Finance Minister: Petrotrin can become marketable and viable

TERMINATING its employees ironically makes state oil company Petrotrin more attractive for financing because the company will also be cutting attendant costs like overtime, helping it become more marketable and viable.

That, at least, was what Finance Minister Colm Imbert suggested yesterday when asked by reporters how the company can afford to finance the estimated $2.6 billion it will cost to terminate its employees as it prepares to shutter the Pointe-a-Pierre refinery and increase exploration and production activity.

“The people they are going to get financing from now will not lend them money unless they take action to stop the haemorrhaging of the company and make it profitable. If you are getting financing to reduce the wage bill from its current $2 billion to $1 billion and cut off a lot of expenses like overtime, et cetera, then the company becomes viable and marketable,” Imbert said.

These bloated costs are what prevented the company from being able to get financing before.

“When they went out three years ago looking for financiers to refinance the TT $6 billion bond (due next August), every investor told them no problem, you are producing oil and oil is a valuable commodity. But you have to get your costs down. The financing of severance is one year’s loss. Even though its $2.5 billion, that’s one year’s loss and any businessman would know that if you have to take a hit like that for one year, then the second year you’ve recovered that money. You’re not losing $2.5 billion annually anymore and that’s why they can finance the severance payment,” he said, without having to resort to a government guarantee. The company was confident they will get the financing required for the bond payment now that they’ve taken these steps, he said.

The severance payments, though, as negotiated by the unions, are nearly double the industry standard, he added.

The company was also confident its proposed model as a distributor of fuel to the rest of the Caribbean will make “quite a bit of money.” Regarding the fuel demands of TT, Imbert added, that TT consumes 1.4 billion litres of fuel a year—quite a lot for a little country—at an estimated cost of about $5 billion.