New Petrotrin chairman Andrew Jupiter has warned that the state-owned company has been spending much more than it earns and unless this is quickly reversed, "we may soon go out of business.
"We believe that Petrotrin has the potential to be a sustainable business but achieving this goal requires drastic and urgent change. It cannot be business as usual," Jupiter stressed in an October 9 message to the company, which was themed "Facing and Overcoming Our Current reality."
This followed the new Petrotrin board's first meeting and the message was signed with Jupiter's name, his designation and the October 9 date with a Petrotrin letterhead.
The message stated: "Today the board convened its first meeting and we were apprised of the company's adverse economic situation. Following our deliberations it was clear the organisation is in a perilous state and must take steps to address its current challenges."
Jupiter cited some factors contributing to this, including high and increasing debt, low productivity levels, escalating manpower costs, total company debt now standing at TT$13.28 billion, a US$850 million bond payable in 2019 and other issues.He added: "The harsh reality is that Petrotrin has been spending much more than it earns and unless this is quickly reversed, we may soon go out of business."
He said oil prices are expected to remain low and volatile and Petrotrin's projected revenue for fiscal 2015-2016 is unlikely to support its current cost structure.
Also, while refinery margins were able to partly offset the deficit in the E&P (exploration and production), they are unable to sustain the company's cash flow and net profitability.
Jupiter said: "In order to preserve the company's sustainability, stringent cost management measures must be implemented to control expenditure and improve the efficiency of Petrotrin's operations."
In E&P, he said, current production stood at approximately 45,327 bpd, inclusive of own/operated third parties, down from an average of 45,947 bpd in fiscal 2014-2015.He added: "The company must therefore reinvigorate its E&P operations to accelerate production in the short term.
"In these serious economic times, forging meaningful partnerships and strengthening stakeholders' relationships are critical. The organisation must also review its processes and procedures to ensure they are cost-conscious and effective.
"Although the picture appears gloomy, let us not forget this company has a combined history of over 100 years and that we have demonstrated our resilience in overcoming challenges in the past.
"The board of directors is committed to working closely with management in charting the way forward for the organisation. However, we are very mindful that success would be dependent on all parties working together towards the common good of securing Petrotrin's viability," he added
He told employees, however, that the situation presented them with a new opportunity to transform Petrotrin's reality but noted that "this requires the realignment of all key stakeholders (management, employees and collective bargaining bodies) working together to return the organisation to a state of profitability and stability."
Factors contributing to Petrotrin's situation:
�2 A precipitous fall in international oil prices.
�2 Aged assets and infrastructure.
�2 High operating costs rendering us (Petrotrin) uncompetitive.
�2 Low productivity levels.
�2 Escalating manpower costs.
2,500 to 'go,' says Moonilal
Opposition Whip Roodal Moonilal claims 2,500 workers may be retrenched from state-owned Petrotrin due to the company's current position.Speaking in Parliament's 2016 Budget debate on Tuesday, Moonilal pointed to recent warnings from Petrotrin's new chairman Andrew Jupiter and also to the company's US$850 million bond which becomes payable in August 2019.
Moonilal told T&T Guardian yesterday that the company's situation has been caused by debt incurred from the past People's National Movement administration, including a US$850 million bond.He claimed Petrotrin management had indicated preparations for a voluntary separation plan in respect of employees and the Opposition had information on that.
"That's a serious matter. It's consistent with the chairman's warnings but all of Petrotrin's debt and the US bond were incurred under the PNM," he said.
Following T&T Guardian queries to Petrotrin regarding what measures the company might employ to deal with its problems and if staff cuts might be involved, Petrotrin's response was that the chairman sent a message to the employees after his first meeting with the board on October 9.
Petrotrin added: "Chairman Jupiter indicated the company is presented with a new opportunity to transform Petrotrin's reality but this requires the alignment of all key stakeholders (Management, Employees and Collective Bargaining Bodies) working together to return the organisation to a state of profitability and stability."