Gail Alexan­der

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."