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The Government will now determine whether there are price hikes in fuel supplies to consumers when Petrotrin shuts down its refinery and begins importing fuel.
This was the word from Petrotrin board chairman Wilfred Espinet evening, after he completed a busy day in which he held talks with the OWTU and other unions representing Petrotrin workers and detailed the company’s restructuring plan, which includes shelving the refining business and the future importation of the refined products of gasoline, diesel and aviation fuels.
Speaking to the T&T Guardian at the end of a day of talks, Espinet said any price increase in fuel “is a policy decision, the Government is the one to make the decision.” He said issues such as subsidies we outside the remit of Petrotrin.
Asked whether importing fuel would not be more expensive, Espinet said, “I don’t believe so because we are an expensive refinery. The net cost of the product is unlikely to be any more than it is now.”
Efforts to contact Energy Minister Franklin Khan and Finance Minister Colm Imbert on the issue of the future price of fuel when the refinery is shut down were unsuccessful as calls to their mobile phones went unanswered.
In the 2018 budget, Imbert announced a 39 cents increase in the price of Super fuel from $3.58 to $3.97 per litre while the cost of diesel fuel went from $2.30 to $3.41 per litre. He also signalled then Government’s intention was to remove the fuel subsidy entirely and implement a system whereby fuel prices at the pump would fluctuate and be determined on the market prices of oil and refined products. The model is similar to that used in the United States and in St Lucia in the Caribbean.
Commenting on the plan yesterday, former energy minister Kevin Ramnarine expressed concern at what he said was the very real prospect of consumers paying international market prices for diesel and gasoline in the absence of information on where the company intends to import fuel from.
According to Ramnarine, about “17 per cent of the refinery output is consumed locally, another 17% is consumed regionally and the is rest sold to extra regional customers.” The major regional customers are Barbados, Jamaica and Guyana, he said.
Yesterday, there were long lines at gas stations as consumers started panic buying in reaction to news the Government planned to shut down the Petrotrin refinery.
But NP, which is the main supplier of fuel products produced by Petrotrin, meanwhile assured that its operations are “running normally with a continuous and reliable supply of fuel.” The company also advised there was “no need for consumers to panic-buy,” saying such action will only serve to “cause fuel shortages.”
Espinet also assured consumers that there was no need to panic buy.
“We have sufficient stock and we will continue to keep quantities so that we do not create disruptions,” Espinet said.
The company, he said, produces more than the country can use and it is that excess which is sold. But in the current situation, “it’s a matter of keeping the inventory so we will be adequately supplied in the local market.”
If there is a need, he said fuel will be imported to ensure that local demands are met, as has been done in the past.
As to supplies to Caribbean islands, Espinet said Petrotrin is looking at importing in “larger amounts and re-sell to some of the smaller markets. It will give us economies of scale in purchasing.”
In doing this, he said there will be use of the facility “in some way. It is not a big business but at least it will keep a few hundred people occupied,” Espinet said.
Unions were informed yesterday that all 1,700 jobs in the refining operations will be terminated and a re-designed exploration and production business will have approximately 800 workers. According to the company, 2,600 permanent jobs will be affected by the restructuring exercise.
Official statistics from the company indicate that Petrotrin had lost TT$8 billion in the last five years, is $12 billion in debt and owes the Government more than $3 billion in taxes and royalties. The company said it required a cash injection of TT$25B to stay alive, to refresh its infrastructure, to repay its debt and even when that is done if the company remains as is it is projected to continue losing about TT$2B a year.
Espinet said with the “termination of the refining operations and the re-design of Exploration and Production, Petrotrin will now be able to independently finance all of its debt and become a sustainable business.”