By Mike Jarrett
The Government of Trinidad and Tobago announced on August 28 that it would be closing the country’s only petroleum refinery, Petrotrin. One week shy of his third anniversary in office,
Trinidad and Tobago’s seventh Prime Minister Dr. Keith Rowley addressed the nation. In a solemn speech on September 2, 2018, the Prime Minister of the twin-island republic told his compatriots that Petrotrin’s oil refinery at Pointe-a-Pierre would be closed in three months, on November 30, and that the corporation was to be restructured.
Following the Prime Minister’s announcement, the Oilfields Workers Trade Union (OWTU) scrambled to find a formula to keep the refinery functioning but to no avail. Proposals presented by the union did not impress the Petrotrin Board of Directors, Chairman Wilfred Espinet said the submission did not offer a viable solution to the problems that brought the newly elected government to its decision to close the facility. Espinet announced that Petrotrin would be moving ahead to shut down the refinery and preserve the company’s assets.
Petrotrin (Petroleum Company of Trinidad and Tobago Limited) was founded in 1993 as a merger of two government-owned oil companies (i.e. Trintopec and Trintoc). It was the state-owned oil company of the Republic of Trinidad and Tobago. It went defunct, as scheduled, on November 30, 2018. Its successor, Trinidad Petroleum Holding Limited, will administer two new companies – Heritage
Petroleum Company Limited and Paria Fuel Trading Company, both of which came into operation on December 1, 2018. In his address to the nation the Prime Minister made the following points regarding the Petrotrin refinery:
On August 30, 1984 the government purchased the refinery, already antiquated and failing, from Texaco for $189.2 million, (in a move mainly to save some 3,000 jobs).
Over the past decades T and T has moved ‘imperceptibly’ from oil to gas.
The liabilities of the Petrotrin threaten the credit rating and the financial stability of the country.
International rating agencies warn of further downgrades if nothing significant is done to improve this worsening situation.
There is an 850 million USD bond (TT$6 billion) that is due for payment in a single transaction in August 2019 and another of almost 700 million USD due soon after.
On Tuesday, August 28, the board of directors of Petrotrin announced plans for to get the company on a path to sustainable profitability, to stop the taxpayers financing operations that are losing billions of dollars and to stop the haemorrhaging of foreign exchange in US dollars.
The primary objective of the announced interventions is to transform the business of the company from chronic money losing to a return to profitability.
Petrotrin’s ongoing failure now threatens national survival.
Analyses by local and foreign expertise all indicate that the refinery will continue to lose money.
Analyses show that other aspects of company operations, Exploration and Production, if operated properly and separated from the refinery, could be a good business producing handsome dividends.
Addressing the latter point, the Prime Minister said: “It is this advice that has finally been accepted by the Cabinet after about a year of intensive work.”
“Unfortunately, the nightmare does not end with these disastrous projects, the company now borders on insolvency, as its cost of operations far exceeds its revenue. Survival has only been possible through the non-payment of taxes and royalties owing to the Government as well as the procuring of Government guarantees for loans from financial institutions,” the Prime Minister stated.