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Dr Farrell: Taking Responsibility; why the Petrotrin disaster is a very Trini malaise that may be repeated

“So the logical question is: why don’t our governments fix the state enterprise governance system? The answer is partly because it sustains political patronage and corruption, partly because it buys off the trade unions, and partly because of inertia—fixing things that don’t appear to be broken simply isn’t worth the effort; and if cracks do appear, it is easier to procrastinate and hope something will turn up.”

The following column was shared with Wired868 by Dr Terrence Farrell, economist, author and ex-chairman of the Economic Development Advisory Board (EDAB):

Photo: Trinidad and Tobago Prime Minister Dr Keith Rowley (left) and Opposition Leader Kamla Persad-Bissessar SC.
(Copyright Power102fm)

Our reality is that we lurch from crisis to crisis—sea-bridge, Commissioner of Police, earthquake damage, and now Petrotrin—all within a matter of weeks.

Now that Petrotrin, long simmering, has boiled over, the analysts, in both traditional and social media, are out in full force. Raffique Shah, Martin Daly, Ralph Maraj, Mary King and William Lucie-Smith have all weighed in lucidly.

Opposition spokespersons have seized the opportunity to ramajay on the hapless government, although the crisis unfolded partly on their watch. Some analyses and commentary in social media—such as Howard Dottin’s and Nicholas Jackman’s Facebook posts—have been quite good, even insightful.

With the notable exceptions of Jackman, Lucie-Smith and Daly, few—to use the earthquake analogy—have penetrated to the epicentre and diagnosed the underlying tectonics of the Petrotrin tremors. Like most high magnitude earthquakes, the Petrotrin quake has been long gestating. In fact it is over 25 years in the making.

When, in 1985, the Government acquired the refinery from Texaco to ‘save jobs’, Trevor Farrell is reported by the New York Times as opining that it would have been cheaper to put every employee on the dole.

Photo: Petrotrin workers in Pointe a Pierre.
(Copyright Trinidad Guardian)

Trevor Boopsingh, an early chairman of Petrotrin, casting back to 1994 and noting the 20 year delay to address the ageing Point Fortin and Pointe a Pierre refineries stated: “The cost of this delay was enormous given that for several years (1982-1994) crude and semi-finished products had been diverted to keep the two refineries going, both carrying large annual operating deficits due to excess labour, insufficient crude supplies and ageing plant and equipment.”

There have been plenty of foreshocks which have been ignored or glossed: Trintomar, oil spills, ULSD project, GTL project, Trinmar, farmout and lease operatorship programme. And of course the lurid tales of corruption and mismanagement detailed by Camini Marajh in the Express.

Petrotrin, with its billion dollar turnover, has long been a trough from which many, suppliers and contractors, workers, managers and directors, have fed greedily.

So why did it take so long for the situation to come to this pass?

We could ask the same question of the closure of Caroni and the sugar industry which took even longer. We could ask why it took ten years at least for the sea-bridge to collapse, or 30 years for BWIA to collapse the first time, and another 15 years for it to collapse a second time?

All roads lead back to the fact that these are state enterprises operating within a deeply flawed governance system which can produce only failure.

Photo: Former Petrotrin executive chairman Malcolm Jones (centre).
(Courtesy Firstmagazine.com)

Sometimes the failures are mildly distressing, like EFCL, or risible like National Self Help Commission. Some like EMBD and Sport Company reek of the stench of corruption. Others, like Caroni and Petrotrin, are catastrophic!

All have their roots in state enterprise governance driven by political and not by economic or business imperatives.

The real function of these state entities is not to produce an efficient service but to distribute the rents from the energy sector. The depth of the crisis of these state entities is usually invisible to the average citizen, and I daresay even to the Government of the day.

The mostly fictional data, macroeconomic and financial, which support the annual budget do more to obfuscate and conceal than to lay bare the true extent of the problems in these state entities.

Given the ease with which they may be thrown under the bus, there is also a strong incentive for the boards and management of these entities to conceal or minimise the problems, until “water more than flour”, by which time the situation is irretrievable by ordinary means.

One might well ask: Haven’t we been warned about the pernicious effects of poor state enterprise governance?

Photo: Former Sport Minister Anil Roberts (centre), ex-SPORTT Company CEO John Mollenthiel (left) and former SPORTT chairman Sebastien Paddington.
The three men were key figures in the controversial Life Sport fiasco.
(Courtesy SPORTT)

We certainly have! There was the Bobb Committee in 1985, the Rampersad Committee in 1990, and I led a committee which produced a report in 2016, since buried.

All of these reports pointed out that the system of governance of state enterprises produces corruption and failure. And our trade unions love state enterprises. It allows them to suck at the teats while retaining the ability to blame management or the government when things go wrong.

It’s no surprise that the OWTU will not buy the refinery, even if they were to get it for a dollar! And those others who rue the closure of Caroni Limited should take their own money, not taxpayers’ money, and invest in sugar!

So the logical question is: why don’t our governments fix the state enterprise governance system? The answer is partly because it sustains political patronage and corruption, partly because it buys off the trade unions, and partly because of inertia—fixing things that don’t appear to be broken simply isn’t worth the effort; and if cracks do appear, it is easier to procrastinate and hope something will turn up.

So while we wring our hands and lament the job losses and the huge debts piled up by Petrotrin, and, far too late, try to see if there is some clever or magical way to avert the inevitable, let some of us at least spare a thought for the other subsurface tectonic forces which can and will visit further catastrophe upon us unless we stop being un-responsible and act proactively and sensibly.

Photo: OWTU president Ancel Roget (right) and his comrades have vowed to respond to the government’s intention to shut down the Petrotrin refinery.
(Copyright Industriallunion.org)

Consider WASA! This particular can has been kicked down the road repeatedly.  The water distribution system is a complete shambles—forget ‘Water for all by the year 2000’ and forget the Beetham Wastewater project; sewerage likewise.

Years ago, it was estimated that to fix the water distribution infrastructure alone would cost almost $30 billion. Who knows what the estimate now is. And there has been no increase in water rates for years.

Consider TTEC, also in need of an increase in tariffs to address its persistent deficits and its ageing system of substations and overhead lines.

Consider PTSC, without an adequate fleet, without a public transportation plan managed by a Transport Authority, and where illegal PH ‘taxis’ operate with impunity.

Consider the management and disposal of physical waste and the festering sore that is the Beetham landfill.

Our unwillingness to deal with facts and data, to heed professional advice, and to take hard decisions is a cultural affliction. We cheerfully put an infant school bench or a handy tree branch over a gaping manhole in a city road and move on; and just as cheerfully, in the face of a collapsed seabridge, driven by pure political expediency, buy a boat that we think might work and press it into service.

Photo: Minister of Works and Transport Rohan Sinanan.
(Copyright News.Gov.TT)

We insist on the continued manufacture of buggy whips in an age of motor cars because we have to ‘save the jobs’ of the workers who are really really good at making those buggy whips! But as I have consistently maintained, economics will always trump politics. It may take years or even decades, but political machinations will be subducted under the inexorable pressure of economic laws.

Even rich countries cannot swim against the tide of technological and economic progress. There always comes a point where the can can no longer be kicked down the road.

The crisis may eventually be confronted with the ritual ‘address to the nation’ which portrays necessity as heroism, fearlessness, or even brilliance. But no one is counting the economic cost of the wasted resources, the hidden costs to the country which have been incurred by years of trying to sustain the unsustainable, or of failing to address poor management, or failing to implement proper standards of performance in state entities.

Those losses can never be recovered. And that is why we are so much poorer, so much less productive and efficient and innovative, and have achieved so much less than our promise and potential as a people.

Oblivious to the unseen economic losses, in the face of the high costs of procrastination and poor decision-making, we say: ‘Trinidad nice; Trinidad is a paradise!’ ‘We like it so!’ ‘Things bad, but they could be much worse’.

Photo: Economist, author and attorney-at-law Terrence Farrell.
(Copyright RC Social Justice TT)

Despite the bravaydanger deep down ordinary Trinis are deeply concerned by what the collapse of Petrotrin portends.

Our President has rightly enjoined us to have boundless faith in our destiny. We should. But we must surely first eliminate our seemingly boundless capacity for self-delusion, lest we inhabit a fool’s paradise.

We must eschew un-responsibility and take responsibility for the future of our nation.

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4 comments

  1. Thank you, Trevor. You are more than right to invoke the ghost of the closure of Caroni. You offer a bleak and particular re-statement of the generalization that the condition of Petrotrin is a reflection of the condition of the picaroon society and economy as a whole: inefficiency in management, structurelessness, multiple openings and opportunities for corruption and patronage, predatoriness and self-cannibalisation,cruelty and suffering, cultivated blindness and evasion, and waiting for manna to fall. In short, a failure of mind and a lack of vision.
    I would have liked to see the following: (a) A discussion on the worth or worthlessness of the two recommendations of the Lashley Report: Governance Arrangements; and Organizational Structure. (b)An intelligent discussion as to whether the answer is amputation or therapy. (c)An explanation to the common man of the seemingly guiding principles of the Government,namely: i. It is better to import than to produce for yourself and ii. We might as well return to the plantation condition of exporting raw material and buying it back in refined form. Finally, tell me and Clint Eastwood who to kill.

  2. I have no criticism on behalf of this well analyzed cultural system of waste. This economist has put it all well in a nut shell. Governance has to establish a check and balance system managing the resource and economy output. Far to long all of the country state enterprise will be either privatize or idle drain. All the economy of the country goes back into Board of state enterprise, unions, the friendly flyers or the trickled pass down, and large account.
    When could we remember attending some ribbon cutting or opening of some well monitor structure for the use of the citizens. Take one of our major resource pitch, yet still our highways and inner city roads unbearable to even roll a barrel. Our forestry gardens and parks could be well kept and manage generating economy through visits for tourists as well locals. Prime habitats for general geographic landscape for quality of life. Just imagine if Trinidad infrastructure caters for full landscape and architecture, do you think citizens would want to leave and migrate. These are just insight of how our economy could be funded for the betterment of country while encouraging tourism labor for locals and the lack of migrating. More to come.

  3. I have never read a more insightful piece on W868 on the greater national political situation.
    Kudos to Dr Farrell who has had the fortitude to say what needs to be said and by extension to do what he had to do r.e. resignation from EDAB.

  4. ” boundless capacity for self-delusion”

    Best phrase ever, to describe the Trini mentality.