Sunday 27 September, 2020

Economist: Gov't may seek investors for Petrotrin refinery

UWI economist Dr Roger Hosein is of the opinion that the refinery has value to the right player and will not remain closed for long.

Speaking to LoopTT, Dr Hosein said the closure of the refinery may not be permanent, and suggested that international and local investors may be invited to take over the refinery, once the “militant union” has been subdued.

“In relation to solutions moving forward for Petrotrin, the state did outline a solution to retrench 2,500 workers, reemploying 800 workers, leaving 1,700 workers on the breadline.”

“This assumes the closure of the refinery. I do not think the refinery will remain closed permanently, the refinery has potential value and the state would therefore consider at some point negotiating a deal with Exxon or Sinopec or some other private investor to take over the refinery.”

Dr Hosein suggested that if a single private investor could not be found, government might implement fixed income bonds similar to the National Investment Fund (NIF) to raise capital for the refinery to resume operations, but with a suitable public-private partnership.

LPG may increase

Dr Hosein added that the cost of LPG may also increase. 

“If the refinery remains closed it’s possible that the economy’s cost of living may be affected, we would now have to import 25,000 barrels per day of refined petroleum products.”

“This would increase the cost at the pumps of fuel (if not continually subsidised by government), it also means that LPG may go up in value, although PPGL can supply the LPG needs of the economy, LPG from Petrotrin was subsidised by about $25 million per year and therefore if it is that Petrotrin were to close then the cost of a 20lb cylinder may increase,” he said.

On Sunday night, Prime Minister Dr Keith Rowley said government 'had no choice' but to shut down the refinery as the company has become a drain on the economy instead of a contributor. 

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Dr Rowley also referred to the results of the June 2017 Lashley report which said the company's debt for financial year-end 2015 amounted to $11.4 billion. 

He added that several talks had been held with stakeholders, including the Oilfield Workers Trade Union (OWTU) to discuss the issue, and detailed analysis was done, therefore any accusation of the decision being sudden was disingenuous.

Dr Rowley said that the refining assets of Petrotrin "can now be put in a separate company for opportunity attention", adding that the OWTU would be given an opportunity to own and operate the refinery, however, OWTU head Ancel Roget rejected the offer, saying the refinery belongs to the people of Trinidad and Tobago. 

Dr Rowley said the company will now focus on "increasing the production of barrels of oil and each barrel will be sold externally on the open market", which would improve the country’s earning potential.

For more information on Petrotrin's shutdown see: Petrotrin's refinery shutdown explained (and why it was done)


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