Andrea Perez-Sobers
Senior Reporter
andrea.perez-sobers@guardian.co.tt
Business groups and one economist see the reopening of the Petrotrin refinery as a step in the right direction with a local entity.
On Monday, during the United National Congress (UNC) general election victory speech, prime minister-designate Kamla Persad Bissessar vowed to reopen the Pointe-a-Pierre refinery, which was closed by the previous administration in 2018.
A UNC insider told Business Guardian that the aim is to work with the Oilfield Workers Trade Union (OWTU) to restart the refinery.
The OWTU previously unsuccessfully bid to acquire the refinery through its company Patriotic Energies and Technologies Company Ltd.
A representatve of one of the companies that was shortlisted in the most recent bid told the Business Guardian that it would cost between US$800 million to US1 billion to restart the refinery.
Economist Dr Justin Ram believes that it was an error to shut down the refinery completely, without any plan to reopen it.
He said Petrotrin as it was, needed to be restructured as its workforce was too large, which was costing taxpayers.
“I would have hoped that when the last government shut it down, that it was meant to be a restructuring, not just to be this wholesale closure of the refinery, and then for T&T to import fuels for domestic use and for re-export, I don’t think that is what we want,” Ram said.
He noted that it is important that the refinery be run efficiently, and that the new entity provides revenues to the government.
Ram outlined that the Government might initially have to think about providing some fiscal concessions to allow the new investment time to develop and become a profitable entity.
“These are things that we’re going to have to look at, but I think generally it’s an idea that I support and it should never have been shut down in the first place as far as I’m concerned.”
Asked whether he thought it was a good idea to let OWTU’s Patriotic Energies operate the refinery, as opposed to Nigerian energy company Oando PLC which was announced as the successful bidder in March, Ram said having a local entity that can put forward a proposal that is viable, by all means, and, because it’s important for T&T economically, a local entity is needed.
“I don’t know this Oando entity very well, but I do know the OWTU. The OWTU has been involved in the oil and gas industry for a long time. But I’m sure that not only within their membership, they know people who can assist them in doing this. So, by all means, I think too often, we sort of negate local entities from doing things,” Ram disclosed.
One of the things the economist suggested is that the new government should consider setting up a regulator that would monitor productivity and production efficiencies.
“The reason why I say that is because a lot of people will say, why give it to a local entity? They are going to have this monopoly here. That can lead to inefficiencies,” he pointed out.
One former Petrotrin director said the refinery can be given to the OWTU, on the condition that the government does not put a cent into it and the trade union’s investors fund the entire project.
Further, the former official said the OWTU company must be held liable for any accidents that occur in the community and not the taxpayers.
The former director stressed that the refinery would need a substantial injection of capital to start it up.
“In other words, you are going to need hundreds of millions of dollars to start that refinery once more. The question is where are you going to get it from? Is the union going to be able to do it? A lot of these things sound very good to people because, oh, we’ll open the refinery, we’ll do that. As it is, we already have a substantial number of state enterprises that are losing money,” the former board member disclosed.
They noted that the then Petrotrin was losing $2 billion a year and with the restructuring that took place in 2018, Heritage Petroleum Company, posted after-tax profit of $940.27 million for the year ended September 30, 2024, a 36.4 per cent decline from the $1.47 billion from a year earlier.
“That is the difference. You want the company to be making this revenue yearly and not losing with a top-heavy workforce. The refinery at this stage, over the seven years it has been closed, is going to be extremely expensive to start again. You’re going to be spending as much money as a new refinery. So almost everything in there is going to have to be taken over and done over as new.”
Business leaders welcome promised reopening
San Fernando Business Association president Daphne Bartlett said the promised reopening of the refinery is major since this country would have saved US$740million per year in the importation of fuel and the purchase of the byproduct bitumen for road repairs.
“Our neighbour Guyana is one of the largest producers of oil and we could refine their oil with proper negotiation. Tremendous employment would be created and it would certainly lessen the incidence of crime,” Bartlett said.
Fyzabad Chamber of Commerce president Angie Jairam highlighted that with the reopening of the Pointe-a-Pierre Refinery, this country can offer a variety of benefits across economic, social, and environmental dimensions.
She noted by refining crude oil locally, T&T can enhance its self-sufficiency in fuel production, potentially reducing dependency on imported fuels and stabilising local fuel prices.
Also, Jairam stated that the reopening of the refinery may encourage additional investments in the energy sector and beyond, aiding the country’s efforts to diversify its economy away from a heavy reliance on a single commodity.
Giving his input, chairman of the Confederation of Regional Business Chambers (CRBC), Vivek Charran said the refinery has laid dormant for some time so the initial investment to restart and refurbish may be significant. Charran said it appears the union may be given the nod to run the refinery but they will need the additional investment to do that. He questioned whether there would be potential partners.
“If the refinery is reopened and profitable it will enrich the fenceline communities and provide a source of employment. If we have potential agreements with Guyana to refine oil and probably later with Suriname then this could also help our foreign exchange situation. But the refinery must be profitable or else we run the risk of revenue being used to support a loss-making company which in the long run will do more harm than it will benefit us all,” Charran detailed.
Jai Leladharsingh, coordinator of the CRBC, who was also in support, said by revitalising the Pointe-a-Pierre refinery, T&T could strengthen its position as a regional energy hub, attracting trade and investment from neighboring countries.
He indicated that this move holds significant potential benefits across multiple sectors.
“By carefully managing its operations and addressing environmental and social considerations, T&T can leverage this opportunity for sustainable development and sustainable economic growth,” he added.