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JAMAICA | Prime Minister orders forensic audit into oil losses at Petrojam

Featured Prime Minister Andrew Holness has ordered a forensic audit into the massive oil losses at Petrojam. Prime Minister Andrew Holness has ordered a forensic audit into the massive oil losses at Petrojam.
KINGSTON, Jamaica December 11, 2018 - Prime Minister Andrew Holness said following a discussion with the Board of the State-run oil refinery Petrojam, he has ordered a forensic audit into the massive oil losses at the entity.

This follows the Auditor General's report which revealed that Petrojam was unable to account for over 600,000 barrels of oil worth more than $5 billion.

The prime minister told a press conference at Jamaica House yesterday that he met with the refinery's new board last Friday and, after three hours of discussions, he has decided that there is need for a forensic audit into the losses.

“I am going to once again, this time for the last time, direct the board to start the process to identify how we can lose 600,000 barrels of oil over five years, and to explain to the public what this is,” the prime minister said.

Mr. Holness said he met with the board of Petrojam on Friday to discuss the Auditor General's report on the problem-plagued oil refinery, to include the significant oil losses.

"There could be the possibility of pilferage, and indeed, we have heard anecdotal cases of pilferage of finished products. But it could be wastage, it could be technical losses. We need to know exactly what are the proportions; what causes it," he asserted.

Mr. Holness has also instructed the board of Petrojam to take action to recover funds identified in the Auditor General's report as misused.

The Auditor General's report which was tabled in the House of Representatives last week revealed that millions were wasted.

Mr. Holness said a principle of restitution will be established to ensure accountability in the use of public funds.

The Prime Minister has also confirmed statements in the Auditor General's report that delays in upgrading Petrojam could render it obsolete in a few years.

"Generally, the plant is old, so it is not operating at its true level of efficiency. We have not had the upgrade refinery since 2006, so the renewal of our refinery has been delayed for over a decade, and it is likely that if the current situation remains, the refinery could end up being obsolete, in fact, it is near obsolescence now," he noted.

In addition, Mr. Holness responded to calls for individuals and companies that benefited from Petrojam contracts in breach of procurement rules to be identified and blacklisted.

"My view is that they should be named. I just want to be sure that I'm on a solid legal footing and I'll discuss that when I meet with the Auditor General," he said.

Holness also announced new measures to make the traditional petrol pricing mechanism at the refinery more transparent.

He said there were frequent questions as to Petrojam's pricing mechanism, noting that the traditional response has been that it is the best pricing mechanism.

“But, obviously, the public has another view for the simple reason that they hear world prices going down, but the pump prices tend to be going up,” he pointed out.

while noting that there is a measure of discretion in determining the price, he pointed out that the formula used is said to be a good formula for determining the price.

“But, there is an adjustment made to the formula, and that adjustment is really an exercise in discretion, and it is in the exercise of that discretion that I think offers the opportunity to bring transparency,” he said.

The prime minister said he has directed the board of Petrojam to ensure that the minutes of the meetings on pricing are sent to the Ministry of Finance's Enterprise Division, or directly to the minister, to enable review.

“I am also going to recommend, after further consultations with the board, how we can introduce independent parties into the process,” he said, noting that these independent parties would have to have no special interest in the process, and could include representatives of the Consumer Affairs Commission or a Ministry of Finance.

  • Countries: Jamaica

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