In his address to the nation at 7:30 on Sunday night, 02/09/2018, Prime Minister Dr. Keith Rowley claimed success in securing Trinidad and Tobago’s future in the gas industry and made a stout defence of his government’s decision to close Petrotrin’s oil refinery at Point-a-Pierre and concentrate its commercial activities on production and export of crude.
Petrotrin has been grossly mismanaged over the years since 1984. Its production of crude has been falling to what is now estimated at 45000 barrels per day. It has manpower costs of 47% of its recurrent expenditures, a working capital deficit of $6.6 billion, and lost $4.3 billion in 2016. As currently configured, Petrotrin is an inefficient, insolvent, highly indebted company. Technological upgrade to make its plant and operations efficient would cost $7 billion that the country cannot afford. It is projected to lose $2.5 billion per year for the foreseeable future. It has debt amounting to more than $11.4 billion, and owes taxes and royalties to government in excess of $3.2 billion. Some US850 million of Petrotrin’s debt is due as a bullet payment in 2019, with US$700 million due soon thereafter.
The debt arose from several large failed projects intended to turn the company around, including: (i) its World Gas to Liquid (GTL) project that ended up wasting $3.15 billion; (ii) its Gasoline Optimization Programme (GOP), which ended up wasting $12.6 billion; and (iii) its ultra-low sulphur diesel project, which so far has wasted US$413 million and needs another US$350 million for completion.
It would take $25 billion just to keep Petrotrin afloat and the company cannot find that level of financing. Petrotrin has become a “ward of the treasury”. The financial case for closing the refinery and restructuring Petrotrin is compelling, but for the claim that the restructuring would enable it “to service all of its debts”. 2600 workers would lose their jobs: 1700 in the closed refining and marketing operations and 900 in the restructured exploration and production activities. Those workers would be treated with “dignity” and be provided with “services such as financial advice and employee assistance programmes for psychological support” as well as “significant financial packages upon ties being severed with the company.” The country would import the 25000 barrels of refined products it consumes per day and export the 40000 barrels per day (or more) of crude the reorganised Petrotrin would produce.
The Prime Minister called on the nation to unite around the government’s solution, including workers who should avoid “unnecessary work stoppages and other contrived industrial actions”. He took a dig at “elements in our society who do not view this change the same way but see it as an opportunity to further their own ends in mischief making.” The message: if you have a different view of the same facts and are willing to go to the mat to defend that view, in the light of the financial crisis at Petrotrin, you are a mischief maker, not a patriot. You are ignoring the “implications that such action can have on our stakeholders, including those to whom we are heavily indebted”.
But surely, even if we agree to go along, as citizens and the ultimate owners of the country we must add substance to the PM’s call for national unity by taking a careful look behind the financial crisis at Petrotrin. Who is responsible for this Petrotrin mess? Who benefitted and how? That is a matter for deeper investigation. Most important, what is responsible for this mess? Is it possible that the answer is the autocratic approach to governance in the country? Could it be that the government itself is guilty of the same charges of inefficiency laid at Petrotrin’s door, for example with its management of other state-owned companies like Caribbean Airlines and the Trinidad and Tobago Inter-Island Transportation Company? Does the Prime Minister’s call for all of us to “have faith in our country” amount to a call to continue endorsing the autocratic approach to governance that got us to this Petrotrin in the first place? Does his call for us to believe that the “new board” will produce a viable and profitable transformed Petrotrin amount to a call to continue endorsing autocratic appointment of the boards of government-owned companies, including the boards of Petrotrin? Is this new board capable of levelling with the Cabinet on the implications of the heaviness of local crude for the viability and profitability of the restructured Petrotrin without some sort of local refining? Is it just fine for Parliament and the public to have no opportunity to properly assess the suitability of Cabinet-selected board members, especially the chairperson, to do the job at hand while speaking truth to power? Is it not striking that all of Petrotrin’s failed projects were launched between 2005 and 2009 under the Patrick Manning government by boards appointed in the same way they are appointed today? There seems to be a glaring lesson to be learned from the Petrotrin debacle. If we do not pause to fix our governance arrangements and subject the decisions of the Cabinet to thorough scrutiny, making it truely accountable to our Legislature, then we are destined to repeat the errors of Petrotrin ad nauseum. Indeed, as citizens, we would have no adequate process through which to make the best decisions for us and for our children and no basis on which to share responsibility for the outcomes of decisions made by Cabinet!