Petrojam, the state owned oil refinery, has announced that it will cut the prices of some products, effective Friday.
The price of E10-87 and E10-90 gasoline will go down by J$2.45 while that for diesel will be reduced by $2.30.
The price cut for kerosene oil will be $1.59.
Propane cooking gas however rises by 51 cents while $1.04 has been added to the price of butane gasoline.
Read more:
THE start date for the modernisation of Jamaica’s oil refinery, Petrojam, appears to have been brought to the front of the queue of Venezuelan expansion projects.
Already delayed by five years, the project failed to take off due to the inability of the owners
Tyrone Reid, Sunday Gleaner Reporter
A comprehensive operations audit of Jamaica’s state-owned oil refinery has questioned the legality and financial oversight of several mega contracts totalling hundreds of millions of US dollars per annum that are being entered into by Petrojam officials.
This is among a number of concerns contained in a “strictly confidential” report prepared by Centennial Group, a consulting firm from Washington, DC, which conducted a special operations audit of Petrojam Limited at the request of Finance Minister Audley Shaw.
The inspection was spawned by a massive $7.3 billion loss incurred by the company in the 2009 financial year.
The consultants, who stated that Petrojam could have substantially reduced its losses during a particular four-month period when the refinery was operating at high negative margins by increasing its reliance on imports to meet local demand, determined that several critical issues in the petroleum sector were too murky for comfort.
“High-value contracts for purchase of crude oil and petroleum products amounting to hundreds of millions of US dollars annually are being negotiated by a few Petrojam officials without any external oversight. Delegation of such responsibility needs to be established more carefully with proper oversight for better transparency,” the consultants said.
No authority to sign
The report also stated: “The legality of some contracts seems questionable with the system of delegation of financial authority being not clear. Amendments and/or renewals of some very high-value contracts have been done by some officers who may not have the required financial authority to sign these contracts.”
The consultants recommended that “a competent and authorised team of strong negotiators with skills in the oil trade with GOJ representation in the team should carry out these negotiations”.
“This will get the best possible terms for the country and would ensure adequate transparency in the deals. Further, in cases where petroleum products are imported without competitive bidding, as in the case of imports from Petrotrin, increased oversight is necessary by the Ministry of Energy and Mining, PCJ and Petroleos de Venezuela (PDVSA),” the report stated.
Commenting on the report, Winston Watson, general manager of Petrojam Limited, insisted that no unauthorised personnel signed a contract on behalf of the company. “I haven’t seen any document to substantiate that,” he told The Sunday Gleaner. In an earlier response issued by Petrojam on Friday, the company said it had an internal governance policy that was detailed in its chart of accounts with signing authority and delegation clearly identified.
“This chart of account has been approved by the board of directors and is strictly adhered to. At no point in the audit did the Centennial team request documentation on proof of signing authority; nor is Petrojam aware of any particular contract, the legality of which could be in any doubt by virtue of its signatory,” the Petrojam statement said.
The consultants also pointed out that the freight rates for product imports were unusually negotiated based on Petrojam’s own assessment. “This lacks transparency and evaluation of freight rates should be based on international benchmark rates published by Worlds Scale and AFRA ,” the consultants stated. AFRA, the average freight rate assessment, is one of the methods used to determine crude-oil freight rates.
In addition to those issues, the consultants highlighted that the demurrage – the charge for detention in port of a vessel by the ship owner beyond the time allowed or agreed upon – paid by Petrojam for vessels bringing in petroleum products appears to be excessive, running into millions of US dollars.
“Although Petrojam’s explana-tion is that high demurrage is the result of the limited capacity of the terminal, the dock occupancy was only 78 per cent in 2006, 83 per cent in 2008 and 80 per cent in 2009 up to July. In this context, it is worth mentioning that in some countries there have been many instances of collusion of port personnel with vessel owners for collecting extra demurrage,” the report stated.
Important issue
To further clean up the abysmal state of affairs in the country’s petroleum sector, Petrojam can no longer appear to be operating as a law unto itself, Centennial Group, the US-based audit consultants, has warned the Government.
“One important issue for the Government to resolve is that currently Petrojam is functioning virtually without effective oversight by either PCJ or the Ministry of Energy and Mining.
“There is need to develop this capacity with competent personnel who have knowledge of the petroleum sector. The Government also has to develop a satisfactory regulatory framework for the sector. At present, Petrojam serves as a quasi-regulator,” the consultants stated.
The consultants recommended that Petrojam, a joint-venture company with 49 per cent shares held by a foreign company – Petro Caribe S.A., an affiliate of
Tyrone Reid, Sunday Gleaner Reporter A comprehensive operations audit of Jamaica’s state-owned oil refinery has questioned the legality and financial oversight of several mega contracts totalling hundreds of millions of US dollars per annum that are being entered into by Petrojam officials. This is among a number of concerns contained in a “strictly confidential” report prepared by Centennial Group, a consulting firm from Washington, DC, which conducted a special operations audit of Petrojam Limited at the request of Finance Minister Audley Shaw. The inspection was spawned by a massive $7.3 billion loss incurred by the company in the 2009 financial year. The consultants, who stated that Petrojam could have substantially reduced its losses during a particular four-month period when the refinery was operating at high negative margins by increasing its reliance on imports to meet local demand, determined that several critical issues in the petroleum sector were too murky for comfort. “High-value contracts for purchase of crude oil and petroleum products amounting to hundreds of millions of US dollars annually are being negotiated by a few Petrojam officials without any external oversight. Delegation of such responsibility needs to be established more carefully with proper oversight for better transparency,” the consultants said. No authority to sign The report also stated: “The legality of some contracts seems questionable with the system of delegation of financial authority being not clear. Amendments and/or renewals of some very high-value contracts have been done by some officers who may not have the required financial authority to sign these contracts.” The consultants recommended that “a competent and authorised team of strong negotiators with skills in the oil trade with GOJ representation in the team should carry out these negotiations”. “This will get the best possible terms for the country and would ensure adequate transparency in the deals. Further, in cases where petroleum products are imported without competitive bidding, as in the case of imports from Petrotrin, increased oversight is necessary by the Ministry of Energy and Mining, PCJ and Petroleos de Venezuela (PDVSA),” the report stated. Commenting on the report, Winston Watson, general manager of Petrojam Limited, insisted that no unauthorised personnel signed a contract on behalf of the company. “I haven’t seen any document to substantiate that,” he told The Sunday Gleaner. In an earlier response issued by Petrojam on Friday, the company said it had an internal governance policy that was detailed in its chart of accounts with signing authority and delegation clearly identified. “This chart of account has been approved by the board of directors and is strictly adhered to. At no point in the audit did the Centennial team request documentation on proof of signing authority; nor is Petrojam aware of any particular contract, the legality of which could be in any doubt by virtue of its signatory,” the Petrojam statement said. The consultants also pointed out that the freight rates for product imports were unusually negotiated based on Petrojam’s own assessment. “This lacks transparency and evaluation of freight rates should be based on international benchmark rates published by Worlds Scale and AFRA ,” the consultants stated. AFRA, the average freight rate assessment, is one of the methods used to determine crude-oil freight rates. In addition to those issues, the consultants highlighted that the demurrage – the charge for detention in port of a vessel by the ship owner beyond the time allowed or agreed upon – paid by Petrojam for vessels bringing in petroleum products appears to be excessive, running into millions of US dollars. “Although Petrojam’s explana-tion is that high demurrage is the result of the limited capacity of the terminal, the dock occupancy was only 78 per cent in 2006, 83 per cent in 2008 and 80 per cent in 2009 up to July. In this context, it is worth mentioning that in some countries there have been many instances of collusion of port personnel with vessel owners for collecting extra demurrage,” the report stated. Important issue To further clean up the abysmal state of affairs in the country’s petroleum sector, Petrojam can no longer appear to be operating as a law unto itself, Centennial Group, the US-based audit consultants, has warned the Government. “One important issue for the Government to resolve is that currently Petrojam is functioning virtually without effective oversight by either PCJ or the Ministry of Energy and Mining. “There is need to develop this capacity with competent personnel who have knowledge of the petroleum sector. The Government also has to develop a satisfactory regulatory framework for the sector. At present, Petrojam serves as a quasi-regulator,” the consultants stated. The consultants recommended that Petrojam, a joint-venture company with 49 per cent shares held by a foreign company – Petro Caribe S.A., an affiliate of
KINGSTON, Jamaica – Opposition Spokesman for Industry, Commerce and Energy, Gregory Mair, is blasting Government’s handling of the energy sector. In a release to the media Mair said inaction on 10 consecutive weeks of increasing gas prices, high electricity rates and Petrojam Petrojam is facing increased pressure to make public its formula for calculating the price of petroleum products. The Micro, Small and Medium Sized Enterprise, MSME Alliance, says for many of its members, especially taxi drivers, the impact has been devastating and concerns are mounting in the face of persistent questions about the pricing mechanism used by Petrojam. Their call follows several from Opposition Spokesman on Energy, Gregory Mair who has been strident in his criticisms of the pricing mechanism, labelling it as deeply flawed. However, despite calls for Petrojam to open up to public scrutiny it has steadfastly remained silent. President of the Jamaica Solar Energy Association and member of the MSME Alliance, Roger Chang says the information should be made available to dispell doubts that the public is being cheated. Mr. Chang says he’s now awaiting the outcome of a request for the pricing formula through the Access to Information Act. He told our newscentre that he decided to go that route after failing to get a satisfactory response from Petrojam’s General Manager, Winston Watson: Mr. Chang says the MSME Alliance is also questioning whether the concerns raised in two audit reports of Petrojam in 2008 and 2009 have been addressed. He says among other things the audits said Petrojam’s pricing mechanism is being administered with limited oversight. The audit pointed out that with Petrojam being one of the market participants it was improper for it to administer the pricing system. Mr. Chang says the reports also outline a lack of transparency and inefficiencies at the refinery which results in the cost being trickled down to the consumer at the pumps and in their electricity bills. Yesterday it was announced that motorists would have to pay more for petrol for a ninth straight week as Petrojam hiked prices to just below record levels. http://rjrnewsonline.com/news/local/petrojam-pressured-over-petroleum-pricing-formula In the wake of concerns about the rising cost of petrol, Petrojam, the oil refinery jointly owned by the Jamaican government and
The state-owned oil refinery Petrojam is to provide full disclosure on its pricing mechanism in the wake of Chad Bryan, Gleaner Writer As the current exchange between the Petroleum Corporation of Jamaica (Petrojam) and the Micro, Small and Medium-Sized Enterprise (MSME) Alliance continues, fuel prices keep going up. The MSME is the latest organisation to complain publicly about high gas prices. MSME member and Jamaica Solar Energy Association President Roger Chang, is asking that Petrojam make its pricing mechanism public. Rising gas prices are a consistent feature of Jamaica, in the past punctuated by riots as government taxes caused a sudden spike, which aroused public ire. One of those riots was in January 1979 when, under the Michael Manley-led People’s National Party (PNP) government, fuel prices increased from $3 to $3.20 a gallon for premium gasolene and from $2.85 to $ 3.10 a gallon for regular. In January 1985, yet another year started with increased fuel prices ande riots, this time under the Edward Seaga-led Jamaica Labour Party (JLP) government. Five people were killed in the violence that ensued after a $1.91 increase, prices moving from $8.99 a gallon to $10.90 a gallon for premium gasolene. In April 1999, with the PNP back in control under the leadership of PJ Patterson, demonstrators took to the streets to protest a hike in fuel tax from $1.55 a gallon to $2. On Friday, Petrojam’s website listed E10 (87) gasolene at $107.5228 and E10 (90) at $109.1787, prices to which dealers would add their margins. The increase in fuel prices is an all too common occurrence which motorists continue to grapple with at the pumps as, since recently, the cost of fuel went up by $2.00 to cost $107.52 for a litre of E-10 87, $109.17 for E-10 90 gasolene and automotive diesel, which has gone up by $1.11 to sell for $ 107.29 per litre. The earliest figures on the website were $27.4276 for unleaded 87 grade fuel in February 2004, with unleaded 90 going for $28.8704 at that time. Cheap petrol price? According to Brace for higher fuel prices. That’s the warning from the Jamaica Gasoline Retailers Association, JGRA. It comes as consumers face the seventh consecutive week of
The Petrojam oil refinery at Marcus Garvey Drive in Kingston – File
