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PSOJ demands sanctions for those guilty of breaches at Petrojam

Howard Mitchell

 

The Private Sector Organization of Jamaica (PSOJ) is calling for sanctions against those who breached governance and management rules at the State-run oil refinery, Petrojam.

The Auditor General's report which was tabled in the House of Representatives on Tuesday revealed that bad management practices have cost Petrojam hundreds of millions of dollars.

The report covers the management of the entity during the tenures of both the last People’s National Party government and the current Jamaica Labour Party administration.

PSOJ President Howard Mitchell told RJR News on Wednesday that he was very concerned about the findings, which reflect “a breach of a fiduciary duty” and of “the appointed board members, and … the Permanent Secretary, and it’s a breach with other people’s money.”

Such breaches had cost the country too dearly over the years, “and it’s time to enforce the rules,” he stressed.

Meanwhile, Auditor General Pamela Monroe Ellis has determined that poor planning and imprudent management decisions at the State run oil refinery contributed to significant delays in the commencement and execution of four major capital investment projects.
 
The four projects comprised the construction of a Petroleum Testing Laboratory, the replacement of the North Perimeter Fence, rehabilitation of the Main Docking Facility and the F-2 Furnace replacement.
 
Mrs Monroe Ellis said the poor decisions resulted in costs significantly exceeding the initial contract sums.
 
For example, the original contract for the rehabilitation of the Main Docking Facility was agreed at $783.6 million.
 
However, the total amount spent to date is $1.23 billion. 
 
The Auditor General said the contract sums for the projects amounted to $1.5 billion with cost over-runs on the construction of  the Testing Laboratory, rehabilitation of the Main Docking Facility and the F-2 Furnace replacement totaling $615.7 million.
 
For the replacement of the perimeter fence, Mrs Monroe Ellis said Petrojam made a bad decision costing $67 million in excess of the original estimate, which pushed the total loss in value on the four contracts to $682.7 million. 
 
When the construction of the wall came up for discussion at Parliament's Public Administration and Appropriations Committee in June, Telroy Morgan, Petrojam's Acting Manager of Refinery Optimization and Business Support, explained that changes in the scope of work led to increases in the estimate.
 
The Auditor General has also raised concern about the procurement methodologies used for the award of contracts under the four major capital investment projects.
 
Mrs Monroe Ellis said Petrojam not only breached the procurement guidelines, but also would have deprived itself of the opportunity to ensure that it selected the most suitable contractors, at the best price, to maximise the potential to obtain value for money.
 
She said for the 16 contracts reviewed under the four projects, Petrojam either did not provide the rationale or provided insufficient justification for its use of the Direct Contracting and Direct Contracting Emergency procurement methodologies.
 
The government, in the meantime, has given a preliminary response to the Auditor General's report.
 
Cabinet is yet to discuss the document.
 
At Wednesday's Post Cabinet media briefing, Information Minister Senator Ruel Reid, said the government will not shy away from responding to the findings and acting on them. 
 

 



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