Petrotrin: radical surgery…or die

Br Raffique Shah
July 12, 2018

Raffique ShahI never thought I’d one day write a column that says what I’m about to. But as someone who has always put country before personal or ideological interests regardless of the fire I faced, I feel compelled to endorse calls for a radical restructuring of State-owned oil company Petrotrin.

If there is resistance to life-saving changes, declare the damn company bankrupt and shut it down.

I am not about to apportion blame for the demise of this one-time jewel of the national economy. Enough has been said and written about that. The workers and the OWTU argue that it was successive political directorates, boards and management personnel that bungled the never-ending refinery upgrade projects whose costs more than quadrupled from US $300 million. And time-wise, the upgrades took more than 10 years.

The union insists that the company’s huge external debt, in the vicinity of US $1.6 billion (TT $11 billion), and its liability of around $10 billion in taxes to Government, were incurred by the decision-makers, not the workers.

Management asks us to note an annual wage-bill of approximately TT $2 billion, 50 percent of operating expenses, with overtime running at $250 million. We are told that a carpenter earns $100,000 per month, a manager has been on accumulated leave for four years, and other mind-boggling atrocities that infuriate average citizen Joe who struggles to make $10,000 per month, not to mention ordinary-Jane, on her legs ten hours a day, and lucky to take home $5,000 a month.

No. We have had more than enough sordid details of how those who feast on our hydrocarbon resources, from seven-digits managers and contractor-crooks to unproductive workers live high on our oil and gas while we “ketching we nennen” from birth to death.

We must have the guts to say enough is enough. A few among the elites of society, privileged workers and corporate hustlers in the lead, must not be allowed to live in luxury at the expense of the many who suffer in silence, some among these steeped in squalor.

Now, whatever they may say to the contrary, they would raid the Treasury to pay for the mess they made, to rescue Petrotrin from the Shylocks who are eager to lend them more money using our tonnes of flesh and barrels of blood as collateral when they cannot repay the mountain of debt they are amassing.

Let’s face it, Petrotrin is broke, insolvent, bankrupt. Its ageing assets were valued at TT $40 billion in 2017, but most of that would be deemed scrap should the lenders have to levy on it. The company’s immediate past president, Fitzroy Harewood, said last May (after an old storage tank collapsed and spilled crude oil into the Gulf of Paria) that Petrotrin will need to spend at least TT $16 billion over the next four years to repair its ageing infrastructure.

According to current chairman Wilfred Espinet, 5,000 employees have accumulated a massive 183,000 days’ leave (that’s 501 years!). He also translated its debt as amounting to US $2,000 per capita—meaning that’s the sum the company has borrowed in the name of every man, woman and child in the country.

A solution to these myriad challenges starts with every employee and contractor agreeing to pro-rated reduction in payments, salaries and wages, with the higher-paid taking bigger cuts—say 50 percent in the case of the $190,000 per month president…surely he can survive on $95,000! The lowest-paid employee (say $15,000 per month) could sacrifice five percent of his earnings to secure his job. Such adjustments could be for a limited time, say until the company can comfortably service its reduced debt and returns to annual after-tax profits of $1 billion or more.

I can hear the blood-curdling cries out there for my crucifixion on a cross made of stale gobar! At my age, and with my mala fides—I was in the frontline with George Weekes braving police batons as we called for the nationalisation of the oil and sugar industries—I couldn’t care less.

Petrotrin is precariously teetering on the edge of an abyss. If it takes the plunge, there will be nothing left for anyone—president, peon or pensioner. It is make-or-break, do-or-die time. There is still hope that it can be saved, but only if it undergoes radical surgery, which would impact its 5,000 employees most, its several-thousand pensioners, and yes, the wider citizenry too.

Imagine after spending US $1.5 billion on upgrades that executives like Aleem Hosein and the late Malcolm Jones (among others) said would bring bountiful returns, Petrotrin remains crippled by high costs and low returns.

In February 2012, Hosein, who was vice-chairman, was quoted in a newspaper report: “The refinery operates on the basis of margins and I will not be surprised that the margins increase to between US $1 and US $1.50 (per barrel) which would mean that we could earn up to (TT) $1 million more a day when this optimisation is completed…”

Six years later, the company is in a worse position.

Now NiQuan executives tell us they have the GTL keys to big profits… Can you believe these fellas?

Look, if radical restructuring is rejected, declare the company bankrupt, pay all creditors and employees what we can, shut down operations and import the fuels we need.

We will end up paying market prices for diesel, gasoline etc. But we’ll save billions of dollars that sundry crooks and “lochos” siphon from our oil industry that they treat as their grazing ground.

7 thoughts on “Petrotrin: radical surgery…or die”

  1. This PNM company was molested and raped by the PNM for years. It is about time that the PNM and UNC paid back all the money they stole from the company over the last 60 plus years. If not jail them and throw away the key

  2. In 2002 Petrotrin’s debt was just over TT $3 1/4 billion, by 2010 when Manning/Malcolm Jones were in charge to rose four fold to TT $12 1/2 billion.

    More than TT $9 1/4 billion was spent on the Gasoline Optimization Plant, TT $4 billion on an ultra-low sulphur diesel plant, TT $3 1/4 billion World GTL project with 33 cost over runs. These projects were way behind schedule amounting to $15 billion in wasted monetary resources. To fund these projects Petrotrin borrowed US $750 million and US $850 million bonds on the Euro market paying over 4% to consumers….

    The Petrotrin saga continues, with billions of unnecessary debt, a highly over paid work force and an aging infrastructure. What concerns me is the aging infrastructure, a disaster in the making. Already there has been blow out in the sea as recent as last week. And more to come. This is why we can say great is the PNM with more thiefing to continue.

  3. The way forward is to break up the company into several sub divisions and manage each divisions independently. Bring wages back in line with industry standards. Put the refining division on the stock market. Get rid of poor management and bring in experts in each division.

    Immediately work on replacing aging infrastructure. Create a public/private partnership. Listen to the union but do what is right.

  4. you guys are all in dreamland

    government cant run anything

    everythign they touch is a disaster because of thiefing


  5. Excellent reasoning and suggestion Mamoo. The same was recommended for Caroni in 1984 accepted by the Board in principle but executive management in the company would not have any part of it (the cart is guiding the horse). Why? that is the best mechanism used to enhance thieving when everything is presented mumbo jumbo for state funds. No accommodation for fiscal responsibility and accountability when everything is charged to a tonne of sugar including the lavish living in company houses.

    In the case of Caroni the company should have been divided up into an agricultural and industrial complex. The core would have been sugar production for the agricultural complex where the research station, T&FE, etc. would be support systems allowing for diversification e.g., milk, beef, citrus production etc.

    In the case of the industrial complex the diversification program would be operational e.g., the bakers yeast, vinegar xanthan gums etc. would have been at the fermentation complex whereby the distillery would be the core. The bagasse complex would have been at BC where the particle boards, animal feeds etc. would be at the core and the sugar complex would have been at USM where the syrups, refined sugar etc. would have been at the core.

    This is why I would continue to maintain we have a system of failed leadership in the country politically, managerially always willing to appear as a laughing stock to the international community not forgetting the 1 percenters.

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