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Petrotrin grilled on cost overruns

Thursday, December 12, 2013
Members of the Public Accounts (Enterprise) Committee, from right, Khalid Hassanali, president of Petrotrin, and the company’s chairman Lindsay Gillette at yesterday’s sitting.

The board of the Petroleum Company (Petrotrin) was grilled yesterday on  the impact of cost overruns and proper project management at yesterday’s Public Accounts (Enterprises) Committee sitting in Parliament. Newly-appointed Opposition Senator Camille Robinson-Regis chaired the committee, which examined the audited financial statements for the years 2008-2011. 



Among those who represented Petrotrin were its chairman Lindsay Gillette, deputy chairman Aleem Hosein, director Rudranath Maharaj and president Khalid Hassanali. The Gillette-led board was installed in October 2010. The Gasoline Optimisation Programme (GOP), which was discussed and which was originally scheduled to be completed in 2008, moved from its original budget of US$430 million to US $1.4 billion, Hassanali told the committee.



GOP is designed to increase the overall gasoline yield of the refinery, as well as improving the quality of the gasoline product to meet environmental specifications. Saying the additional cost of the GOP was approved “every step of the way by Cabinet” Hassanali said there was also a steering committee to oversee the project. 



Point Fortin MP Paula Gopee-Scoon, who raised the issue of budgetary exercises, questioned whether that was realistic on the part of Petrotrin, given the fact that every year the company endured some 20 to 30 per cent of cost overruns. “I expect with large projects there will be overruns but from one year to the next, are you making errors with regard to your projections?”  Gopee-Scoon asked. In response Hassanali said the concerns were valid, adding that the board had embarked on several initiatives to improve the system. 


Those, he said, entailed not only budgetary control but also project management because they were connected in terms of the causes of the overruns and also the various models used for the procurement of those major projects. He added: “We expect this year we will certainly make progress. The major projects are largely behind us in terms of the development of the refinery, save and except for the ultra-low-sulphur diesel plant. 


“The rest are all behind us and our focus from this year and for the next few years is going to be very heavily on the exploration and production division.” Hassanali said the company was expected to face challenges in that area but it was “improving as it went along.” On the issue of ocean-bottom seismic surveys, which have caused concern to fishermen, Gopee-Scoon said she was not “sold on the idea” that Petrotrin had made peace with them.


She added: “My own view is that you have not come up with a policy as to how Petrotrin is going to treat with this compensation matter and particularily so because of the impoverished areas that are affected and where fishing remains the only industry. “To me you have always tried to sideline the issue as though fish will just migrate for one day while you do your data in this particular block and it will come back the next day. 


“I’m not satisfied that you have sufficiently and reasonably explained why. I know you have done so in the press but it seems unrealistic to me.” 


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