IN 2018, the government of Trinidad and Tobago announced the closure of Petrotrin, the state-owned oil company that had been a cornerstone of the nation’s economy for over a century. This decision, aimed at curtailing financial losses and inefficiencies, has had far-reaching consequences on the country’s fuel security, foreign exchange reserves, and overall economic stability.
Petrotrin’s closure marked the end of local refining operations, leading to an increased reliance on imported refined petroleum products to meet domestic demand. This shift has exposed the country to global market volatility and supply chain disruptions. Before the closure, Trinidad and Tobago benefited from a more self-sufficient energy model, where domestically extracted crude oil was refined locally, ensuring a steady and predictable supply of fuel.
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With the end of refining activities, the country became dependent on fuel imports, introducing new vulnerabilities that cannot be ignored, despite attempts by government officials to downplay them. Geopolitical tensions, supply chain disruptions, or fluctuations in global oil prices now have a direct impact on the availability and cost of fuel in Trinidad and Tobago.
The economic ramifications of Petrotrin’s closure extend beyond fuel security. As a significant contributor to the nation’s foreign exchange earnings, Petrotrin played a vital role in stabilizing the local currency and maintaining foreign reserves. The Minister of Energy may try to dismiss this reality, but the loss of Petrotrin’s operations created a substantial gap in the country’s foreign exchange inflows.
Historically, Petrotrin’s export of refined products generated considerable foreign exchange, essential for funding imports and supporting the local economy. The shift from an exporter to an importer of refined products reversed this dynamic, increasing the demand for foreign currency to pay for fuel imports. Consequently, Trinidad and Tobago has faced declining foreign exchange reserves, exerting pressure on the exchange rate and contributing to economic instability.
The foreign exchange shortage has had a ripple effect across various sectors of the economy. Businesses relying on imported goods and services have struggled to obtain the necessary foreign currency, leading to delays, increased costs, and reduced competitiveness. Additionally, the reduction in foreign exchange earnings has constrained the government’s ability to invest in infrastructure, social services, and economic diversification efforts, further limiting the country’s growth prospects.
Beyond the macroeconomic effects, the closure of Petrotrin had severe social and employment implications. Thousands of workers were displaced, leading to increased unemployment and social distress. The loss of jobs in the refining sector triggered a cascading effect on related industries, including logistics, maintenance, and support services, exacerbating economic hardships in many communities. Despite efforts to retrain and redeploy displaced workers, the scale of the challenge remains immense. The loss of high-paying jobs in the oil and gas sector has contributed to a decline in household incomes and consumer spending, negatively impacting economic activity and small businesses.
However, in a significant policy shift, the Government of Trinidad and Tobago has announced an agreement to lease the Petrotrin refinery to the Nigerian energy company Oando. According to Minister Stuart Young, this deal is intended to revive refining operations and restore some level of fuel security and economic stability. While details of the agreement are still unfolding, this development marks a potential turning point in the nation’s energy sector.
The key questions now are:
• Will Oando’s involvement lead to a sustainable, efficient, and profitable refinery operation?
• How will this deal impact local fuel prices and supply stability?
• Will the refinery’s reopening create substantial employment opportunities for former Petrotrin workers and other Trinidadians?
These concerns remain at the core of public discussions, as citizens anxiously await clarity on how this new arrangement will unfold. The government has positioned the Oando deal as a strategic move to reduce fuel import dependency, improve energy security, and potentially generate foreign exchange through refined product exports. However, given past experiences with state-run energy ventures, we remain skeptical about the long-term viability and economic benefits of this agreement.
Although the IMF projected economic growth of 2.4% in 2024, largely driven by the non-energy sector, this is far from reassuring for citizens struggling with rising costs and a weakening dollar. The purchasing power of a polymer blue $100 bill continues to drop, making it harder for ordinary citizens to cover basic expenses. The opposition in Trinidad and Tobago has expressed scepticism about the Oando lease of Petrotrin, questioning its legitimacy and potential benefits for the future. Looking back at the performance of Stuart Young as Minister of Energy, this skepticism seems justified. Under his tenure, concerns were raised about transparency, accountability, and the handling of key energy sector deals. Given these past issues, doubts about the Oando lease being in the country’s best interest are understandable.
While the Oando deal represents a potential step toward revitalizing refining operations, its true success will depend on execution, transparency, and whether it genuinely delivers tangible benefits to the people of Trinidad and Tobago. None of which we have at the moment.
