Petrojam plugs holes - Refinery implements measures to reduce losses, improve operational practices
Refinery implements measures to reduce losses, improve operational practices
After failing to account for oil amounting to $5.2 billion over a five-year period, Petrojam Limited, the state-owned oil refinery, has implemented new initiatives to reduce oil losses.
In her 2018 special audit of Petrojam, Auditor General Pamela Monroe Ellis found that the public body suffered “unaccountable” oil loss amounting to 600,684 barrels over the period 2013 to 2018.
On Tuesday, Monroe Ellis stated in her annual report, which was tabled in Parliament, that the new initiatives have supported existing measures, which have been strengthened. The measures include tank repair and preventative maintenance programmes, security, sampling, and testing procedures.
It was reported that oil losses fell to 0.03 per cent in 2019-20 relative to a target of 0.4 per cent.
“I would interpret the enhanced approach to the containment of oil losses as recognition by Petrojam that while oil losses may be a normal part of the refinery process, it is important to pursue efforts to maximise the achievement of value for money spent,” the auditor general asserted.
The 2018 audit also questioned whether Petrojam’s adjustment in the price of fuel was done in a transparent manner. Owing to the absence of minutes at the time, the auditor general could not ascertain if the change in the price of fuel was done transparently.
Monroe Ellis reported that the pricing committee continues to meet weekly with participating representatives from the Ministry of Science, Energy and Technology, the Office of Utilities Regulation, and the Ministry of Finance and the Public Service. She noted that minutes of the meetings are prepared and shared with the representatives. Also, a market-adjustment policy was developed and is being utilised on an ongoing basis by the committee.
VALUE FOR MONEY
Following damning reports of explicit acts of nepotism at Petrojam in 2018 fuelled by weaknesses in human resource management, Monroe Ellis said that the recruitment practices were now in keeping with the entity’s policy. She reported that regularisation of Petrojam’s list of established positions continues with the finance ministry.
Monroe Ellis said there was also progress in the strengthening of oversight responsibilities of the board of directors, particularly compliance with the Public Bodies Management and Accountability Act and the Corporate Governance Framework. She said this was important because in the 2018 audit, it was noted that several malpractices and resource-administration issues occurred because of weak internal controls and a lack of transparency in decision making.
“Note is taken of the increased oversight of Petrojam’s donations and the implementation of checklists to allow for proper due diligence and transparency,” Monroe Ellis said.
The 2018 audit revealed that the number of donations doubled between 2013-14 and 2017-18 despite a cash flow problem, but Petrojam did not provide the rationale for the level of increase in donations.
TRAINING AND CERTIFICATION
Further, the auditor general has taken note of steps made by Petrojam to provide training and certification in project management, which is expected to enhance the successful implementation of new projects and achievement of value for money.
The 2018 audit showed that in awarding contracts, the state-owned oil refinery frequently contravened the terms of the procurement law and good practice by utilising the direct contracting emergency procurement methodologies without meeting the allowable circumstances. This deprived the company of value for money.