Joshua Seemu­n­gal

Se­nior Mul­ti­me­dia Jour­nal­ist

joshua.seemu­n­gal@guardian.co.tt

Yes­ter­day, the Sun­day Guardian be­gan an analy­sis of the moth­balled Pointe-a-Pierre (PAP) re­fin­ery as a po­ten­tial restart moves clos­er. Last Fri­day, Pres­i­dent Gen­er­al of the Oil­fields Work­ers Trade Union (OW­TU) An­cel Ro­get burned pho­tographs of Prime Min­is­ter Dr Kei­th Row­ley and En­er­gy Min­is­ter Stu­art Young to sym­bol­ise its dis­agree­ment with the re­fin­ery ac­qui­si­tion process. He called for a na­tion­al de­bate about the re­fin­ery’s clo­sure, say­ing the coun­try was robbed of a ma­jor for­eign ex­change earn­er. As both sides of the di­vide grap­ple to gain con­trol of the nar­ra­tive, Guardian Me­dia takes a crit­i­cal analy­sis of the com­pa­ny, what it cost the coun­try, and whether it should or could have been sal­vaged.

While the Man­ning gov­ern­ment in the ear­ly nineties saw the for­ma­tion of Petrotrin as a nec­es­sary move, the find­ings of re­ports sug­gest­ed the merg­er al­so ex­ac­er­bat­ed ex­ist­ing cul­tur­al is­sues.

Ac­cord­ing to the Lash­ley Re­port, there was no com­pre­hen­sive in­te­gra­tion plan. This, it said, re­sult­ed in de­fi­cien­cies in its op­er­a­tions, safe­ty and en­vi­ron­men­tal track record. The re­port de­scribed Petrotrin as com­plex and un­man­age­able. There were long­stand­ing con­cerns about over­staffing and low pro­duc­tiv­i­ty.

“The com­pa­ny lacks a clear pur­pose and iden­ti­ty, which has caused it to at times en­gage in ac­tiv­i­ties that are not con­sis­tent with the pro­fes­sion­al prac­tices of a com­mer­cial en­ter­prise.

“While staffing is sig­nif­i­cant­ly high­er than in com­par­a­tive re­finer­ies, this is not a root is­sue but a symp­tom of the un­der­ly­ing man­age­ment prob­lems,” the Lash­ley re­port stat­ed.

Ac­cord­ing to in­dus­try ex­perts, the move to uni­fy as­sets con­sol­i­dat­ed the OW­TU’s pow­er in the en­er­gy sec­tor, mak­ing it more dif­fi­cult to in­sti­tute nec­es­sary changes. Ex­perts said that giv­en OW­TU’s po­lit­i­cal pow­er, suc­ces­sive gov­ern­ment’s core man­date, as op­posed to fi­nan­cial vi­a­bil­i­ty, was po­lit­i­cal pa­tron­age.

Flex­ing its mus­cles, the OW­TU promised to re­move two suc­ces­sive Prime Min­is­ters: Patrick Man­ning and Kam­la Per­sad-Bisses­sar. The union al­so sought al­liances with Dr Row­ley and Per­sad-Bisses­sar while their re­spec­tive par­ties were in op­po­si­tion.

“In short, the Petrotrin fix was al­ways seen to be bad for pol­i­tics and even one’s po­lit­i­cal sur­vival, but we have ar­rived at a place now where its on­go­ing fail­ure threat­ens na­tion­al sur­vival. Such is my lot. This Gov­ern­ment does not have the lux­u­ry of not at­tend­ing to this age-old prob­lem. Time is not on our side,” PM Row­ley said in his 2018 ad­dress about Petrotrin’s clo­sure.

In his ad­dress, Dr Row­ley said that Petrotrin’s wage bill ac­count­ed for around 47 per cent of the re­cur­rent ex­pen­di­ture, em­ploy­ing more than 5,000 em­ploy­ees at a cost of around $1.8 bil­lion (TT) a year. Petrotrin al­so had more than 1,000 ven­dors sup­ply­ing ma­te­ri­als and 2,000 ser­vice providers.

Petrotrin and the OW­TU have had sev­er­al stand­offs in the past decade. In No­vem­ber 2011, work­ers shut down a large sec­tion of the re­fin­ery, cit­ing man­age­ment’s fail­ure to ad­dress safe­ty con­cerns. OW­TU Pres­i­dent Gen­er­al An­cel Ro­get claimed Petrotrin’s op­er­a­tions were ad­verse­ly af­fect­ed by po­lit­i­cal ap­point­ments.

He added that there were too many va­can­cies and an overde­pen­dence on con­tract work. “The re­fin­ery is a tick­ing time bomb. On the port, there are safe­ty is­sues. At the ma­rine de­part­ment and the bond, there are sim­i­lar con­cerns. A year ago, we sub­mit­ted a new man­age­ment struc­ture for the com­pa­ny, and that has not been im­ple­ment­ed,” Ro­get said.

In Feb­ru­ary 2012, the OW­TU and Petrotrin agreed to a nine per cent salary in­crease in salary ne­go­ti­a­tions for the pe­ri­od 2008–2011. In March 2013, how­ev­er, thou­sands of Petrotrin em­ploy­ees/OW­TU mem­bers protest­ed. They ac­cused the com­pa­ny of fail­ing to ho­n­our the terms of the col­lec­tive agree­ment signed a year ear­li­er. Ro­get ar­gued that the com­pa­ny promised to fill 800 va­can­cies, make ca­su­al work­ers per­ma­nent, make the work en­vi­ron­ment safe, and set­tle out­stand­ing pay­ments for the pe­ri­od 2009–2010, but it failed to keep its promise. The strike last­ed a week be­fore Petrotrin’s lawyers won an in­junc­tion forc­ing work­ers to re­turn to work.

“Work­ers will go back to work feel­ing de­mo­ti­vat­ed and de­mor­alised. An in­junc­tion doesn’t take care of poor man­age­ment and nepo­tism.” Ro­get said.

In De­cem­ber 2016, OW­TU served strike no­tice to Petrotrin af­ter wage ne­go­ti­a­tions for the 2015–2018 pe­ri­od broke down. The union was of­fered 0-0-0 for the 2011–2015 pe­ri­od as well as the 2015–2018 pe­ri­od.

The com­pa­ny at­tempt­ed a six-year wage freeze, cit­ing its fi­nan­cial trou­ble. In Jan­u­ary 2017, with a strike loom­ing, the OW­TU ac­cept­ed a five per­cent wage in­crease of­fer for the 2011–2012 and 2012–2013 pe­ri­ods.

In an ad­dress to the na­tion, Prime Min­is­ter Row­ley said the com­pa­ny’s cur­rent debt was $13.2 bil­lion (TT), and bor­row­ings to meet wage in­creas­es would add to the na­tion­al debt. “With the need to sus­pend ex­port sales, in the event of a strike, Petrotrin’s gross re­ceipts would have de­clined by three-quar­ters and its for­eign ex­change earn­ings would have dried up ... the planned strike would have caused a net in­come loss of close to $500 mil­lion (TT) dur­ing the po­ten­tial 90-day pe­ri­od of the strike.

“It is es­ti­mat­ed that this in­ter­im in­crease of five per cent will im­me­di­ate­ly in­crease Petrotrin’s wage bill by $81 mil­lion per year, and the back pay li­a­bil­i­ty aris­ing from the in­ter­im of­fer would be in ex­cess of $300 mil­lion,” Dr Row­ley warned.

Twen­ty-one months lat­er, all 5,000 plus of those em­ploy­ees were re­trenched.

Board games

Be­tween Jan­u­ary 2007 and its clo­sure in No­vem­ber 2017, there were four dif­fer­ent chair­men: Mal­colm Jones, Lind­say Gillette, An­drew Jupiter, and Wil­fred Es­pinet. Dur­ing that pe­ri­od, 40 dif­fer­ent peo­ple were ap­point­ed to the board—an av­er­age of four new an­nu­al ap­pointees. Be­tween Jan­u­ary 2007 and 2010, when the Man­ning ad­min­is­tra­tion was in pow­er, 11 dif­fer­ent mem­bers served.

The board av­er­aged eight serv­ing mem­bers. Be­tween Jan­u­ary 2011 and Ju­ly 2015, un­der the Per­sad-Bisses­sar ad­min­is­tra­tion, 15 dif­fer­ent mem­bers served. The board av­er­aged nine mem­bers dur­ing that time. Be­tween Oc­to­ber 2015 and No­vem­ber 2017, un­der the Row­ley ad­min­is­tra­tion, 14 dif­fer­ent mem­bers served. The board had an av­er­age of sev­en serv­ing mem­bers.

With both changes of gov­ern­ment (in 2010 and 2015), the en­tire in­cum­bent board was re­placed. The on­ly board mem­ber to serve in two dif­fer­ent ad­min­is­tra­tions was An­tho­ny Chan Tack, who served un­der Man­ning in 2007 and Dr Row­ley in 2017.

Ac­cord­ing to the 2017 Lash­ley Re­port, the process by which the boards were ap­point­ed was detri­men­tal to ef­fec­tive gov­er­nance.

“The his­to­ry of changes in man­age­ment and de­mands im­posed were not con­sis­tent with the in­ter­ests of the com­pa­ny, fur­ther crip­pling its per­for­mance. To­day, Petrotrin is over­bur­dened with debt, which sub­stan­tial­ly re­sult­ed from poor in­vest­ment de­ci­sions.

“The sit­u­a­tion re­sult­ed: in Lit­tle room for con­ti­nu­ity and plan­ning suc­cess­ful projects be­yond a five-year hori­zon; cre­at­ing an un­nec­es­sary dis­rup­tion of busi­ness strate­gies; A lack of con­sis­ten­cy in strate­gic di­rec­tion; A lack of cor­po­rate gov­er­nance ex­pe­ri­ence and skills; Poor de­ci­sion-mak­ing; Loss of in­sti­tu­tion­al mem­o­ry; Pow­er dis­tance be­tween pol­i­cy/strat­e­gy and op­er­a­tional man­age­ment; Loss of con­fi­dence and in­sta­bil­i­ty; Con­stant chal­lenges for its en­gage­ment with ma­jor stake­hold­ers; A loss of morale among the em­ploy­ees,” the re­port stat­ed.

Rat­ings and bonds

From April 2001, Petrotrin’s Moody’s rat­ing was down­grad­ed from Baa3 (mod­er­ate cred­it risk) to Ba1 (sub­ject to sub­stan­tial cred­it risk) in May 2015, and then fur­ther down­grad­ed to B1 in April 2017 (spec­u­la­tive and high cred­it risk). The com­pa­ny’s Stan­dard and Poor’s rat­ings de­clined from BBB (In­vest­ment grade) in 2005 to BB (Non-In­vest­ment Grade, or junk) in April 2007.

“The com­mit­tee not­ed that the cur­rent ex­ter­nal and in­ter­nal en­vi­ron­ments, cou­pled with con­tin­u­ing cred­it down­grades by rat­ing agen­cies, al­so made it in­creas­ing­ly dif­fi­cult for the com­pa­ny to man­age liq­uid­i­ty through short–and medi­um-term bor­row­ing for trade fi­nanc­ing and work­ing cap­i­tal sup­port,” a 2016 JSC Com­mit­tee chaired by David Small re­port­ed.

The com­pa­ny al­so had two ma­jor long-term bor­row­ings com­pris­ing two bonds: a US$750 mil­lion bond at six per cent from May 2007 as well as a US$850 mil­lion bond at 9.75 per cent from Au­gust 2009, which in­volved a sub­stan­tial bul­let prin­ci­pal pay­ment. The US$750 mil­lion pay­ment was amor­tised.

In Sep­tem­ber 2018, Fi­nance Min­is­ter Colm Im­bert said the Gov­ern­ment guar­an­teed more than $2.5 bil­lion in loans in just six months for Petrotrin. He said he wrote let­ters of guar­an­tee for Re­pub­lic Bank, Sco­tia Bank and First Caribbean for US$50 mil­lion, re­spec­tive­ly; First Cit­i­zens Bank for US$55 mil­lion and FCB for US$25 mil­lion. Im­bert stat­ed that each guar­an­tee af­fect­ed the Gov­ern­ment’s pub­lic debt.

As of Sep­tem­ber 2023, the Gov­ern­ment’s pub­lic debt was $102.5 bil­lion. The pub­lic debt as a share of GDP is 0.54. In Feb­ru­ary 2013, Trade and In­dus­try Min­is­ter Paula Gopee-Scoon an­nounced that Her­itage re­fi­nanced the Trinidad Pe­tro­le­um Hold­ings Lim­it­ed groups’ debt of US$975 mil­lion.

She said it was the sec­ond time the debt had been re­fi­nanced. The debt, she said, re­sult­ed from Petrotrin’s US$850 mil­lion bul­let bond and part of the amor­tised US$750 mil­lion bond.

The (un) fore­see­able fall­out

“The Gov­ern­ment is not clos­ing down Petrotrin, and in case you were just open­ing up your fridge and you didn’t hear that when you closed the door, let me re­peat it. The Gov­ern­ment of Trinidad and To­ba­go is not clos­ing down Petrotrin.”

Prime Min­is­ter Dr Kei­th Row­ley promised on Sep­tem­ber 4, 2018, dur­ing a po­lit­i­cal meet­ing in Mara­bel­la. The meet­ing was en­ti­tled, “Resur­gence of Petrotrin.”

It came days af­ter the Gov­ern­ment an­nounced its in­ten­tion to shut down the Pointe-a-Pierre re­fin­ery. Up to then, there was no men­tion of the com­pa­ny be­ing shut down as well. Twen­ty-three days lat­er, chair­man Wil­fred Es­pinet an­nounced at a press con­fer­ence that the com­pa­ny would be shut down, with all work­ers re­trenched.

The de­ci­sion came de­spite both the 2017 Lash­ley re­port and a JSC in­to Petrotrin’s op­er­a­tions say­ing there were op­por­tu­ni­ties to turn the com­pa­ny around, al­beit with sig­nif­i­cant and dif­fi­cult changes. The Lash­ley re­port stat­ed, “It is equal­ly clear that this is a valu­able source of in­come and very im­por­tant for for­eign ex­change earn­ing po­ten­tial.

There is a great op­por­tu­ni­ty to har­vest this po­ten­tial, but sig­nif­i­cant­ly im­proved stew­ard­ship is ur­gent­ly re­quired. Petrotrin has sig­nif­i­cant­ly un­der­per­formed over the years, and giv­en the cur­rent eco­nom­ic re­al­i­ties of T&T, it has be­come nec­es­sary to re­view the per­for­mance of the com­pa­ny with the ob­jec­tive of re­duc­ing its de­pen­dence on the State and cre­at­ing val­ue for present and fu­ture gen­er­a­tions of the coun­try.”

The 2016 JSC in­to Petrotrin’s Ad­min­is­tra­tion and Op­er­a­tions stat­ed that “In spite of these is­sues, the com­mit­tee is of the view that Petrotrin has sig­nif­i­cant po­ten­tial for pos­i­tive sus­tained growth, pro­vid­ed that the tough de­ci­sions need­ed are tak­en quick­ly to un­lock the full val­ue propo­si­tion of the com­pa­ny. In­ter­nal­ly, the com­pa­ny re­al­ly needs to take a hard look at how it has been con­duct­ing busi­ness in sev­er­al ar­eas high­light­ed in this re­port and make the nec­es­sary ad­just­ments to pro­tect the com­pa­ny from re­peat­ing the mis­takes and the poor de­ci­sions of the past.”

De­fend­ing the com­pa­ny’s clo­sure in March, Dr Row­ley said Petrotrin would have lost at least an­oth­er $5 bil­lion be­tween 2018 and 2023. To this day, econ­o­mists and en­er­gy ex­perts share op­pos­ing opin­ions on whether clos­ing Petrotrin was the right de­ci­sion. In May 2023, Her­itage Pe­tro­le­um re­port­ed a $1 bil­lion prof­it in 2022.

Mean­while, fence­line com­mu­ni­ties across Mara­bel­la, Pointe-a-Pierre, and Clax­ton Bay re­main deeply af­fect­ed by the clo­sure.

Part 3 to be con­tin­ued in the Sun­day Guardian