JAMAICA | Opposition PNP Wants Audit of Petrojam Oil Purchase in face of J$5-billion loss

KINGSTON, Jamaica. July 20, 2023: Shadow Minister on Finance and Planning, Julian Robinson, MP, has formally requested an audit of the decision made by Petrojam to purchase up to one million barrels of oil at the cost of US$120 per barrel, resulting in a substantial loss of J$5 billion to the entity.

The purchase, which exceeded ordinary inventory acquisitions, has left Petrojam facing significant financial challenges, prompting the Government of Jamaica to provide a J$5 billion loan as private financiers declined to extend credit due to the impairment of the company's financials.

In light of this situation, the Opposition has raised several critical questions that they believe should be thoroughly investigated:

1. When was the oil purchased?
2. What was Petrojam's internal process to authorise such a large-scale purchase?
3. Was the Ministry responsible for Energy involved in making this decision?
4. Were the inherent risks of buying the stockpile at US$120/barrel adequately evaluated before the decision was made?
5. Did Petrojam consider a price hedging arrangement to protect itself from potential losses in case of a decline in market prices after the purchase at US$120/barrel? If not, what were the reasons?
6. Who was the oil purchased from, and was an intermediary/agent involved 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, and for how long was it anticipated that this stockpile of oil would last?
9. Will Petrojam's obligation to repay the J$5 billion loan over the next 18 months impact the prices it charges for its products, potentially affecting the travelling public?

The J$5 billion loss incurred by Petrojam will ultimately be borne by the country's taxpayers, leading to a reduction in Petrojam's distributions of surplus to the Consolidated Fund. Furthermore, the Government's need to provide a loan to cover the losses will diminish Central Government's cash resources, impacting other critical public expenditures.

The audit request has been formally submitted to the relevant authorities, and the Opposition eagerly awaits the results of the investigation to shed light on the circumstances surrounding Petrojam's oil purchase.

The PNP is committed to ensuring transparency and accountability in public financial matters. We seek to protect the interests of the citizens and advocate for prudent decision-making in the energy sector.

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