Less than three weeks after it publicly refused an offer from the Trinidad and Tobago government to buy the refinery at the state-owned oil company, PETROTRIN, the powerful Oilfield Workers’ Trade Union (OWTU) has had a change of mind and is now seeking a joint partner to enter into a lease arrangement.
In addition, the OWTU is indicating that its members should be prepared to take a 15 per cent salary cut to make the joint venture a reality.
“Now the OWTU is being totally committed to keeping the country’s sole refinery in operation and is confident of its viability. We are prepared to work with reputable businesses and investors in a joint venture to lease the Pointe-a-Pierre refinery,” OWTU president general, Ancel Roget, told PETROTRIN employees at a meeting on Thursday.
“Any type of arrangement that we enter into, that arrangement must see assets remaining in the hands of the people and benefiting the people,” he said, adding that the lease arrangement would keep the refinery running and avoid a costly restart.
“The assets of the refinery remain in the state-owned company PETROTRIN, as different from the sale of the assets to some buyer. Example, as a complete refinery, or as individual refining units and/or as scrapped plant and equipment,” he said
Late last month, Prime Minister Dr. Keith Rowley announced that his administration was prepared to give the first option to the OWTU to acquire the refining assets of PETROTRIN, telling the nation that the “decision to close the refinery was taken after detailed analysis and deep introspection”.
But the OWTU rejected the offer and said it was merely a “ruse” for the government to sell the refinery to a preferred buyer.
Last week, talks between the government and trade union leaders failed to get the government to change its mind on the closure of the refinery.
Planning and Development Minister, Camille Robinson-Regis, speaking to reporters, after a two-hour meeting, said “we have agreed to disagree” on the closure of the refinery.
Rowley recalled that in January 2017, he had warned the nation about the financial situation existing at PETROTRIN and the need to deal with the situation.
“I reminded you that there is a US$850 million bond that is coming due for payment in the form of a single payment in August 2019 and another of almost US$700 million that would be due soon after,” Rowley said, adding that the future of the company “has been the subject of much negative speculation for the past several months but inevitably we must come to the time of decision making as we are forced to abandon the procrastination and finger pointing which have only served to worsen the eventual outcome”.
Rowley said that approximately 1, 700 permanent workers will be affected in the refining and marketing division of the company, while in exploration and production, employment levels are to be reduced from 1700 workers to approximately 800 persons.
“A large number of these workers, those over 50, may be able to exit by way of attractive early retirement packages,” he said, adding that in the coming weeks the government will take part in the announcement and participation in at least two significant industrial projects in the southwestern peninsula,” he said.
Roget told the meeting that the OWTU plan is to prevent the cannibalisation of the plant and that the lessee in this arrangement would take possession of all the increased crude, all 67,000 barrels.
“It will now find its way to the refinery, guaranteeing job security,” he said, adding that the government would not have to spend any money in this lease arrangement.
Roget said as part of its first option, the union is also proposing a restructuring of the US$850 million bullet payment owed by PETROTRIN next year to keep the company alive.
“Ask the current bondholders to refinance for a 3-5 year period with interest rate pegged to US five years treasury bonds yields. It is against the background of a well ordered PETROTRIN. You take a lower interest loan to pay off the debt over a longer period.”
He said the PETROTRIN workers could also buy back the bonds with a 10 per cent to 15 per cent monthly salary contribution.
“Now that is not a pay cut, that is a contribution,” he said, adding that pension funds and investment in the credit union can also help rescue the company, as it relates to the overhanging debt.
He said this was one of the six critical areas the union explored to save the company from closure.
“We are suggesting that the government’s plan (to shut down the refinery) has created panic amongst the global markets and bondholders,” Roget said, noting that the yield rose sharply to 14 per cent as investors could not understand how the shutdown of the refinery would help service the billion-dollar debt.
“They are nervous because when they examine what has been proposed as revenue, it’s very very sketchy,” he said.
The union is also calling for an increase in PETROTRIN’s crude oil production in order to make the refinery more viable.
“When we ramp up the production of indigenous crude we would import less. The margins will be greater,” he said, adding that even as the government talks about the reduced local production there were many unexplored options to increase local crude levels.
He said once more indigenous crude was produced, the country would be more insulated from currency fluctuations.
“The same board arrived at the same position in its February presentation to Parliament,” Roget said.
The OWTU is also proposing to have stakeholder agreement on the appointment of the board of directors as part of a reorganised internal structure.
“The government must not hold the exclusive right to choose their friends and financiers, business interests to the board,” he said, adding the state company should be accountable to the Parliament.