Renu­ka Singh

State-owned Petrotrin is fac­ing an­oth­er fi­nan­cial chal­lenge, as there are re­ports that 21 of 23 plants with­in the ag­ing re­fin­ery have been shut down, a pend­ing mul­ti-mil­lion dol­lar se­cu­ri­ty bond pay­ment is due and there re­main un­paid bills pil­ing up from the two-month old oil spill.

While Petrotrin has re­mained mum on the shut­ting down of the plants, work­ers at the com­pa­ny have re­port­ed to their rep­re­sent­ing union, the Oil­fields Work­ers' Trade Union (OW­TU), that the sub-plants have been "of­fline for sev­er­al days".

This, work­ers said, will in­vari­ably lead to more fi­nan­cial loss­es for the al­ready cash-strapped or­gan­i­sa­tion.

OW­TU boss An­cel Ro­get has ques­tioned why the com­pa­ny was keep­ing news of this shut down qui­et. In a tele­phone in­ter­view on the is­sue, Ro­get said if the work­ers had been be­hind the shut down "it would be all over the news."

"But it's shut down now be­cause of poor man­age­ment and we are hear­ing noth­ing," Ro­get said.

"There is no feed stock to keep the ma­chin­ery go­ing and the work­ers have noth­ing to do with that. That is strict­ly as a re­sult of poor man­age­ment and poor de­ci­sions at that State feed­ing trough called Petrotrin."

Min­is­ter of En­er­gy Kevin Ram­nar­ine did not re­turn phone calls and did not re­spond to e-mails on the sit­u­a­tion. Petrotrin chair­man Lind­sey Gillette, pres­i­dent Khalid Has­sanali and com­mu­ni­ca­tions man­ag­er Gillian Fri­day have not an­swered re­peat­ed calls, texts and e-mails re­gard­ing the shut down, but one source close to the ex­ec­u­tive has con­firmed that the plants have been off-line due to a lack of raw ma­te­r­i­al feed stock to sup­ply the re­fin­ery.

In fact, the Sun­day Guardian was told that se­nior man­age­ment man­dat­ed that "no one speak to the Sun­day Guardian" when they learned the mat­ter was be­ing in­ves­ti­gat­ed.

In the past year, Petrotrin has faced nu­mer­ous mon­ey-los­ing sit­u­a­tions, trig­gered by work­ers' ac­tion, by the De­cem­ber 17 oil spill and by in­fra­struc­tur­al is­sues with­in the re­fin­ery.

US$150m bond pay­ment due

This lat­est set­back could af­fect the com­pa­ny's abil­i­ty to fur­nish its mas­sive US$150 mil­lion in se­cured bonds in­sur­ance pay­ment which be­comes due this year. The bond, which was un­der­writ­ten by MBIA In­sur­ance Corp back in 2001, holds the com­pa­ny as­sets as col­lat­er­al.

The Sun­day Guardian ac­quired a doc­u­ment from US rat­ing firm Stan­dard and Poor which shows that pay­ment on a fi­nan­cial guar­an­ty in­sur­ance pol­i­cy is­sued by in­ter­na­tion­al in­sur­ers–MBIA In­sur­ance Corp–is due this year.

Though the bond is­sue was giv­en a favourable triple A rat­ing, it is de­pen­dent on Petrotrin's abil­i­ty to en­sure "time­ly pay­ment of in­ter­est and prin­ci­pal," the Sun­day Guardian learned.

Ac­cord­ing to the Stan­dard and Poor as­sess­ment, the un­der­ly­ing risk to MBIA is based on Petrotrin's abil­i­ty to "pro­duce and ex­port a suf­fi­cient amount of diesel fu­el/No 2 Oil (No 2 Oil) to gen­er­ate a suf­fi­cient amount of re­ceiv­ables to pay debt ser­vice."

"The struc­tur­al en­hance­ments in place to mit­i­gate sov­er­eign risk, in­clud­ing the as­sign­ment of re­ceiv­ables to Caribbean Heat­ing Oil Pur­chase Co Ltd and the re­quire­ment that, un­der the terms of the No 2 Oil con­tract, Petrotrin, act­ing as agent for the is­suer, will re­sell the quar­ter­ly de­liv­ery re­quire­ment of No 2 Oil sold to the is­suer to cer­tain long-stand­ing cus­tomers of Petrotrin.

"In ad­di­tion, each ap­proved buy­er will re­ceive ir­rev­o­ca­ble in­struc­tions from Petrotrin no­ti­fy­ing the buy­er of the for­ward sale con­tract and in­struct­ing each buy­er to make all pay­ments in­to the off­shore ac­count," the doc­u­ment read.

But MBIA is al­lowed to con­trol the sale of Petrotrin's prod­ucts to en­sure its pay­ment is pro­tect­ed. The doc­u­ments pro­vide dis­in­cen­tives to "non-ap­proved buy­ers."

"Since it would re­quire the com­pa­ny to redi­rect all prod­ucts sold to the ap­proved buy­ers, Petrotrin is the dom­i­nant sell­er in the re­gion­al mar­ket with a 74 per cent mar­ket share in 2000/2001 based on its abil­i­ty to pro­vide mul­ti prod­uct car­goes to its cus­tomers," the doc­u­ment said.

Ro­get ad­mit­ted that with all the fi­nan­cial set­backs at Petrotrin in the past year, he was con­cerned about the com­pa­ny's abil­i­ty to fi­nance its mas­sive bond debt.

In re­sponse to e-mailed ques­tions, man­ag­ing di­rec­tor, head of in­vestor re­la­tions at MBIA Inc, Gre­go­ry R Di­a­mond, would on­ly say that he could not com­ment.

"As the in­sur­er of bonds, we are gen­er­al­ly not per­mit­ted to share in­for­ma­tion about the is­suers of those bonds," Di­a­mond said.

Ques­tions re­gard­ing the loan re­pay­ment were sub­mit­ted to both Fri­day and Petrotrin cor­po­rate events co-or­di­na­tor Joy An­toine, but to date they have not been an­swered.

Oth­er loan pa­ra­me­ters:

Ac­cord­ing to the Stan­dard and Poors doc­u­ment, there are sev­er­al oth­er pa­ra­me­ters sur­round­ing the bonds, which in­clude:

n The loan al­so ex­pects a "suf­fi­cient lev­el of over­col­lat­er­al­i­sa­tion", which, on av­er­age, is ex­pect­ed to be over five times the debt ser­vice, giv­en a 15-year av­er­age No 2 Oil price and over two and a half times the debt ser­vice giv­en a 15-year min­i­mum price lev­el for a No 2 Oil stress case.

n The avail­abil­i­ty of a liq­uid­i­ty fa­cil­i­ty to cov­er debt ser­vice for the next two quar­ter­ly pay­ments.

n The sale of prod­uct to high cred­it­wor­thy bor­row­ers, re­duc­ing the risk of loss­es re­sult­ing from a de­fault by an ap­proved buy­er. Petrotrin is ob­lig­at­ed to main­tain at least three ap­proved buy­ers, each of which must be rat­ed at least triple-'B'-plus or a whol­ly owned sub­sidiary of a par­ent that is rat­ed at least sin­gle-'A'-plus.

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