Workers at State-owned Petroleum Company of T&T Ltd (Petrotrin) will not be getting a pay hike or backpay any time soon as the company has suffered a $346 million net loss for fiscal 2013/2014. The bad news was delivered to the workers by Petrotrin president Khalid Hassanali in a circular on Tuesday.
He said: “During the last fiscal year, 2013/2014, Petrotrin has battled a perfect storm of challenges, including global and local developments and events, which has severely hindered our profitability and reputation. “We now battle the turbulent waters of low refinery margins and the harsh winds of falling global oil prices, all of which have significantly compounded the company's difficult financial situation over the last few months.”
International benchmark oil prices have fallen by almost 30 per cent since June 2014 and most analysts project prices under US$75 a barrel, he said in the circular. “We are faced with depressed refinery margins as they continue to be under pressure due to global oversupply of refinery capacity,” he said.
In a bullet in the circular, Hassanali added: “Recent financial rating downgrade led to an increased cost of borrowing. In order to mitigate this situation, we have reduced our operating expenses as well as capital projects and costs.” He explained: “Refinery cost structure and debt service burden require a gross refinery margin of US$9 per barrel (bbl); however, our actual market driven gross refining margins were US$6.67/bbl in 2013 and US$6.38/bbl in 2014; currently around US$4.04/bbl.”
Also part of Petrotrin’s current reality is “high debt service burden, inclusive of high annual interest payments.” Hassanali said Petrotrin pays annual interest of $850 million and a balloon payment of US$850 million will become due in 2019. Petrotrin pays bondholders a 9.75 per cent coupon on the bonds maturing in 2019.
Though Hassanali did not mention it in his circular, Petrotrin also has a 6.0 per cent coupon bond, maturing in 2022, when it will have to pay US$500 million. Of six T&T bonds Oppenheimer analysts reviewed on November 3, they said Petrotrin's 2019 bond had the highest current yield at 7.7 per cent.
OWTU, workers meet today
Oilfields Workers’ Trade Union (OWTU) president general Ancel Roget will hold a meeting with Petrotrin workers today to decide on the union’s next course of action in the ongoing salary dispute with the company. Contacted for comment last night on Petrotrin president Khalid Hassanali’s claim that the company would not be able to increase salaries or pay backpay after incurring a 346 million loss in the last fiscal year, Roget said that and the negotiation process would be the main topic at the meeting.
Pressed further, Roget said he would not divulge the union’s next course of action until after they got the workers’ views today.