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Billion Payout

Discussion in 'latest News in Trinidad & Tobago' started by alexk, Aug 30, 2018.

  1. alexk

    alexk Guest


    A billion-dollar Petrotrin payout is ahead to refinery workers who will lose jobs—including an early retirement package for those over 55 who will receive full pensions.

    “We haven’t worked it out fully yet but the (termination benefits package) figure will be huge - significantly more than a billion dollars,” Energy Minister Franklin Khan told reporters yesterday.

    Khan gave the estimated cost of workers’ termination benefits following yesterday’s launch of state-owned TTT Limited television station, formerly CNMG. (See page A7)

    Earlier this week, Petrotrin’s board confirmed plans to close the company’s refinery in October in a move which will cause the loss of 1,700 permanent jobs. But OWTU president general Ancel Roget has called on Government to rescind the decision and call an election or “face chaos.” (See page A5)

    But Khan said yesterday, “Mr Roget represents a trade union that seeks to represent workers as it sees fit. T&T’s based on law and order and any action they take, once legal, is acceptable. But if it’s illegal, the state would have to act.”

    “So no - we’re not rescinding the decision,” Khan confirmed.

    On Roget’s insistence that he wasn’t told of the closure at a recent meeting with Prime Minister Dr Keith Rowley, Khan said, “Yes, he was told. I was at the meeting. The meeting’s minutes will show the Prime Minister indicated in no uncertain terms to Mr Roget that Petrotrin will be getting out of the refining business. As to why (Roget) didn’t communicate that (to OWTU) at that point in time, that’s his call - not mine.”

    On termination benefits for workers, Khan said,”All the costs are being worked out as we speak. A lot of milling through of numbers has to be done. We’ll be offering an early retirement plan for people over 55, pay them off and they’ll have their full pension. Then we’ll have an exit package—I don’t want to call it severance—for younger workers. That formula is still being worked out.

    “But the (termination benefit) figure will be huge - significantly more than a billion dollars - since the base salary of Petrotrin is big. Any calculation will be based on base salary.”

    While refinery workers don’t command the highest salaries and theirs is on par with the company’s Exploration/Production sector’s wages, the refinery has the largest overtime costs, he added. But overtime wouldn’t come into play in termination benefits.

    Khan also acknowledged the closure’s effect on the “human side”.

    “We’ve said we were left with no other choice—to save putting the economy at risk ... However, no matter what spin you put on it, there are 3,000-2,500 families who will be affected. I’m very much conscious of this and so is the Prime Minister,” Khan said.

    “I know most of those workers! I supervised some of them in my career. I feel great empathy for them. That’s why we’re working out proper packages for them. We also hope the spin-off effects for places like Marabella will be something like what happened in Couva and Chaguanas in the post-Caroni era.”

    He said major challenges will be in Marabella, Gasparillo and other catchment areas for the refinery.

    Khan said he wasn’t worried about Santa Flora, La Brea and Point Fortin, which will have more Exploration and production activities.

    “Point will go even further as there’ll be more activity in Trinmar and Atlantic (LNG) is still there,” he said.

    Khan says the “exit” agreement for the Petrotrin terminations will be a human resource expense.

    “If you have to meet that cost you may probably have to borrow it or something like that. But it’s the only way out of this, you just cannot send people home without anything,” Khan said.

    Whether taxpayers will bear some part of this cost, Khan only said, “The termination benefit figure will be part of the cost structure of this reorganisation, but it’s a small figure compared to the annual haemorrhaging (of Petrotrin).”

    He said calculation to close the refinery was based on a cost benefit analysis in the context of the operational costs of the refinery, in terms of the haemorrhaging of money because of the importation of crude oil.

    However, Khan assured the details of the payout to workers will be worked out “long before October.”

    On when the entire process will be completed, he said he hoped “a lot of things will be completed before year-end.”


    Petrotrin will become a terminalling facility, Energy Minister Franklin Khan reiterated yesterday.

    “As we speak, it’ll be converted into a terminalling facility that will use up all its tankage (tanks),” Khan said.

    Instead of making its own fuel, Petrotrin will in future be importing fuel as a terminalling facility and selling it at internationally competitive prices to NP, he said. The latter then sells fuel at a subsidised price.

    Also, the terminalling facility will accomodate imported finished product in bulk towards shipping to the Caricom market, he said.

    “So we can service the Caricom market. It’s just that we wouldn’t be producing the fuel, we’ll be importing the fuel for onward distribution, as a shipping centre,” he said, adding Government is also communicating the Petrotrin development to Caricom partners.

    On other aspects of the terminalling plan, he said, “There would be bunkering facilities, as there’s tremendous storage capacity at the refinery. That operation will be much scaled down than if you were running a full refinery.”

    Khan said they had not yet sourced from where the imported fuel would emanate. He said Venezuela has a fuel shortage but noted sourcing fuel internationally isn’t a big problem.

    Khan said any defective/leaky tanks would be decommissioned.

    “The amount of storage you need when you refine 150,000 barrels of oil isn’t the same as when you’re importing the equivalent of 25,000 to 40,000 barrels of oil,” he dsaid.

    All that won’t be used presently in the company are the plants - the Desulphurisation plant, Catalytic (Cat) Cracker plant. In due course, programmes will be revealed, Khan added.

    He conceded certain projects had affected in the refinery closure - like the Ultra Low Sulphur Diesel plant - which was a “bitter pill to swallow” since it was 90 plus per cent completed but also had major structural issues.

    Khan denied Government took “long” to respond to the public on the matter. He noted historical public opinion that political interference had “killed” Petrotrin. Khan added the company’s board was empowered to work autonomously.

    “They presented their plan to Cabinet, it was approved and they rolled it out. We don’t have to do ball-by-ball commentary,” he said.

    Prime Minister Dr Keith Rowley, who was at yesterday’s function, left while Khan spoke to reporters. Rowley will speak on the Petrotrin situation on Sunday.

    He also said the fuel subsidy is still on. In the last Budget, he said all subsidy was removed on fuel but the Budget was pegged on an oil price of US$52 and for this year it averaged over US$60 - resulting in a subsidy.

    “Our calculation is the subsidy’s estimated by the end of the fiscal year at about $900 million,” Khan said.

    “There’s also a subsidy that Petrotrin absorbs on LPG. That figure is over 500 million so there’s still a heavy subsidy from the state on fuel and on LPG—we haven’t decided exactly how that will be handled.”

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