We must congratulate the OWTU on its submission of the winning bid for the purchase of the Point-a-Pierre refinery at a cost of some US$700 million.
This is, of course, contingent upon the new company Patriotic Energies and Technologies Ltd meeting a number of conditions including, inter alia: confirmation of ability to finance purchase and operations; submission of a finalised business and key deliverables plan and a refinery start-up plan before the contract can be properly consummated.
We must also commend the Government and the government-appointed committee for its choice of a local bidder in the OWTU ahead of foreigners, notwithstanding an upfront cash consideration on the part of Patriotic Energies.
This purchase, once consummated shall render redundant the recently-formed Guaracara Refining Company Ltd and Paria Trading Company Ltd.
With respect to the latter, government would have been challenged by a huge outflow of scarce foreign exchange which is Paria Trading which is a net importer of finished petroleum products and shall experience a reversal as we once again begin to produce refined finished products (inter alia: in the form of gasoline, diesel and aviation fuel) locally.
In addition, the fact that Patriotic Energies will be granted a three-year moratorium on all payments of principal and interest towards the purchase and a further ten years to complete payoff of the purchase price shall give the new entity much needed wriggle room to find its feet and to drop anchor in terms of revenue generation and its ability to meet loan repayments as they become due.
This sweetener in terms of payback period perhaps represents some kind of human-face against the backdrop of the less than popular decision to surreptitiously close down the loss-making Petrotrin without recourse to alternative solutions such as rationalisation of the employee base inclusive of downsizing at the breakeven point instead of making some five thousand workers redundant, notwithstanding the negative economic impacts on the district of Point-a-Pierre and environs and service industries sector.
Once properly consummated and ownership passes to the new entity we can expect to see a re-employment of some displaced workers and a fillip in terms of economic activity in these affected districts of Point-a-Pierre and environs.
Lessons need to be learnt, however, from this sordid affair, which Petrotrin had become.
Business activity of necessity must involve some level of risk but the fundamental motive of turning a profit must be paramount. No business can, in fact, prosper and thrive if its revenue position fails to at least cover variable costs and make some kind of contribution to fixed costs.
The OWTU has always maintained that the woes at Petrotrin lay squarely at the feet management which commanded exorbitant salaries and perquisites at the expense of productivity coupled with political interference and mismanagement. Wages and salaries must, therefore, be in sync with the profit position of the new entity, if it is to be successful.
In addition, wages and salaries must be tied to the productivity of the enterprise.
In this respect, incentive schemes such as pay-for-performance and payment by results where wages and salaries are tied to productivity represent excellent motivators to get the best out of employees while employee share ownership plans where employees actually own stakes in the business and profit-sharing plans shall go a long way in boosting employee morale and by extension productivity should Patriotic Energies and Technologies get the green light to begin trading.
Chaguanas, Via email