PORT OF SPAIN, Trinidad (CMC) — The Trinidad and Tobago government said the financial position of the state-owned oil company, PETROTRIN, is far worse than the reported net loss, after tax, of TT$533 million (US$85,280,000) in its unaudited financials for the year ending September 30, last year.
Finance Minister Colm Imbert in a statement to Parliament on Monday, said that the company had in fact recorded a loss of TT$4.5 billion (One TT dollar =US$0.16 cents) after having accumulated losses of TT$4.2 billion between 2011-2016 that were not shown in its accounts.
“It has recently come to the Government’s attention that PETROTRIN’s refinery operation has been unprofitable for the last five years, from 2011 to 2016, a matter that was not revealed before.
“In fact, rather than declaring these losses, PETROTRIN has been carrying them as a deferred tax asset, to be written off against future profits,” Imbert told legislators, adding that as a result PETROTRIN has “for the first time told the Government that its audited losses for 2016 may in fact be of the order of TT$4.5 billion, rather than the previously disclosed estimate of TT$600 million.
“It should be noted that a deferred tax asset is treated as an asset in a balance sheet, rather than as a liability, as it is retained for the purpose of reducing income tax expense in future years. However, if a deferred tax asset remains unusable or it cannot be reasonably determined when it can be used, as in this case, it needs to be written off the balance sheet. It can be gradually brought back into the books whenever profitability occurs.”
Questioning why PETROTRIN never reported the multi-billion dollar loss under the former People’s Partnership administration, Imbert said the Keith Rowley government is committed to returning PETROTRIN to profitability and as a result, the treatment by the company of accumulated losses in the refinery as assets can no longer continue.
“The question is, therefore, why under the previous administration was the deferred tax asset not written off as a loss in 2014 or 2015, so that the true financial position of PETROTRIN would have been publicly known?
“It now falls to this Government to determine the reasons for this unacceptable situation and to take the necessary steps to deal responsibly, proactively and professionally with any adverse consequences that may arise from this previously unreported loss of TT$4.5 billion. Rest assured…that we will do so,” Imbert told legislators.