Auditor General Delivers Damning Report into Management of PetroJam

Auditor General Pamela Munroe Ellis has delivered a damning report on the operations of the State-owned oil refinery, Petrojam.

According to the comprehensive audit report, over the last five years, Petrojam has reported a loss of over five billion dollars worth of oil that it cannot account for. That’s over 600,000 barrels of oil. The information is contained in the Auditor General’s report dated December 2018.

The 114-page document says it contains findings from an audit of the governance framework, resource, procurement and contracts management at the Petroleum Corporation of Jamaica, PCJ, and Petrojam.

The comprehensive audit was conducted following concerns about widespread corruption at the agency and other entities under the then Ministry of Science, Energy and Technology.

The Auditor General has also found poor oversight of the company’s board of management by the Energy Ministry.

Auditor General, Pamela Munroe-Ellis, found that Petrojam embarked on a programme to improve its refinery. But, the extensive audit found that high levels of oil loss became a major risk to the company’s operations.

It says over the last five years, Petrojam reported that during normal production it used 1.5-million barrels of oil valuing over $12-billion.

But, the Auditor General found that Petrojam could not account for 600-thousand barrels of oil valuing over 5-billion dollars.

It says Petrojam’s average annual oil loss was 0.75-percent, which is almost two times its own key performance indicator of 0.4 percent.

It says the State-owned oil refinery has offered inventory inaccuracies, underestimated flaring and fuel consumption, as well as un-reported shutdowns, as reasons for the oil loss.

The Auditor General says last year Petrojam appointed an internal oil loss task force with the aim of reducing the company’s losses.

Some 125-million dollars was spent for the task force to complete eight deliverables by February this year. But, only one of those deliverables was achieved. It says Petrojam could only satisfy 49-percent of its customers’ oil demands, with the production of 7-point 4 million barrels of oil per annum.

That represents 56 per cent of its annual total production capacity of 13-million barrels.

Petrojam also wasted over $62-million, on a piece of equipment it bought to reduce oil loss.

Petrojam could not explain why it had never used the meter and prover system since it was bought in 2010.

However, the oil refinery reported that an assessment conducted in February 2018 at a cost of over one million dollars, revealed that the equipment is now unusable.

The Auditor General also found inefficiencies in Petrojam’s former board of management.

It says the Board was not meeting regularly and the role of the Board of Directors was being limited to making administrative decisions and approvals.

The Auditor General’s Department says it expected Petrojam’s board to periodically report to the Petroleum Corporation of Jamaica, PCJ, and Ministry of Science Energy and Technology, MSET.

But, it says there was no formal reporting framework to PCJ and Petrojam did not always submit the required minutes and reports to the Ministry.

The Auditor General also says both the PCJ and MSET, were inactive in performing oversight responsibilities in monitoring Petrojam’s operations.

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