From oil spills, to industrial action to reported financial losses, State owned Petrotrin has been in the news for the wrong reasons. The company has been seen by many as a Trojan horse, a company where corruption and mismanagement pervades and one which is a burden on the treasury.
In fact Finance Minister Colm Imbert told the Parliament that Petrotrin faces the critical need to reduce operating expenditure by $500 million over the next four years, or increase the profitability of the company commensurately.
He said, “This will require a reduction in discretionary spending, as well as a review of the organisational structure, improved efficiency, and stringent control of operating costs. These adjustments are absolutely necessary since a robust restructuring program will be a pre-condition for the re-scheduling of Petrotrin’s overwhelming debt burden, which includes amortisation payments of close to US$400 million in 2017-2018 and a bullet payment of US$850 million in 2019.”
While this may be true the recent EITI paints a picture of a company that is the third largest contributor to government revenue only surpassed by the NGC and bpTT.
The report for the years 2014/2015 provides an opportunity to look at the contribution to government revenue of individual companies. In 2015, a year in which the company’s profits were the lowest in over 15 years, NGC made its highest ever dividend payment to Government totalling $TT 5.772 billion. Last year was the year of the general election and also a year of large crude price declines.
Further Petrotrion’s contribution to government revenue compares favourably with all the major oil and gas companies operating in this country. Only bpTT, which paid $7 billion in 2014 to the government contributed more to the country’s revenues. BG Group for example paid $2.1 billion while BHP $1.2 billion.
In 2015 Petrotrin contributed $4.1 billion to the country’s coffers, BP paid $4.5 billion while the NGC with its huge dividend payment contributed $8.44 billion.
Put another way taxes from Petrotrin can be used to pay every public servant salary, pay for gate and meet the budget in the Ministry of Agriculture.
The company’s contribution does not end there. When you look at its contribution to the society in its Corporate Social Responsibility report it is clear that it does it part in the communities, pumping cost to $15 million into CSR projects, compared to say BHP which spent a miserly $1 million on CSR.
Only the NGC and BPTT spent more on CSR than Petotrin and as the EITI report noted NGCs CSR expenditure skyrocketed the year before and the year of the last general elections.
The EITI report read: “NGC Group pursued a varied and dynamic Corporate Social responsibility (CSR) strategy that seeks to inspire, develop and transform lives and the national landscape.
“Over the period 2011 to 2015, NGC expended a total of TT$ 216.6 million community social and infrastructure projects. In the last two years 2014 and 2015 in particular NGC corporate social expenditure amounted to a stgering $ 151 .1 million or an average of TT $75 million per year, compared with an average of $ 15 Million per year over the period 1991 to 2011. (TTEITI 2013 Report). The bulk of the expenditure (83 per cent) was classified as social expenditure.”
Petortrin’s Chairman Andrew Jupiter said it is unfortunate that enough of the country is unaware of the tremendous role and importance of Petrotrin.
Sherwin Long, Head of the TTEITI Secretariat, said the energy sector is the major contributor to Government revenue and the EITI report independently verifies and sheds light on this revenue to all citizens.
“You can look at the report and see what all of the major companies pay to Government in tax with a level of comfort because an independent audit firm, BDO Trinity, reconciles both payments from the companies and Government receipts.
“What is interesting in the latest report is the significant contribution of state owned companies NGC and Petrotrin. NGC was the largest taxpayer in 2014 and 2015 paying just over 8 billion in both years while Petrotrin was third and second largest tax payer in 2014 and 2015, paying over 6.6 billion in 2014 and 4.1 billion in 2015.
“The report showed that in 2014 Petrotrin paid to the government $6.767 billion in taxes. This in far less than that paid by the NGC, which amounted to $8.368 but the NGC’s amount included huge dividens,” Long told BG.
He added that the type of transparency required by the EITI is becoming a global norm as recent changes to laws in Europe, the US and Canada require publicly listed companies to disclose their tax payments to foreign Governments.
Long said due to non-disclosure clauses in the Income Tax Act, the EITI is the only avenue for citizens and analysts to get this type of disaggregated and detailed information.
