Petrojam spill nearly $300 million in price cuts ahead of elections
Taxpayers’ pockets bled nearly $300 million due to a decision taken by former Petrojam general manager to cut the price of gasoline by $2 per litre - one month before the 2016 local government elections and in January the following.
The issue was brought to the fore during a sitting of the Public Accounts Committee (PAC) in Parliament on Tuesday.
It was revealed that the former general Floyd Grindley took the decision and that senior executives at the state-owned oil refinery were at a loss to tell who instructed Grindley to take such action that left the country out of pocket.
Manager of logistics and marketing at Petrojam, a member of the company’s pricing committee, Michael Hewett, told the committee that he and the chief financial officer (CFO) objected to Grindley’s action, but were instructed to take a back seat.
“Members, the answer is that we are not aware of any. The GM took positions and those were the ones that were implemented,” Hewett said.
PAC Chairman Mark Golding then asked, “What was your understanding as to why this was being done?”
“Both myself and the CFO at the time were clearly of the view that the direction was not in keeping with the normal direction. But there was a decision-making process that was followed, and that was the result,” Hewett responded.
“No explanation was proffered to you at the committee as to why this was being pursued?” Golding pressed.
It was also revealed that the PAC received an email correspondence which stated that five days before the local government elections on November 23, 2016, former Petrojam, Chairman Dr Perceval Bahado-Singh, ordered a top executive at the refinery to cut $2 off the ex-refinery price of several gasolene products.
Another email revealed that shortly after, incumbent general manager of Petrojam, Winston Watson, issued orders to the effect that the command was carried out.
During the sitting documents were presented which revealed that Petrojam lost in the region of $42.5 million in revenues and the Government lost an estimated $4.25 million in taxes as a result of the price reduction which lasted for a week.
The $2 reduction was put in place again over the period December 8, 2016, to January 11, 2017, and cost the refinery $227 million in revenues.
The second round of price cut cost the Government $21.25 million in taxes.
The committee was also told that soon after Grindley took over the reins as general manager in 2016, sweeping changes were effected to the makeup of the pricing committee and the methods utilized to arrive at the ex-refinery price for gasolene products.
Under the new decision-making process, the general manager had the final say on the price movement whether or not the other four members of the pricing committee were in agreement.