Opposition wants audit of Petrojam oil purchase

The Opposition has asked the Auditor General’s Department to launch a probe into the decision of Petrojam to purchase up to one million barrels of oil, which has resulted in a $5-billion loss to the entity.

It argues that the oil, bought at US$120 a barrel, substantially exceeded ordinary inventory purchases.

The Government has now been forced to provide a $5-billion loan to Petrojam as private financiers declined to extend credit due to the impairment of the company's financials.

The opposition is contending that the situation now requires an audit as it is taxpayers who will bear the cost.

Among the questions it wants probed are:

1. When was the oil purchased?

2. What was Petrojam’s internal process to authorise the purchase?

3. Was the Ministry with responsibility for Energy brought into the making of this decision?

4. Were the inherent risks of buying this stockpile at $120/barrel adequately evaluated in making this decision?

5. Was a price hedging arrangement contemplated by Petrojam to protect itself from losses in the event of the fall in the market price after buying this stockpile at $120/barrel? If not, why not?

6. Who was the oil purchased from? Was an intermediary/agent used in this transaction?

7. Were the procurement arrangements transparent, at arms-length and in accordance with applicable procurement laws?

8. How many months of inventory usage did this purchase represent? How long was it anticipated this stockpile of oil would last for?

9. Will Petrojam's obligation to repay this $5 billion loan over the next 18 months impact the prices it charges for its products, and thereby have a direct impact on the traveling public?

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