It is now do or die for Petrotrin
In disclosing that the options of local equity investment and employee stock ownership will be actively considered among the proposals to take burdensome state owned Petrotrin forward, Prime Minister Dr Keith Rowley has given the nation a public commitment that business as usual at a company plagued by high debt and low productivity, is off the table.
By going further to state on public record to all of us, that Petrotrin's management has been mandated to cut costs to the amount equivalent to the wage increase, the Prime Minister is holding not just Petrotrin's management accountable, but himself and his administration as well. Inability to deliver would not just be an indictment on Fitzroy Harewood and his management team, but on Dr Rowley's ability to set terms which change the way state owned companies do business.
The PM's address to us last night confronted the concerns–not just by the business community, but by average taxpayers–that a five per cent wage increase was ill-timed and far too generous a reward to an entity defined by inefficiency. By disclosing the state of the company, the foreign exchange implications, the possibility of divestment and employee ownership, and the mandate to drastically cut operating costs Dr. Rowley appears to be attempting to open the door to accountability and transparency in the operations of a troubled state enterprise.
With over 5000 employees and a wage bill of almost $2 billion, Dr Rowley last night attempted to change the conversation. The question, no longer where to find and how to fund a five per cent wage increase, rather, how and where will Petrotrin be able to cut costs and the start of public discourse on a model to take the company out of its mire.
The fact that the cost reduction directive was laid out publicly, is also telling. For far too long, Petrotrin and state enterprises like it, has been saved by last minute politically directed salvos, transfers of funds and other politically expedient manoeuvres. Petrotrin's after tax loss in FY 2015 was $819 million, and there is a projected loss of $600 million for 2016. With the company owing the treasuring some $1.2 billion in unpaid taxes, the death knell of its current operating model, is deafening.
Going forward, it is our hope that the company finds the resources to invest more oil and gas exploration. This will require capital that the state doesn't have, so equity investment is a practical option. To say that it is now do or die for Petrotrin is an understatement. The recommendations of former Finance Minister Wendell Mottley and financial experts are therefore eagerly anticipated for public consumption.
That the union which threatened to effectively shut down the economy, is also aware that cuts are coming in some shape or form, tells us that they too, see the need to change the operating model. We hope that in good faith, they too work on a way forward.
Employee stock ownership is a game changer that can re-shape an environment and facilitate the type of partnerships and ethic desperately needed in this situation.
Dr Rowley is in an unenviable position, at the helm of a ship in very rough waters. The handling of the Petrotrin predicament will set precedent for the way forward for other state enterprises. The opening gambit therefore seems to indicate a plan, a degree of thought, a measure of good faith and opportunity.