Crime Economist (MSc/BSc)
The reported state of insolvency/bankruptcy at Petrotrin is the manifestation of the “underbelly” of the self-defeating politics and destructiveness of the corruption that have defined and shaped leadership and governance in Trinidad and Tobago for the last 56 years. In spite of noticeable inconsistencies in some of the financial data being traded by the government, whether by error, omission or inclusion, Petrotrin is being projected as a a fiscal explosion waiting to detonate.
The government is of the strongest view and belief that the only option available to prevent national financial and fiscal crisis, of the likes never seen before, is the decommissioning of the refinery operations at Petrotrin. The de-commissioners have argued very generally and blandly that the refinery is the “financial cancer” which must be removed, if the patient (Petrotrin) is to be given a new lease of commercial viability.
It is important government presentations and the data make clear its case for urgent and critical improvements in the business model, governance and efficiency at Petrotrin and more specifically at the refinery, since based on what has been reported so far, no detailed evidence-based case has to made to justify the decision to discontinue refining 40,000 barrels of TT’s crude oil and importation of 100,000 barrels for refining and become a gross importer of all the fuels (diesel and gasoline) needed to power-up the country energy supplies and to supply our customers in the region.
The information and data provided so far has been elementary and unscientific to say the least and orbits around the reportedly high labour bill, high debt - will of which becomes due in August 2019 - importation of crude oil for refining and estimated costs to upgrade and maintain the refinery. These are all important and necessary measures for the efficiency argument.
However, the case for the closure of the refinery, at the least, requires a comparative costs and revenues analysis of the current model of importing crude and refining it, together with what we produce, against the proposed new business model of total importation of all fuel to meet both domestic and regional demands.
Added to this, in the national and international scheme of things, the refining of our energy supplies should be assessed for its strategic national security and economic importance, and so beyond mere commercial viability.
Therefore, the risks associated with a total out-sourcing of all our energy supplies, from both the national security perspective and economic energy supplies, sovereignty must be factored into any meaningful and sound scientific decision to close our energy refining capacity and capability after 101 years.
Relatedly, therefore, the Government and Petrotrin Board must give us the answers to the following questions:
From where will our energy supplies be procured?
What would be the final cost at the pumps and in our electricity bills?
How would the supply-chain be built to ensure reliability, predictability and affordability?
What will happen with our refining capacity and capability derived from 101 years experience?
What will happen to our commitment to our regional customers?
What are the core issues/problems at the refinery that have and continue to make it liability rather than an income earning asset?
What will be the new governance framework, if any, for Petrotrin?
The answers to the above investigation will certainly serve to clear up many troubling outstanding concerns among the segments of the population that do not live in any of known political echo-chambers. It is a fact that the fiscal bomb at Petrotrin was politically supervised, for years, by many of the ministers and members of parliament who are today blowing that they have no choice and that they are doing it for the country’s children.
These are the same persons who have sat in government and in parliament for the last 30 years and supervised the failure of two major investment projects at Petrotrin, namely, the Ultra-Low Sulphur Diesel Project (ULSD) and the Gas To Liquid (GTL) that have left the company with nearly TT$12 billion in debt.
These are same individuals who, at one time or another, presided over and sanctioned the obscene increases in wages and salaries for directors and managers across the company.
They are the same ones who used Petrotrin as a corrupt political feeding trough for their financiers, operatives and general supporters. These are the acts and events that are manifested in the “underbelly” that is Petrotrin today. So don’t be fooled!