How could the Barbados National Oil Company lose $65 million?

Barbados Free Press reader “St. George’s Dragon” asks…

“The results of the Barbados National Oil Company are out (a year late) and scandalously show that they have lost $48 million in the year, and will presumably have lost another similar amount in the time since March 2009 year end.

I am not an accountant, but there must be some relevance in the fact that the profit from the up-stream side (is that oil production?) is $14.5 million, while the marketing side has lost $65 million.

How can you lose $65 million when the fuel prices are not subsidised by the Government any more?”

PWC Auditors say Barbados National Oil Company “not viable” – No kidding!

According to The Nation, the auditing firm of PricewaterhouseCoopers says that the Barbados National Oil Company is on a downward spiral and will crash and burn without more of your tax dollars. We don’t pretend to be financial wizards ’bout hey, but we’ve been thinking that decades of over-borrowing and over-spending by our leaders is all coming home to roost and before things get better it’s going to be a rougher ride than anyone anticipates.

Can we trust PricewaterhouseCoopers to tell the whole truth about the Barbados National Oil Company?

Has anyone noticed how intertwined the firm of PricewaterhouseCoopers seems to be with Barbados? I’m wondering why that is. I am naturally suspicious when our government and business elites primarily choose only one auditing company to look after everything – and every time when another disaster is announced we are supposed to believe it is a big surprise to everyone.

Remember that PWC are the auditors for CLICO and they have never had to account for their failings in that mess. Here’s what one BFP reader had to say about PWC and CLICO…

No one is questioning the role of Pricewaterhouse Coopers in this Clico fiasco. PwC consistently signed clean Audit reports for Clico and CIB despite knowing about the inaccurate and fraudulent accounting. CIB’s accounts for the 2007 year end were signed off on December 3rd 2009, less that 45 days before the company crashed. There was no going concern qualification, or subsequent events note that should have been in the audit report. Surely PwC knew of the company’s predicament when they signed the accounts!”

“CIB’s accounts for the year ended December 31st 2007 were signed off on December 12th 2008 to be exact. PwC knew about CIBs predicament and still signed a clean audit report. We are a backward community if that firm is allowed to continue unscathed.”

… posted by BFP reader “Trini Whistleblower“

What do you think folks?

Why are the financial reports for the Barbados National Oil Company a year late? Do you think that PricewaterhouseCoopers has given Bajans the entire and accurate story? What about the oil terminal subsidiary? Are any of the CL Financial or CLICO companies involved in any way with the Barbados National Oil Company?

Do you trust our government and PricewaterhouseCoopers to tell taxpayers the entire truth?


Filed under Barbados, Business & Banking, Consumer Issues, Corruption, Energy, Freedom Of Information, Offshore Investments, Oil, Political Corruption, Politics, Politics & Corruption

14 responses to “How could the Barbados National Oil Company lose $65 million?

  1. Donald Duck Esq,


    The nation article says why they incurred such losses. I quote “The report noted the losses had been incurred as a result of the removal of the subsidy on the price of refined petroleum products in September 2008.”

    You need to ask a different question. Why did this administration remove the subsidy on the price of refined petroleum products????

  2. David G. Brooks

    I have what some might think is a stupid question but I wonder if only applies to Oil Companies.

    Normally in business, more so manufacturing, you have your Cost of Goods Sold (COGS), be it purchase cost and resell or cost of materials, etc. that go into the production of your produce and you sell at a mark-up and the difference is your gross margin.

    The BNOC, like any other Oil producing company has to have a standard Cost of Producing a Barrel of Oil (COPBOO, let’s say) and this figure has probably been steady in its growth depending on the cost of operations and costs of running a company, inflation included, etc.

    So lets say for arguments sake that BNOC’s COPBOO is around US$10 and I think I am being generous but if not I think the argument I am putting forward should not differ much, and that it was US$7 a few years ago, before the major oil price increases started.

    When oil prices soared to unprecedented highs over the last few years and therefore BNOC’s would had to sell their oil at those high prices alongside OPEC, then it would beg the question that they should have been making a major WINDFALL in Gross Profit, even in the face of subsidies.

    Their Gross Margin of a Barrel of Oil would gone nearly as high as 1000%, as general cost would have stayed fairly constant but market price went up, and even though prices have come down the GM% should be still in the 700% range.

    So could someone please advise me as to how the BNOC could be losing money – in the order of millions – in the face of this?

    Or is the accounting procedures for Oil Companies different to other business entities. Do they have to also book their COPBOO at a higher artificial rate?

    I really look forward to this discussion/debate, as it is something that I have wondered about for years. Mysteries, it is, enlightenment is hoped for.

  3. Mobotu

    The real question is, why are government organisations and statutory bodies not held to file audited accounts within the statutory time and have never been?

    By the way, where ARE those statutory accounts for the last many years for GEMS???

    Never been published?


  4. St George's Dragon

    Something does not make sense with their results.

    The removal of the subsidy was surely to make the consumer (us) pay the real cost of the oil. If we are doing that, how can BNOCL be losing money?

    According to the Nation article the company produced 280,000 barrels of oil in the year. I ignore the 700,000 cu.ft of gas to make the sums easy.

    The net $48 million loss for the year means that they lost US$86 / barrel. Oil prices that year started at about US$105, peaked at US$145 and finished the year at US$45. That means the loss / barrel is just about the same as the market cost.

    Does this mean that the Government has removed the subsidy but failed to pay the increased price of oil on to BNOCL?

  5. Donald Duck Esq,

    Check out the comments on the loss from the acting gm of bnoc in today’s press

  6. factfinder

    An interesting theory on how a caribbean (BNOL) oil company would lose so much money and the international auditors would massage the figures.
    First it would not be in the interest of a global company to alter any figures from such an insignificant company and country.

    There are many procedures and protocols that international oil companies follow to stay ahead of the game and keep stake holders happy.

    These are R&D, ROW and re-investment, sadly none of which appear in a caribbean company or government dictionary.

    The pumps on the island have been left standing well prior and past the crude peak of 145us per barrel, and it is obvious that the infrastructure and resources have been raped and pillaged by various incompetent direction.

    To get back to the answer no one in Barbados takes any notice of global and international advise !.

    If you look at bizzie William’s proposals the man is obviously Dizzie Williams without sound advise.

    There is no quick fix to these issues, it has to be planned in investment returned, virtually all monies made has to be put back in, in comparison to profit.

  7. What will they think of next

    BFP did you check with the BNOC before repeating garbage from the Nation news paper?

    You know that the Nation is almost always wrong!

  8. David G. Brooks

    This is true, and they invariably always mutilate any letters (to the editor) that I send in, sometimes leaving me having explain to others how I could say what they printed – usually I have to tell them to read the Advocate they had the whole thing.

  9. complicity

    Aren’t the taxpayers in effect shareholders of these statutory companies?

    Isn’t an internationally respected accounting company suppose to explain where all the money went, how and to whom?

    Where are the international oversight bodies such as the IMF, IADB, Standards and Poor, Moodys, Deutsche Bank etc?

    Its enough to make anyone cry!

  10. Mobutu

    complicity asked, ‘Where are the international oversight bodies such as the IMF, IADB, Standards and Poor, Moodys’


    Good one!

  11. talkall

    the barbados national oil company needs a serious forensic audit. persons need to be held accountable for actions, its is not the first time (as i have heard) that million have gone unaccountable for.

    questions also need to be raise about the last drilling program in 2009, where they employed an exces of trinidadians over our locals.

    where the hr manager, drilling foreman and operations manager (all 3 born and raise in trinidad, working in barbados for years) all went to trinidad and imported workers (some didnt have pemitts either).

    find the former manager who makes people feel he is an “oil-guru” and let him answer the questions.

    also I have here a local company who operates local and regional petrol stations, want to aquire barbados national terminal company and a canadian company based in colombia wants to aquire the barbados national oil company.

    lot of questions should be asked but kindly dont ask me.

  12. John

    $65million on marketing?????? I have never even seen an ad for BNOC. Clearly people have been running off with the money & calling it “marketing”

    An audit of what this marketing was, I feel sure that the words “off shore account” & “houses” will be in there

  13. There is no way they should be loosing money with oil price as they are … Gross Margin/Profit should be through the roof.

  14. 14

    Very soon the BNOC will be sold.