Petrotrin: all of them must go!

By Raffique Shah
July 18, 2018

Raffique ShahBecause of the interest generated by my column last week on State-owned Petrotrin and the fact that the country has awakened to a possible disaster at our doorstep in the fate of the struggling oil giant, I thought I should return to add a few more salient points to the national discussion that will likely determine its future.

I claim no expertise in the oil industry, and certainly not on Petrotrin. However, I have, over the years, tried to educate myself on the hydrocarbons and petrochemicals industries in order to better understand these engines of our economy. Besides accessing information that is available in print and online, I have interfaced with many workers, technocrats and experts to whom I am grateful for sharing their vast knowledge with me.

So when readers seized upon my strident statement last week that if the principal stakeholders of Petrotrin cannot or will not formulate strategies that include austerity measures for saving the oil company from collapse, then we the shareholders must be prepared to shut it down to save the country from an economic disaster, I thought I needed to further clarify my position.

Shutting down one of the oldest oil refineries in this part of the world is not a first option. It must be a last resort. Over the last decade, two other refineries in St Croix and Aruba suffered that fate, the latter in 2012 after it racked up huge losses for several years. Both were privately owned enterprises, hence the social impact of their closure was hardly a consideration of the owners. They also differed from Petrotrin in that their feedstock (crude oil) was all imported, and they had no access to natural gas to improve efficiencies in their operations.

In Petrotrin’s case, while it should operate as a business, as indeed should all State enterprises, politicians have always intervened in its affairs, mostly to promote their interests, but also in pursuit of social mitigation initiatives that constrain the company.

The fuels subsidies, for example, cost the company billions of dollars that Government is supposed to repay. Most times it does. But during lean times, such as we have experienced since 2015, it does not. Similarly, Petrotrin, which, up to a decade or so ago was the single largest contributor to Government’s tax revenues (since overtaken by the National Gas Company), withholds taxes it owes the Exchequer. In this incestuous relationship, both lose out when oil prices plunge.

In my view, gasoline and diesel should have never been subsidised. The people who benefit most from fuel subsidies are those who can afford to pay market prices. Government could find creative ways to help those who provide public transport (maxi-taxi owners), such as a reasonable exemption on their annual tax returns—thus encouraging them to file returns and either pay income tax or benefit from refunds for fuel expenditure.

Similarly, cooking gas (LPG) subsidy, which, surely, must be intended for the poor in society, could benefit them through the “smart card” that is currently used for those whose names are on the national poverty register, something the relevant ministry must have.

The pricing of fuels at market levels (changing with oil prices on a monthly basis, as Dubai does) will add hundreds of millions of dollars to Petrotrin’s revenue column. If, by pruning the bloated workforce and eliminating corrupt employment practices at all levels, the company’s wage bill can be reduced by at least 25 percent, then there will be hope for having it continue operations.

It must, however, also improve its oil production, which seems to be stuck at around 40,000 barrels per day (that includes its production sharing and farm-out arrangements), and maximise efficiencies at the refinery on which it spent more than TT $11 billion in upgrades.

How can management justify importing 32 million barrels of crude oil in 2017, up from 24 million in 2010, and show TT $2.194 in losses last year, compared with a $160 million loss in 2010, or a $2.4 billion profit in 2011? In other words, after the upgrades that sunk the company deep into debt, the refinery’s performance is worse than before.

It just does not make sense.

Maybe it should consider scaling down refinery operations to meet only the requirements of the local market—approximately 10 million barrels per year in diesel, gasoline, LPG, aviation fuel, etc) and forego foreign sales, mostly in the Caribbean, of 37 million barrels.

While we’d like to retain the close-to-captive Caribbean markets for petroleum products, are we making profits off these sales or are we subsidising them too? I don’t know…none of us knows, silent, invisible shareholders that we are, taken for granted, taken down a long road of losses, details of which are Petrotrin-secrets.

We can only comment and surmise on the company’s annual reports that are published, wrapped in corporate and accounting euphemisms. Assets increase from TT $33 billion in 2010 to $40 billion in 2017, revenues decline from $25 billion to $20 billion (oh, it spiked to $37 billion in 2011), and losses plunged to a frightening $2 billion.

If among them, Government, management and the workers and their representative OWTU cannot explain these puzzles to shareholder-citizens, and show us how they plan to return the company to profitability, then all of them must go!

I, who in 1975 shouted “Texaco must go!”, will fully endorse this new slogan.

4 Responses to “Petrotrin: all of them must go!”


  • Only last night I wrote a comparative to Caroni (1975) Ltd. and then I saw your “Maybe it should consider scaling down refinery operations to meet only the requirements of the local market—approximately 10 million barrels per year in diesel, gasoline, LPG, aviation fuel, etc) and forego foreign sales, mostly in the Caribbean, of 37 million barrels”.

    That’s exactly the proposal Frank Rampersad put forward for Caroni i.e., supply the local market firstly and regional and international markets can be forgone if the market prices do not justify such taking into account the agreements such as Lome conventions etc. The diversification program could have been implemented sensibly with each cost centre responsibly managing and accounting for it’s own entity. As you said the politicians make a whole lot of mess and destroying in the process the best converter of solar energy into potential energy – the sugar cane plant.

    • When the politicians cease to interfere with the oilfield affairs and stop placing their frieds and family in positions to rape the income of Petrotrin; when corruption and nepotism cease and we stop placing square pegs in round holes; when the unions come to the table and really represent the hard working sacrificial oil field workers and not be self serkers…we may be then able to see profitability..

  • Trinidad has a major problem in the deficit of leaders both political and otherwise. It is amazing how now sensible or workable ideas are adopted to improve the lives of the citizens of the country. Short sighted decisions, selfish decisions, racial decisions, lazy decisions,incompetent decisions are widespread in TT. I have been in meetings where leaders shot down good ideas without discussion because it goes against their self interest or ego. Caroni was the richest company with vast land holdings. This huge asset should have been separated in the diversification plan. All lands around towns should have been converted in residential and commercial holdings. These lands would have brought large returns to the company. This was not done since one political party had promised its biggest supporter the land holdings. We are suffering from incompetent, lazy, dishonest politicians, union leaders, management and to some extent rank and file workers.

  • Shah with political interferences over the years as at Petrotrin the state companies could no longer function properly let alone make a profit. The profits go into Smiley his family and friends pockets and the past ones all the time. Jones was a pure idiot and thief to say the least and like Solomon felt he could do what he wanted under the PNM and they allowed him the freedom to do so. NGC also was and still is, in the same boat thanks to him. Still today our natural gas product to the consumer is not what it was supposed to be by design almost pure CH4 but instead losded with heavy hydrocarbon liquids precious to us but PARTLY given away to Conoco by Jones in Pheonix Park gas Processors (called the Jones plant in an attempt to correct his poor design input to the massive gas distribution system). And even today the other political picks that run these plants just do not know their arse from their elbow. And this is why the PNM governments refuse to declare the real selling price locally of natural gas. The foreign consumer always threaten with law suits if they do not get giveaway prices they want. So it is cheated of the system both ways. The liquid heavy hydrcarbons over time would shutdown island wide even the electricity systems. But back to Petrotrin many changes as you know were tried under Jones and failed miserably. I remember working on a Gas to Liquids plants at WorleyParsons Trinidad to remove these heavy hydrocarbons in Carapal for BG highly successful ventures back in 2006/7. With Jones in Petrotrin this was a national disaster among other hundreds of billions of dollars wasted away on other much needed projects as well. But PNM or UNC refused to change their ways. But God doh sleep Shah, reparations will come.

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