Home' Trinidad and Tobago Guardian : July 6th 2017 Contents JULY 6 • 2017 guardian.co.tt BUSINESS GUARDIAN
ENERGY | BG7
Cabinet to make decision
on Petrotrin soon
The Cabinet will next week
consider the report into
Petrotrin as the Govern-
ment seeks to make a de-
cision on the way forward
for the state enterprise.
While the energy sub-committee of the
Cabinet has already looked at the report, it is
clear there are deficiencies and the Govern-
ment will have to also consider many things
not the least of which is the significant risk
of economic and political dislocation if the
Petrotrin issue is not handled well.
At a news conference last week Friday at
the headquarters of the Ministry of Ener-
gy and Energy Industries, Energy Minister
Franklin Khan admitted that the report was
deficient in that it did not look at the com-
pany's cost structure.
In other words, the report is recommend-
ing the way forward for a company with high
costs and it has not broken down the cost
structure to see where the challenges are;
this in a context where profit is a function
of revenue minus cost.
Khan said this would mean that the Cabi-
net will have to go beyond the report in com-
ing to its decisions on Petrotrin.
Further, the report never considered key
developments at Petrotrin in the last two
It did not take into account that the com-
pany had developed a strategic plan to take
it forward and did not look at the fact that
during the last 18 months it had significant-
ly reduced its losses, it had increased crude
production, increased refinery throughput,
decreased permanent and contract staff and
was now showing an operational profit.
The records show that since the end of
2015, Petrotrin's annual losses were slashed
from over $800 million to just over $300
The company's refinery throughput in-
creased from 105,000 barrels of oil per day
(bopd) to over 154,000 bopd.
Its crude production increased by over
seven per cent, and for the first time since
the collapse of oil prices in 2014, Petrotrin
was seeing an operational profit if its debt
servicing obligations were removed.
Further, the company has seen permanent
staffing levels fall by 10 per cent due mainly
to attrition and it has also reduced contract
labour by 75 per cent.
Khan told the news conference these were
positive steps but likened it to the difference
between cosmetic and more invasive surgery.
But any restructuring of Petrotrin is more
than just the numbers.
Tens of thousands of people, primarily in
south Trinidad, and thousands of businesses
directly depend on the state enterprise for
Petrotrin has more than 4,000 registered
contractors and suppliers.
These businesses range from large con-
tractors to small independent contractors.
They employ thousands of people who work
with the company or on projects for the com-
pany from time to time.
Any restructuring of Petrotrin could po-
tentially hurt these people and their families.
Chief executive officer of the Energy
Chamber, Dr Thackwray Driver, noted more
than half of all the Energy Chamber members
work for Petrotrin and it's their largest client.
"Sixty per cent of our almost 400 mem-
bers are contractors or energy service com-
"Almost all of these companies would
do significant business with Petrotrin.
For many of the companies, especially the
smaller locally-owned service companies
and contractors, Petrotrin would represent
their major customer.
"In addition the small oil companies op-
erating onshore in Trinidad sell all of their
crude oil to the Pointe-a-Pierre refinery."
Driver added: "Petrotrin is extremely im-
portant to many of our member companies
and they have a vested interest in the success
of the company."
President of the San Fernando Business
Association Daphne Bartlett echoed Dr Driv-
er's sentiment saying Petrotrin was crucial
to the economic survival of south Trinidad.
She said: "You cannot underestimate the
importance of the company to business in
south. It's not just salaries of the workers
and their ability to spend in the southern
economy but it's also about the other small-
er companies and suppliers who depend on
Petrotrin. I think they need to come clean
with us because surely Petrotrin can be
The Petrotrin Review Committee was
appointed by the Prime Minister in March
following a Cabinet decision that called for a
review of operations at the energy company
in light of its falling revenues, allegations of
mismanagement and decreasing oil prices
The Petrotrin Review Committee is
chaired by Selwyn Lashley, Permanent
Secretary in the Ministry of Energy. Other
members include Prof Chandrabhan Shar-
ma, Department of Electrical and Computer
Engineering, Faculty of Engineering, UWI;
Helen Drayton, former independent senator;
Robert Riley, head of safety and operational
risk, competency and capability develop-
ment at the BP Group in London and former
chairman and CEO of bpTT; Wilfred Espin-
et, AeroMarine Trinidad Ltd; and Oilfield
Workers Trade Union (OWTU) Gregory
Marchan and David Abdulah.
The committee submitted its findings in
a comprehensive report on June 6 and have
agreed to remain empanelled on assignment
with Cabinet until December 31.
high in Resource
State-owned Petrotrin is one of the best
performing state enterprises globally for
the way it governs itself according to the
Resource Governance Index.
The index recently released its 2017
report that measures the quality of
governance in the oil, gas and mining sectors of 81
According to the report, Petrotrin was among the
top ten state enterprises operating in the oil, gas and
"The Petroleum Company of T&T achieved a good
score of 75 out of 100 points ranking among the top
10 of 74 SOEs (state-owned enterprises) assessed in
the index. Good scores across the board related to
rules and reporting on finances and operations are
offset by a lack of full transparency on the company's
commodity sales procedures."
The report added: "All Trinidadian SOEs are re-
quired to produce monthly cash statements showing
sales and other operating inflows and outflows and
Petrotrin makes this information available. Howev-
er, collection of sales proceeds from the company to
the government and selection of buyers and defining
prices are not rules based."
The company has been under significant scrutiny
with the government saying that all options are on the
table and that the company has to be turned around
in the shortest possible time.
Extractive Industry Transparency Initiative (EI-
TI)'s Sherwin Long told the Business Guardian that
the Resource Governance Index was a credible as-
sessment of how well state-owned companies and
countries involved natural resources were governing
the use and operation of those resources and Petro-
trin scored credibly especially compared to similar
He said: "Benchmarking is always important es-
pecially as it relates to a company's performance
in relation to governance, fiscal and tax terms. The
index highlights whether you have the correct laws
and regulatory framework in place but, more impor-
tantly, whether you go beyond the laws and how do
you practice in terms of ensuring that the regulations
Long noted that the RGI assessed not just the quality
of natural resource governance in terms of the rules,
but the extent to which companies were prepared to
go beyond the strict rules in attempting to improve
Long told the Business Guardian: "Given the sample
size, Petrotrin has performed credibly and the areas
they scored high on are the issue of the transfer rules
and disclosure of transfers, financial reporting rules,
production disclosure as well as their non-commer-
cial activity practices. However, they need to work
harder in disclosure of commodity sales as well as
their corporate governance practices."
The EITI has shown that Petrotrin is the second
largest contributor to government's tax revenues,
only surpassed by bpTT.
The Petroleum Company
of T&T achieved a good
score of 75 out of 100
points ranking among
the top 10 of 74 SOEs
assessed in the index.
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