Trinidad Gov't defends guarantee to Petrotrin

Friday, November 16, 2018

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PORT OF SPAIN, Trinidad (CMC) — The Trinidad and Tobago government Wednesday said it provided guarantees of more than US$400 million to the cash-strapped oil company, Petrotrin, to meet its financial and other obligations so far this year.

Finance Minister Colm Imbert told legislators that as a result of the guarantee, the public debt has been increased by over TT$2.2 billion (One TT dollar=US$0.16 cents).

Speaking on the legislation to establish the three new companies that will take over the operations of Petrotrin on November 30, Imbert again defended the decision of the Keith Rowley administration to shut down the loss-making state-owned oil company.

He said that so far this year, US$402 million had to be guaranteed to local commercial banks in favour of Petrotrin between March 2018 and now.

“Six months, we have had to issue guarantees in excess of two and a half billion Trinidad and Tobago dollars and every time we do this…it increases the public debt (which) is comprised of direct debt and contingent liabilities and a letter of guarantee for a state enterprise is a contingent liability.”

He told Parliament that in one day “we had to approve US$170 million in loan guarantees for Petrotrin otherwise it could not survive, and that is just a short while ago.

“I am talking this year 2018, just a month ago. In one day we had to increase the public debt and increase our debt-to-GDP (gross domestic product) ratio by one per cent…because of the requirement to bail out Petrotrin because it simply did not have the cash to function”.

Imbert said it was important to make the announcement “because I have heard stories outside there that the Government, the Treasury, is not required to support Petrotrin, that Petrotrin is a financially viable company, that it is profitable, that it makes profit and it requires no assistance from the state.

Imbert said he wanted the public to be aware of the “true facts” concerning the oil company, adding “at this point in time the loans that Petrotrin is exposed to in terms of short-term loans, the outstanding balance to date locally is TT$109 million”.

He said in terms of foreign loans, the company is owing TT$644 million, TT$1.4 billion with regard to the long-term gas optimisation project and a further TT$45.6 billion for its involvement in an ultra-low sulphur diesel project.

“This is just part of the loan situation” with the company, the financce minister said, adding that Petrotrin owes the Government more than three billion dollars in taxes and royalties.

“Almost four billion Trinidad and Tobago dollars and you can understand, Madam Speaker, the company just can't pay.

“They just can't pay because if we have to guarantee two-and-a-half billion dollars or close to three billion dollars in financing just for the last six months. If we had not done those guarantees the company would have collapsed.

“So you could imagine they are in a situation where from day to day they struggling to pay bills and the banks require the government to guarantee the loans otherwise Petrotrin would not have been given facilities in terms of paying its wage bills for example,” Imbert said.

He said the payment of the wage bill was “another crisis that came at us just a month ago” and if the Government had not guaranteed the US$170 million, the company “would not have been able to pay their wage bill for October, November”.

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