Criticism of PCJ board off base

Christopher Cargill, Guest Columnist

In a Wednesday Business column titled 'PCJ needs a more diligent board' (Gleaner, July 16, 2014), the writer questioned thecommitment of the Petroleum Corporation of Jamaica's (PCJ) board of directors to transparency, accountability and prudence.

We must highlight aspects of the article that contained incorrect information.

The PCJ is a statutory body under the Petroleum Act and is wholly owned by the Government of Jamaica (GOJ). It has no issued shares. The information your columnist reported regarding 1,000 shares distributed between the Jamaica Industrial Development Corporation and Garnet Woodham is inaccurate.

The writer also made references to the PCJ granting loans to government entities such as the Ministry of Science, Technology, Energy and Mining (MSTEM) and the Office of Utilities Regulation (OUR). No loans were made to these entities. What is reflected in the accounts are receivables from these entities, which are the PCJ's tenants. The size of the receivables is attributable to prior inadequacies in the auditing, invoicing and collection of these receivables; however, the current board and management team have taken decisive steps to effectively manage these receivables going forward.

The PCJ is not involved in liquefied natural gas operations; however, liquefied petroleum gas operations, which are part of the product portfolio of our subsidiary, PETCOM, are on the Government's list of assets to be divested by the Development Bank of Jamaica.

In a similar vein, the matter of inactive subsidiaries, which the writer queried, was inherited by the current board and is being addressed. Those subsidiaries, which are not likely to be useful vehicles for business activities in the future, are being liquidated.

We now address the column's inferences about the quality of the stewardship of the current PCJ board.

This board was appointed in February 2012, but many of the issues raised in the column actually predate our engagement. Notwithstanding this, since the commencement of our tenure, we have been working assiduously to regularise aspects of the corporation's operations, particularly as it relates to governance and regulatory compliance.

Finally compliant

In March 2012, just one month after our appointment, the PCJ had three fiscal years of audited accounts outstanding. In the ensuing period, we have overseen the clearing of that backlog and the completion of the 2013 audited accounts. As a result, the PCJ became compliant with the stipulations of the PBMA for the first time in more than five years.

The loan to the Rural Electrification Programme (REP) dates back to 2002; however, as directors, we spearheaded discussions with that entity and the PCJ has made considerable headway in devising an arrangement under which the REP can make repayments.

Similarly, the sale of 49 per cent interest in Petrojam to PDVSA for US$63.7 million took place in 2008. This board was neither the author nor approver of the deal in question.

Having said that, the PCJ has initiated discussions with the Ministry of Finance and Planning regarding the treatment of these funds, which are earmarked for a refinery upgrade project that has not yet taken place.

Self-financed

We must also address the writer's assertion that the Government "appears desperate to suck out funds from the PCJ". The unfortunate use of adjectives aside, we wish to point out that the PCJ is wholly owned by the GOJ and is a self-financing entity which, under the provisions of the PBMA, may be required to pay over funds to its owner which are termed "special distributions" under the act. The exercising of this right should not be regarded as sinister, especially when there is no evidence that the company is unable to carry out its functions after such payments.

As the foregoing illustrates, we were inheritors of a far-from-ideal state of operations; however, a critical examination of our period of service to date will provide tangible evidence of both the will to correct the anomalies of the past and the provision of guidance and direction to the current management team to ensure that these errors are not repeated.

We assure the public that we are determined to ensure that during our tenure, all aspects of the company's operations will be regularised and brought in line with Government of Jamaica standards. We will continue to act in a manner that promotes good governance, transparency and accountability.

Christopher Cargill is chairman of the PCJ board. Email feedback to columns@gleanerjm.com.