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Special Cabinet meeting talks Petrotrin future
The special Cabinet session was held just under two months after the Petrotrin Review Committee submitted a comprehensive report on the operations at Petrotrin, which included recommendations for the restructuring of the company.
The Petrotrin Review Committee was established in March following a Cabinet decision calling for a review of operations at the energy company. The committee is chaired by Selwyn Lashley, Permanent Secretary at the Ministry of Energy and Energy Affairs.
In an address to the nation in January, Prime Minister Dr Keith Rowley said a “dramatic slump in crude oil prices, combined with an ongoing decline in refinery margins and declining local oil production” had led to a more than 50 per cent decrease in Petrotrin’s revenues, from TT$37 billion in 2012 to TT$16 billion in 2016.
Rowley said Petrotrin had been a net earner of foreign exchange, approximately $250 million per year in 2015 and 2016, and is also an important contributor to government tax revenues and a guarantor of the country’s energy security. However Rowley said many years of high international oil prices masked a range of fundamental weaknesses in Petrotrin’s operations.
Among the main structural problems were a steady decline in domestic oil production, from 64,000 bpd in 2006 to 42,000 bpd in 2016, low productivity, escalating manpower costs and steadily increasing operational and capital costs, due to inadequate controls, questionable management practices, ageing assets and infrastructure.
Petrotrin now has more than 5,000 employees, with an annual wage bill of $1.9 billion, which is close to 50 per cent of its total annual operating costs, Rowley said.
Petrotrin’s debt burden also increased significantly in 2007, largely in part to two external loans, namely a US$750 million loan contracted in 2007 and a US$850 million loan, contracted in 2009, used largely to support refinery upgrade projects, which were exposed to some significant mismanagement and experienced sizeable cost escalation, Rowley said.
Cabinet will have its regular weekly meeting today.