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Thursday 20 September 2018
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Editorial

Petrotrin’s $25B hole

THE SITUATION at State-owned Petrotrin, as outlined on Sunday evening by Prime Minister Dr Keith Rowley, is one that demands an engagement with facts and figures and not rhetoric or political picong. With a $25 billion injection of cash required just to keep the company, in its current form, alive, no one can gainsay the need for drastic action. About 2,600 jobs may be lost because of the planned trimming of the company’s operations but if no action is taken the entire country could be headed for financial disaster.

Petrotrin loses $2 billion a year and is dragging $11 billion in debt. For the refinery to break even, it would need $7 billion and big staff cuts, a drastic revamp of efficiency as well as capital-intensive upgrades to facilities that are impossible to finance. The stark reality is the refinery has become an unbearable millstone around the neck of the country’s largest enterprise, threatening to take down much else with it.

According to Rowley’s own figures, attempts to bolster Petrotrin over the years have not only been failures, they have worsened the situation. Manning-era projects, which Rowley red-flagged in Parliament when he sat in that Cabinet, have done serious damage.

These include the Gasoline Optimisation Programme whose cost rose from $2.45 billion to $12.6 billion, the failed Gas-to-Liquids project that rose from $1.55 billion to $3.15 billion and the failed Ultra Low Sulphur Diesel project that went from $791 million to $2.89 billion. In relation to the latter, Rowley said, “whilst the project is 98 per cent mechanically completed it cannot be operated because the structural specifications were not adhered to, meaning the foundation is faulty and cannot be used and what is worse no one nor any entity has been held accountable for this expensive travesty.”

It would take $2.5 billion to fix it.

A proposal has been floated by Opposition Leader Kamla Persad-Bissessar for this country to offer to refine oil from Guyana. As neat as it seems, such a move would still have to contend with all of these stark shortfalls. Will the Guyana oil price be such to return the refinery to profitability? Will this be viable in the long run, especially as Guyana reportedly is planning a refinery of its own? And how will this affect the rest of the troubling picture? More facts, please.

The Prime Minister is to be lauded for giving us pertinent figures as well as for his assurances that support, as well as healthy compensation packages, will be offered to workers. What must be explained is the overall cost of these finer points.

And because there is no more room for error, all of the figures will also have to be spelled out as the Petrotrin restructuring goes forward.

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