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SHUTTING THE REFINERY CANNOT PAY THE DEBT By Sylvan Wilson

posted 17 Sep 2018, 20:15 by Gerry Kangalee   [ updated 17 Sep 2018, 20:29 ]
Sylvan Wilson
A considerable amount of noise has engulfed Trinidad and Tobago relative to this issue of Petrotrin. Noise! Noise! Noise! Deafening noise!

What we, ordinary people, have failed to do, however, in all this noise, is put things in their proper perspective. An analysis as to why we are here and how we got here is absolutely imperative if we are to make sensible decisions.

What we have are numerous statements purporting to be excerpts of reports from experts but careful reading of the very reports shows heavy political manipulations, all designed to achieve a pre-determined objective.

The story changes according to how the political pendulum swings. In the mid-year budget review everything was rosy including the oil industry. Impsbert said then: “Early estimates are indicative of a growth forecast of 2.0 percent in 2018 and 2.2 percent in 2019, rising to 2.5 percent in 2020. And contrary to the negative commentary of uninformed spokespersons, who speak without having any facts, the turnaround is being driven by economic expansion in both the energy and non-energy sectors.

A few months ago the Board and management of Petrotrin boasted about making a profit then suddenly, out of the blue the refinery has to be shut down.

This is the industry that every citizen of Trinidad and Tobago and many others owe for free education up to the tertiary level, our health care, cheap electricity and water, tens of thousands enjoy affordable housing etc. Yet we are prepared to allow such catastrophic decisions to be made without full and detailed presentation of all the facts followed by national discourse.

Critically, in determining the way forward, one of the things we must identify in coming up with solutions must be what specific problems are they addressing.

For instance, Petrotrin has a particular issue to address in August next year, which is the payment of a debt of US $850 million. A lot of suggestions and all kinds of talks are coming up about the level of the workers’ salaries, sale of the refinery, etc.

If the problem that we are seeking to address is the payment of US $850 million then it means that any actions taken to address that must deal with that. It makes absolutely no sense whatsoever in someone who has arthritis taking very good medication but prescribed for someone who has hypertension. It just simply will not relieve the pains in the joints.

The debt is put up there as one of the burdens that needs to be dealt with. No one has said and no one has even attempted to show how shutting down the refinery pays off the debt. No one has shown how the elimination of monthly overtime costs of the legendary electrician of $70,000 fame and the $22 million for the rest of staff pays the debt.

Image result for dollarsSo, it, therefore, means what could very well happen with that debt is this: come next year August, US $850 million dollars will have to be found. Petrotrin will not be able to go and re-finance that given its current financial state, whether the refinery runs or not. So that debt will end up being taken on by and paid or refinanced by the People of Trinidad and Tobago. One way or the other we will pay the debt, whether we have a refinery or not.

Now, critically, going down that road, if it is that the refinery shuts down, then where are the finances coming from to make whatever payments will become necessary? Will it be from the sale of that same refinery that “can’t make a profit” and/or will it be the sale of our producing fields? And these are the issues that we need to focus on as we walk this walk. What is going to happen to that debt? How is it going to be serviced? That is independent of whether the refinery runs or not.

There are two questions pertinent about survival of the refinery, firstly is it that refining is no longer a viable activity? If the answer is no, then we should be witnessing mass world-wide closures of refineries. In fact, the 200,000 barrels a day former Hovensa refinery in St Croix is being re-started, as is the 235, 000 barrels per day refinery in Aruba. According to the International Energy Agency global oil supply reached a record 100 million barrels per day in August.

If the answer is yes, then the other question is: is there something peculiar about Petrotrin? The answer to that question is YES. This is the reason for all the noise. The chief culprits will be found deep within our so-called political divide. Careful analysis will show in the Petrotrin and other similar issues there is really no divide.

But these decisions that are being made about the shut-down of the refinery, to my mind, quite clearly, are different phases of a particular journey. That journey, that entire journey, is not yet spelt out. But it is well-defined for those who will be effecting and benefitting from this design.

So that when the dust finally settles, what we may very well find is that Trinidad and Tobago is servicing a debt with all of the implications associated with it. Trinidad and Tobago will NOT have a refinery; we may very well have little of our producing fields.

So Trinidad and Tobago, as a country, independent for 56 years, will go back to our colonial days. We’ll own absolutely nothing and our Independence will be characterised by having a National Anthem and a Flag. That is what’s going to happen after 56 years of a journey where we fought for an Independent Trinidad and Tobago and indeed an independent Caribbean.
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