Oil firms owe Govt $392M

Energy Minister Franklin Khan
Energy Minister Franklin Khan

Oil companies operating in TT owe the Government some $392 million in unpaid royalties, said the 14th Report of the Public Accounts Committee (PAC) relating to the Ministry of Energy and Energy Industries (MEEI) recently laid in Parliament.

“At the time of the audit in January 2017, royalties from 11 oil companies as at 30th September, 2016 were outstanding.” Royalty is calculated using crude oil production data from the ministry’s Contract Management Unit, evaluation reports from CARIRI and US Gulf Coast prices from the Platts Oilgram Price Report.

“The MEEI stated that letters are usually prepared and expedited to companies which have outstanding quarterly payments, requesting urgent settlement of all outstanding royalties.” In August, letters were sent to three companies who had outstanding royalty payments for an extended period of time.

“Each letter indicated that all outstanding payments must be made within 90 days and that failure to comply would result in the MEEI exercising his right to revoke each company’s Exploration and Production (E&P) Licence(s). “Subsequently, two of those companies made part payments, while the other suggested that the MEEI consider a payment plan once the company resumed production.” The main companies owing outstanding royalties blamed technical, legal and financial constraints for their inability to honour their royalty obligations.

“As at January 2017, the outstanding royalty totalled approximately TT$392.83 million and as at August 2017, only TT$$4.19 million was paid.”

The PAC recommended that for oil companies unable to honour their royalty obligations, payment plans with interest rates should be established based on the amount outstanding. Further, the MEEI’s permanent secretary should invoke the penalties stipulated under Regulation 59 of the Petroleum Regulations of the Petroleum Act.

Energy Minister Franklin Khan could not be reached for comment on the report.

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