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Monday 23 April 2018
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Business

A new era at Petrotrin

Petrotrin Chairman Wilfred Espinet

By Carla Bridglal

Petrotrin is not competitive. The State oil company’s fundamental inability to match its competition on cost of production in a commodity market where price is largely fixed has hindered its profitability.

“We as a Board are dealing with how we make Petrotrin competitive,” company chairman Wilfred Espinet said. Espinet spoke to Business Day on Tuesday at the company’s Port of Spain office, candidly articulating the board’s hopeful intentions of getting the Petrotrin back to profitability. This entails a comprehensive restructuring that includes a managerial overhaul, better accountability and transparency, a cultural makeover, and balancing the interests of stakeholders like the government and the union — all the while assuring creditors that company can commit to a strategy and give confidence that Petrotrin is worthy of additional financing.

Petrotrin Chairman Wilfred Espinet

The company has announced a separation of the company into two distinct businesses: one focusing on exploration and production, and another on refining and marketing, starting March 1. It has also got rid of senior management and appointed a transition team including Espinet; deputy chairman Reynold Adjodhasingh, who will have oversight for finance and administration; former Petrotrin vice president Anthony Chan Tack, with oversight of refining and marketing; and former BPTT chief executive Robert Riley, with oversight responsibility for exploration and production. Riley, who has been serving as an advisor to the Board, will also have oversight of emergency response.

“There is a need for accountability and responsibility. In the previous structure, that cloud (of senior management) hung over people and was an escape hatch. Nobody took responsibility. What we are saying now is that each person is now responsible for a unit and everything in it and there will be key indicators to work towards,” Espinet said.

The team is expected to be in place for about two years, guiding the company back onto a path of profitability, he added. A recruitment process for the transition team’s permanent replacement is also already underway, with the search going international.

He noted some of the criticism the board has faced, as non-executive with the de facto power of executives during this transition period. “Why are (people) preoccupied with designation more than function?” he stated flatly. In a thinly veiled criticism of the previous executive management while defending the transition team, Espinet said, “A person may have had a designation and may not have done anything. He had a function but wasn’t effective. Now we have someone… who may now be able to guide a process without any designation and be much more effective in terms of getting people below them to work.”

Espinet suggested that there was a culture of hierarchy endemic at Petrotin, where leaders were more preoccupied with status than leading and motivating their workers. This lack of direction allowed overstaffing in areas like administration “to sit in offices… to grow like a fungus to suit themselves because the more people under them, the bigger they are maintaining their kingdoms.”

This has hindered basic requirements for the maintenance and operation of the plant. One of the problems Petrotrin has found itself in, Espinet noted, is the fact that routine maintenance and upgrades haven’t been done, not just because of the high cost and the company’s debt servicing payments taking precedence, but partly of because the company didn’t have competence to identify the scope of works required and to plan how it could be done.

“That’s a missing element we are now trying to bring into the mix of the thing: competence overall — in management and employees — and the whole level of skills based around it,” he said.

In December, company president Fitzroy Harewood resigned, with his last day scheduled to be February 28; the Board took that opportunity to “speak to the senior VPs,” who also left the company.

“They were ineffective. I’m not saying so; the results are saying that. Let’s be pragmatic. I’m not here to cast aspersions. In any company, like driving a car, if you don’t take control you’ll run off the road.

“In theory, the top tier has been removed. We’re now going to put someone who is directly in charge. Who is not going to have a throne. We are bringing it down to an operational level, giving the individual responsibility totally on his own, reporting directly to the board,” Espinet said.

This will hopefully encourage a level of participation among workers. “One of the problems we had found in Petrotrin was there was no participation in coming to decisions — it was a very small, select group (usually the senior managers). This style is vastly different from what we engage in now. Part of the focus is communicating.”

Asked what the compensation package was for the executives who left the company, as well as the remuneration for the new members of the transition team, Espinet said there was a limitation in the Freedom of Information Act that prevented him from divulging specifics on personal agreements. But, he said, “This Board is very conscious of (Petrotrin’s) predicament… and every decision it makes has tried to make sure that it gets value for every single decision it makes. It wrings out value out of everyone it gets in contact with.”

As for transition team, Espinet said serving the company was not about money but duty.

In implementing the new system, Espinet said the Board discovered there was a “thirst for leadership and guidance.” “I find it amazing and it’s part of what’s motivated some of the people who came in. There’s a hierarchy and the culture of working together is non-existent.

“We are doing a number of things at the same time. We know we can’t encourage everybody some people will have to be changed. It’s inevitable that shocks are part of the system,” he added.

 

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