International probe into Petrotrin vital

THE EDITOR: As a layman, it is my understanding that economists have always warned developing countries of becoming dependent on the production and export of “primary products.”

A primary product is a natural resource or a raw product that is usually processed and transformed into downstream products that fetch a far higher price than the primary raw product.

Crude oil is one such primary product and the fuels and other refined products that are manufactured downstream from it are far more profitable. The range of downstream products affords far greater opportunity for a lucrative manufacturing sector.

Can someone explain the rationale for excluding ourselves as a national community from ownership of a downstream manufacturing enterprise that on the face of it seems far more profitable and has the potential for far-reaching further expansion of a manufacturing base? How could we prefer instead to restrict ourselves to producing and selling a primary raw product, the quality of which, we are told, is inferior to the global standard?

As a producer of this raw product in a relatively small quantity, we have no say in the price it is may attract. We have also been repeatedly told recently that one of the chief causes of our present economic strife was the fall in the global price of this very product.

Can someone then explain to me how our reversion to and reliance on this single aspect of the petroleum industry translates into sound logic when such reliance renders us far more vulnerable to the vagaries of the manipulation of the price of crude oil on the world market?

Apart from this apparent gaping hole in the logic on the face of it, as a country, we have not been furnished with a cogent, lucid and objective reason for “shutting the refinery.” The Prime Minister has presented to the nation disjointed snippets which he sought to support based on “independent” reports, all of which he asserted recommended the closing of the refinery.

TV6 obtained one of these studies, the Solomon Report, and in turn informed the nation that no such recommendation had been made. Quite to the contrary, its recommendations focused on plant rehabilitation to profitability. Citizens subsequently also learned that Cabinet reports on workers’ salaries were grossly exaggerated.

It is no exaggeration to insist that Petrotrin has been a feeding trough for politicians for many years. Between 2001-2009 there have been documented project cost overruns that in one instance exceeded 700 per cent of the initial estimate. This ought to cause alarm bells to ring.

A train of events not unlike occurrences at Petrotrin had been occurring at Brazil’s state-owned oil company Petrobras, where illegal payments of more than US$5 billion was discovered to have been made to company executives and political parties. A culture of systemic graft in Brazilian politics was unearthed that provoked a backlash that brought down one government and left another on the brink of collapse.

The haste behind this recent decision, Petrotrin’s avoidable loss of billions ($8.1 billion) in cost overruns between 2001-09, the present Prime Minister’s reluctance to allow this issue to be interrogated in the court based on the most ridiculous and specious reasoning, all generate legitimate concern and more importantly an imperative for immediate, local and international investigation.

STEVE SMITH via e-mail