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Monday 18 December 2017
Commentary

The revolving door of State Enterprise restructuring

The Government is continuing with its restructuring initiatives of selected State Enterprises as it should. As I have pointed out in a past column, I am in total agreement with a few of those decisions, as some of the entities simply cannot justify their continued existence, particularly when one considers their cost of operations against the value of their output.

On the other hand, it appears that Government’s policy on the restructuring initiative is operating on an extemporaneous basis, using pivoted moves driven only by financial expediency rather than that of strategic intent or diversification.

Let us examine the Government’s recent decision with respect to the Caribbean New Media Group (CNMG). This company was launched in 2005 after the failure of Trinidad and Tobago Television (TTT). Now in 2017, some 12 years later and because successive governments could not make CNMG profitable, it is now decided that the company will revert to its original TTT brand.

We were assured by the Communication Minister that new employment will be created, due to increased roles for content producers, cameramen, videographers, etc. However, 122 employees and 37 freelancers will soon be out of a job, although all were invited to reapply for employment with the new entity. I, for one, cannot understand how this can be sold as new employment. Is it not the same job roles, with the same required skill sets needed at both CNMG and its intended successor TTT?

So far, these restructuring initiatives have either resulted in outright closure and/or the creation of a successor entity doing the same thing, in the same way and with a majority of the same people. A very recent example is the new Tourism Development Company (TDC) plan. This, however to my mind would create an end result no different from what previously existed with a revolving door effect. The restructuring initiatives seems devoid of any clear strategic platform or foundation of diversification.

In the case of closure Caroni Green Ltd for example, we heard that the initial seed financing was all that was invested, as the former CEO claimed that the enterprise was a self-sufficient operation. However, we heard explanations contradicting those claims coming from the Minister of Agriculture. I am to wonder if Government ever attempted to determine if Caroni Green Limited could have ventured in partnership with Agricultural Research Department of the University of the West Indies or even considered the rearing of livestock. Was it possible to sell the company as a going concern if indeed it was self-sufficient?

Now, regarding Petrotrin, the Joint Select Committee (JSC) of the Parliament produced a report in June 2016 with respect to that company’s administration and operations. The JSC recommended that the organisation should find ways to defer payment of some bond commitments, explore options to optimise existing cost structure, assess the integrity of assets; and perform a manpower audit to determine its ideal workforce size along with skills and competence gaps of its human capital.

This report seems to have been ignored. Instead, the Government created a special committee to make further recommendations. The public is now aware that the recommendations of this 2017 report speaks to breaking up Petrotrin into three separate entities being Exploration and Production, Trinmar and Refining and Marketing. The report, however, made no recommendations of private (foreign or local) partnership, nor the reduction of the existing workforce.

I am still waiting to be convinced how these three entities working together will ease the financial burden on tax payers occasioned by Petrotrin’s current massive international debt.

As I understand it, they will still be producing the same petroleum products, in the same way and targeting the same markets. We would be back to that ‘revolving door’, as breaking up Petrotrin into three entities is not a full solution to our diversification needs and therein lies the problem.

Indeed, it was the Economist Dr Patrick Watson who recently offered that he “is not optimistic about future oil prices, as new products are being manufactured away from the use of hydrocarbons as people are finding cheaper, cleaner alternative sources of energy”.

Since 2009 Middle Eastern oil producers have been finding ways to diversify their industry away from a strict reliance on hydrocarbons. Today Saudi Aramco is delivering Saudi Arabia’s National Science, Technology and Innovation Plan (NSTIP), towards a knowledge-based economy. In this regard, the NSTIP have been working with European, US and other researchers, and product manufactures to create innovative new products from crude oil and gas.

Dubai’s Raven Petroleum also supplies oil field equipment and logistical services apart from its oil and petroleum products. Even British Petroleum has rebranded its slogan to Beyond Petroleum as it attempts to diversify into other renewable energy products and markets.

Going forward, I suggest that critical ingredients for effective restructuring must include new product or service offerings for different segments of the market. This is sure to trigger a change in organisational culture, which more than often, is what is required to guarantee a successful transition to a new entity.

Why didn’t the thinkers behind these decisions, not seek to identify CNMG’s value chain for enhanced local content and consider possible mergers with CreativeTT to commercialise the video graphing and cinematography skills that must exist within the organisation.

We need not be reminded that if we do the same things all the time, we will only get the same results every time.

Courtney McNish writes a weekly column for the Business Day.

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