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Petrotrin on planned strike: Company ready to import product
Thursday, February 16, 2012
Should the Oilfield Workers’ Trade Union (OWTU) workers go on strike on Saturday, Petrotrin plans to import product to meet local demand in addition to it having hundreds of thousands of gallons of fuel stored in tanks.
This is according to sources on the Petrotrin board who say that while there will be some inconvenience, the country will not grind to a halt. “We believe that the majority of the members of the OWTU do not really want to strike, but they are bullied by the union and they are then forced to take action. We will import fuel if we have to. We already import for different blending purposes from Venezuela and, if necessary, we will continue to do so. We have significant fuel in storage and we will utilise that fuel as well. The only thing is how the fuel will leave the refinery and it may require the assistance of the military,” a Petrotrin board member told the Business Guardian on Tuesday. Tuesday was also the day the union served the company with notice of strike action.
At present, seven plants at the Pointe-a-Pierre refinery are down for planned maintenance. Already the company has been importing product to meet customers’ needs. Asked if this meant that it might be a bad time for the union to pursue strike action, OWTU president general Ancel Roget said it is a good time because the company has been trying to bring the plants back up as they try to complete the gasoline optimisation project. “I have noticed that the Minister of Energy, the Prime Minister and Ken Allum and saying they have contingency plans in place. Well, I want to tell them that they must prepare for the long haul. If there is one aspect of industrial relations the OWTU knows better than anyone is the issue of strike action and what strategies ought to be employed. “We will ensure that there will not be any fuel, including helicopter fuel, for those who like to joyride.” If there is a strike on Petrotrin, what is likely to be the effect on the wider economy? last year, the Central Bank Governor Ewart Williams issued the warning while delivering the Economic Bulletin for July 2011 at the bank’s Port-of-Spain conference room that strike action was a serious downside risk to the economy. Williams had said: “The largest downside risk is the fragile industrial climate which could contribute to work stoppages and possible retrenchment, putting a halt to any resurgence in economic activity. A general strike is the worst possible thing we could face at this time.”
On Tuesday, Republic Bank senior economist Dr Ronald Ramkissoon said he did not want to even contemplate Petrotrin going on strike because of the impact it will have on the economy. He said a strike at Petrotrin—which he described as an extremely important part of the economy— will not bring relief to anyone or organisation in the country and it was the reason he was hoping that dialogue would lead to a resolution. Former energy minister Conrad Enill agreed that there was an urgent need for a resolution to the problem and is warning that failure to resolve the issues will have far-ranging consequences. Enill said the Government will find itself in a position where for the affected quarter, its tax revenues from Petrotrin, could be significantly hurt. He said this would not be good for the Minister of Finance at a time when there is significant call on the Government’s finances and when the country is also running deficits. Enill predicted that it will hurt the cash flow of the Government. “What you basically have is a situation where Petrotrin will no longer be in a position to use its cashflow to initially pay for the fuel subsidy and would instead mean that if the company is importing product, the Government will have to pay for it and that will impact its cashflow.” Enill said small and medium-sized business, particularly in south Trinidad, are likely to be badly hurt by the strike. He said when one considers Petrotrin, one has to consider the number of smaller companies that depend on Petrotrin for their livelihood. “What is going to happen to the company that has a legitimate payment from Petrotrin and cannot get it in time? What does that do to that business or what does it do to the people who are employed in that business? These are some of the things that have to be considered when dealing with the issue,” said Enill. The former energy minister said apart from having to import product, Petrotrin will be faced with a situation where they are unable to take product from lease or farm out operators which will put pressure on those producers and their business. He said there would also be issues raised about the integrity of the plants and how they are going to be brought back on stream. On the issue of a direct impact on citizens, Enill predicted that a strike at Petrotrin will lead to panic buying and almost a hoarding situation for fuel. This, he said, could negatively impact transportation costs in the short-term and lead to a short, but painful increase, in inflation.
“Truckers are likely to than charge a premium for their services and businesses will have to pay additional cost in transportation. This would be expected because the truckers will have to spend an inordinate length of time lining up for fuel and is likely to pass that onto the businesses.” He noted that strike action in the oil industry does not help the image of T&T, which is known globally for its high level of industrial peace. Members of the Petrotrin board feel there is eventually going to be conflict between the OWTU and the management because of the attempts made by the Government, the board and management to make the company more efficient. The OWTU president general said he expected that consumers will have to bear some difficulties should last minute efforts to salvage negotiating process fails. He said the country should prepare for fuel shortages and it should stand by for more difficulties. Petrotrin is an integrated oil and gas company and produces 35,000 barrels of oil a day and refines 154,000 barrels of crude a day. Last year the company made a net profit of $2.2 billion.
At the heart of the threat of strike action by the Oilfield Workers’ Trade Union (OWTU) against state-owned Petrotrin is the company’s five per cent wage increase over three years. The OWTU wants a 75 per cent wage increase: 25 per cent for each year. In a published full-page statement on February 14, Petrotrin said: “The lowest paid Petrotrin employee receives a base wage in excess of $11,000 per month before other benefits, which when added, can take that employee’s total compensation package to over $15,000 a month.” “Petrotrin’s current wage bill stands at $1.9 billion per annum. This represents nearly 50 per cent of operating costs while the industry benchmark is 35 per cent.” The Pointe-a-Pierre-based company stated that three-quarters of the items under negotiation have already been settled, and that the remaining items are directly related to general increases and allowances.
“Both parties have signed a memoranda of understanding to that effect,” Petrotrin stated.
• enhanced housing allowance to all as a percentage of basic wages/salaries
• housing allowance is available to all employees, not just those with mortgages
“It may be used for mortgage payments, rental, home repairs, etc.”
• the periods under review have all expired
“As such, the company is willing to negotiate both the 2008-2011 and the 2011-2015 periods together.”
“Over the period, employees received a hedge against inflation through a cost of living allowance (COLA), which was above that offered by most other employers.” The company said that initial COLA consolidation at the start of the expired period resulted in an increase ranging between 11 per cent and 19 per cent. “When this is added to the accrued COLA for the period, which averages between ten per cent and 12 per cent of wages, the cumulative effect amounts to an overall increase of between 21 per cent and 31 per cent.”