

Weekly reports of inventories have to be sent to Codezol.  Facilities inspections will be held by Codezol, Crim, and US Customs prior to receiving the license.

The process can take from 9 months to 12 months.  It is faster in products like propane and natural gas, is slower in products like diesel or gasoline.

I spoke with Suzanne Clapp and she told me she doesn't have experience in free trade zones.  She mentioned the name of Armando Lima that can put us in contact with the Free Trade Zone personnel in Puerto Rico.   

It took Peerless 14 months to get the sub zone because there was some "prejudice with oil during the Clinton Administration".  It costs them $60,000 in legal fees and it was done by Phelan & Mitri.

Marshall Miller did the Codezol license and it cost $40,000 in legal fees but it was much less work than the one done by Peerless.

As per Mr. Fern?ndez, the next step is a short history of us so he can understand who we are and what we do.

Any questions please let me know so I can pass it on to Codezol.

Saludos