(Trinidad Express) Outlining the Government decision to shut down operations at Petrotrin’s Pointe-a-Pierre refinery, Finance Minister Colm Imbert said in its current state, the oil company was a looming crisis.
Imbert said the company had placed a severe burden on the treasury and Petrotrin was now “tottering on the brink.” He said the refinery economics had further deteriorated and had failed to adapt to the changing fuel environment.
In delivering the 2018/2019 budget presentation in the House of Representatives yesterday, Imbert said continuing efforts over time had failed to improve Petrotrin’s efficiency.
Major upgrades of plants at the refinery had failed, including the Ultra Sulphur Diesel Complex and the Gas to Liquids Plant. These plants, he said, had significant cost overruns in the process.
He said the upgrades had cost the company in excess of $12 billion, with an amount of $5.7 billion due in August 2019.
Imbert said although the Ultra Sulphur Diesel Complex was 98 per cent completed, it could not be operated as it was structurally defective and would cost an addition $2.5 billion to complete.
Petrotrin, he said, has a workforce of 5,000 with an annual wage bill of $1.8 billion or $2.2 billion. The company’s medical plan, he said was running at an annual cost of $245 million a year with a contribution by workers of $50 or $80 monthly.
Imbert said that the medical plan covers the employee and spouse for life and family members under age 21 or under age 23 if still in school.
“The truth is Petrotrin is tottering on the brink and action must be taken now,” he said.
Imbert said Petrotrin continues to approach the Government for guarantees, the latest amount being US$56 million, to purchase a cargo of crude. “In its present form, Petrotrin remains unprofitable,” he said. And even if the bills were cleared, Imbert said, the oil company would still continue to incur a loss of $2 billion a year. He said the company purchases 100,000 barrels of crude a day at a cost of $47 million.
“There was no doubt at the level of company and representatives of the workers, the Oilfield Workers Trade Union, that the business model at Petrotrin was obsolete and unprofitable,” he said. Imbert said capital investment to sustain Petrotrin was simply not available. He said losses at Petrotrin was being camouflaged by the previous Government and the PNM Government was now prepared to move the company to viability.
Crude, he said, would be exported following the refinery’s closure to earn substantial foreign exchange. He added that exploration and production would be increased.
And petroleum products, he said, would be imported through a new terminaling business market.
Government would also accept offers for the company’s assets.