How come?

PM baffled by 600,000-barrel oil loss, orders forensic audit

Senior staff reporter

Tuesday, December 11, 2018

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FOLLOWING discussions with Petrojam's board of directors, Prime Minister Andrew Holness says he will direct a forensic audit into the loss of 600,000 barrels of oil from the State-owned oil refinery since 2013.

Holness also announced new measures to make the traditional petrol pricing mechanism at the refinery more transparent.

The prime minister told a press conference at Jamaica House yesterday that he met with the refinery's new board last Friday and, after three hours of discussions, two of which were focused on the oil loss, he has decided that there is need for a forensic audit into the losses.

“I am going to once again, this time for the last time, direct the board to start the process to identify how we can lose 600,000 barrels of oil over five years, and to explain to the public what this is,” the prime minister said.

“Some people have said that it is stolen oil and, as I dig deeper there could be the possibility of pilferage and, indeed, we have heard anecdotal cases of pilferage of finished products; it could be technical losses. We need to know exactly what caused it,” he stated.

Turning to the pricing mechanism, the prime minister noted his Cabinet colleague, Audley Shaw, had frequently questioned Petrojam's pricing mechanism. He also noted that the traditional response has been that it is the best pricing mechanism.

“But, obviously, the public has another view for the simple reason that they hear world prices going down, but the pump prices tend to be going up,” he pointed out.

He confirmed that there is a measure of discretion in determining the price, but said that the formula that has been reviewed is said to be a good formula for determining the price.

“But, there is an adjustment made to the formula, and that adjustment is really an exercise in discretion, and it is in the exercise of that discretion that I think offers the opportunity to bring transparency,” he said.

The prime minister said that he has directed the board of Petrojam to, as of now, ensure that the minutes of the meetings on pricing are sent to the Ministry of Finance's Enterprise Division, or directly to the minister, to enable review.

“I am also going to recommend, after further consultations with the board, how we can introduce independent parties into the process,” he said, noting that these independent parties would have to have no special interest in the process, and could include representatives of the Consumer Affairs Commission or a Ministry of Finance.

“But I will give further details as to how that can be done,” Holness concluded.

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