Khan accuses Kamla of fear mongering

ENERGY Minister Franklin Khan said issues raised in a letter by Trinidad Petroleum Holdings chairman Wilfred Espinet regarding Paria Fuel Trading have been sorted out and criticised Opposition Leader Kamla Persad-Bissessar for "fearmongering."

He was responding to statements made by Persad-Bissessar, at the UNC Monday Night Forum, that she saw a June 7 letter from Espinet to Khan that Paria was losing US$20 million per month, spoke of a failure to implement ex-terminal pricing, and an inability to secure two letters from the Ministry of Energy and the BIR to close the 2018 year-end audit and finalise long-term financing.

Khan, in a telephone interview yesterday, confirmed the letter and explained the US$20 million is a foreign exchange deficit.

"Because Paria buys its fuel with foreign exchange and sells it on the local market for TT dollars. Paria has to source foreign exchange for purchase. Most of its foreign exchange is from Heritage (Petroleum). Initially they were running about a (US) $20 million deficit per month, the Minister of Finance intervened and sorted out that matter and they will get their money from the Central Bank of TT. Not for free but they will exchange equivalent TT cash for it. So that was fixed a while back."

Khan said there is no cash-flow problem with Paria and the company is generating a small profit.

"There is no risk with the supply of fuel in TT."

On the ex-terminal price, Khan said it took a little while to sort out because there was legislative drafting and government was dealing with terminal pricing for the first time.

"But it went to Parliament and it was approved and as we speak it is in effect."

He explained before there was an ex-refinery price and what needed to be developed was a robust and transparent formula to calculate an ex-terminal price.

On the issue of letters to the ministry regarding Paria's accounts, Khan said there was a legal issue where Petrotrin claimed to have overpaid royalties from 2007 to 2014 and the company wanted that to be written off from their current revenue liability.

"And that was the subject of a legal challenge by Petrotrin at the time and the lawyers met and I intervened with the Minister of Finance and that matter was also sorted out. And the relevant letters were issued to Trinidad Petroleum Holdings so they could have declared their accounts."

He continued: "So the three issues she raised there to make sensation have all been addressed and have all been addressed amicably quite a while back. So it is fearmongering."

Espinet in Guardian and Newsday interviews in May had disclosed that Paria imports 25,000 barrels of oil per day and had to acquire US currency to make these purchases. He had acknowledged that securing the US$20 million to pay creditors in foreign currency was a challenge. This US$20 million shortfall is presumably what Persad-Bissessar referred to, although she appears to have misunderstood the context, a source familiar with the transaction told Newsday.

Persad-Bissessar at the Fyzabad meeting quoted Espinet's letter in which he said the shortfall "...is a structural problem that is going to result in a shortage of fuels unless corrected.”

“That is a very serious issue," she said. "What is that US$20 million shortfall about?" She asked whether the oil company is losing US$20 million per month, saying at today’s rate of exchange, that was TT$140 million.

“That is not losing money. It is haemorrhaging money,” she said, and told supporters if Paria has to find US$20 million per month to buy fuel it may have to increase the prices at the pumps.

In April, addressing questions in the Senate on the profitability of Paria and its sister, Heritage Petroleum Ltd, Finance Minister Colm Imbert, acting as energy minister, said while Heritage had made a US$2.5 million loss (TT$17 million), Paria had made a TT$46 million profit as of January 31.

Recently, Trinidad Petroleum – Paria's parent company – in its six-month financials reported Paria made TT$51 million in profit in its first six months of operations.