Con­gress of the Peo­ple (COP) po­lit­i­cal leader Car­olyn Seep­er­sad-Bachan claims doc­u­ments at Petrotrin show the com­pa­ny can be turned around. In her ad­dress at a Move­ment for So­cial Jus­tice (MSJ) break­fast fo­rum on Petrotrin at the Cara Suites Ho­tel and Con­fer­ence Cen­tre, Clax­ton Bay, yes­ter­day, Seep­er­sad-Bachan said there are sev­er­al non-cash ad­just­ments and one-off pay­ments that could ad­dress loss­es at the Pointe-a-Pierre re­fin­ery.

On Au­gust 28, Gov­ern­ment an­nounced that it was end­ing Petrotrin’s re­fin­ing and mar­ket­ing op­er­a­tions fol­low­ing $8 bil­lion in loss­es over a five-year pe­ri­od. The state owned en­er­gy com­pa­ny has a $12 bil­lion debt and owes the gov­ern­ment more than $3 bil­lion in tax­es and roy­al­ties. Petrotrin chair­man Wil­fred Es­pinet said the com­pa­ny re­quires a cash in­jec­tion of $25 bil­lion to re­fresh its in­fra­struc­ture and re­pay its debt.

How­ev­er, Seep­er­sad-Bachan, an en­gi­neer and a for­mer en­er­gy min­is­ter, re­ferred to a March 5 in­ter­nal memo which showed a $2 bil­lion loss that was record­ed in Petrotrin’s 2017 au­dit­ed fi­nan­cial state­ment.

“It is not a neg­a­tive cash-flow. It has to deal with all the sig­nif­i­cant non-cash ad­just­ments: deal­ing with im­pair­ments of as­sets, ex­pense in cap­i­tal bor­row­ing, non-recog­ni­tion of de­ferred in­come tax and re­duc­tion in in­vestor car­ry­ing cash. These are non-cash ad­just­ments, in some cas­es, they are one-off,” she said.

“If you look at the cash flows them­selves, you have $1.5 bil­lion for earn­ings be­fore in­ter­est, de­pre­ci­a­tion tax and amor­ti­za­tion. You have a cash-flow that is $2.5 bil­lion. That is in the ac­counts and that is what is ex­plained here in this cir­cu­lar by Petrotrin on March 5, 2018.”

Seep­er­sad-Bachan said in 2010, Petrotrin dis­cussed es­tab­lish­ment of a sink­ing fund in which 50 per cent of rev­enues earned from the new plants built us­ing that mon­ey would cov­er the bul­let pay­ment. The US$750 mil­lion loan due in 2020 was an amor­tized loan, with on­ly US$250 mil­lion out­stand­ing, she added.

She told the au­di­ence of trade union­ists, pe­tro­le­um deal­ers and busi­ness rep­re­sen­ta­tives that while re­fin­ery mar­gins were said to be low, as of Ju­ly 2018, the mar­gin was be­tween US$8 to US$10 bar­rels per day (bpd). By her cal­cu­la­tions, if op­er­at­ing ex­pens­es of US$4.50 bpd and US$1 bpd for over­heads were sub­tract­ed, Petrotrin would show a pos­i­tive cash flow of US$2.50 bpd of re­fined prod­ucts.

Seep­er­sad-Bachan re­called that the re­fin­ery un­der­went up­grades in the 1970s, 1990s and 2010s and the state of the art equip­ment in­stalled cost be­tween $4 bil­lion to $6 bil­lion.

She said the best mar­ket for T&T’s crude is the Pointe-a-Pierre re­fin­ery, due to pric­ing is­sues and the lim­it­ed avail­abil­i­ty of naph­thal­ic-type re­finer­ies for heavy crudes. She said while there is a pos­si­bil­i­ty that prices might de­crease in the com­ing years, low crude price will ben­e­fit the re­fin­ery.

Seep­er­sad-Bachan ref­er­enced Moody’s vice-pres­i­dent and se­nior an­a­lyst Arvin­der Salu­ja who pre­dict­ed that re­fin­ing and mar­ket­ing com­pa­nies’ earn­ings will in­crease by 13-15 per cent through the end of 2019.