Higher construction costs and a greater scope of works were among the main reasons why the cost of the Petrotrin refinery upgrade jumped from $2.22 billion (US$350 million) in 2003 to $8.26 billion (US$1.3 billion), Energy Minister Conrad Enill said.
He said a hike in construction costs over the past seven years was a key contributor, as well as an increase in the scope of works after detailed engineering was done from 2006 to 2008.
"The cost of the project was increased to US$917 million in 2007 based on these developments. In 2008, a further review of the project; and the cost increased from US$917 million to the current US$1.3 billion," Enill said.
Enill, a Government Senator, gave the explanation late on Monday night during the House of Representatives 2009/ 2010 Budget debate at the Red House, Port of Spain.
He came to the Lower House sitting to respond to concerns raised about the escalation in the cost of the project by Diego Martin West MP Dr Keith Rowley.
Enill said the Petrotrin upgrade, officially called the gasoline optimisation project, was meant to improve the quality of its vehicle fuel products for export to markets outside Caricom.
"We found ourselves where we had one of two choices-either go out of business, or create the circumstances to go into the international market; and this we sought to do through this gasoline optimisation project," Enill said.
"The estimated cost of the project in 2003 was US$350 million," he said.
In 2004, "basic engineering designs provided for a better indication of the scope of the project" and resulted in a US$300 million price increase.
"Based on this review the cost increased to US$650 million," Enill said.
"In 2006, with an overheated construction industry, Petrotrin experienced difficulty in obtaining lump sum bids from pre-qualified contractors," he added.
