President of State oil company Petrotrin Khalid Hassanali has admitted to multiple delays and cost overruns during the time the Fluidised Catalytic Cracking Unit (FCCU) was out of service at the company's Pointe-a-Pierre refinery.

But he denied yesterday that the shutdown cost $2 billion.

Hassanali said the $2 billion was an operating expenditure for purchasing blending stock to ensure continuity of quality supply to customers.

He was responding to Opposition Senator Terrence Deyalsingh's claims made during the 2012/2013 budget debate in the Senate on Tuesday.

Deyalsingh said the unprecedented shutdown of the FCCU for 16 months had resulted in a cost of about $2 billion.

However, speaking with reporters at an Energy Chamber luncheon at Paria Suites, La Romaine yesterday, Hassanali said: "The $2 billion loss took me by surprise because the $2 billion that was spent over the last period when the cat cracker was out of service was really for purchasing blending stock."

He said: "We didn't stop the refinery over the last two years. The refinery has been running. It is only a little more than 12 months now that the cat cracker was taken out of service. It has been upgraded while it was running, but since December last year it was taken out of service," he said.

Hassanali said upgrade works on the FCCU began in 2006 at an estimated cost of US$173 million.

The contract comprised a lumpsum portion for engineering, procurement and some management and fabrication services.

The rest of the work comprising the major part was on a cost reimbursable basis, meaning Petrotrin took all the costs of construction.

Hassanali said the procurement process proved a major delay, but an accident in the boiler and a death at the refinery further delayed the completion of upgrades this year. The initial estimate, he said, was revised on two occasions—2008 and 2010—to US$439 million.

He said final commissioning activities are in progress and full commercial production is expected in November 2012.

Hassanali said during the period the FCCU was out of service the refinery continued operations, producing gasoline and diesel.

"And what we bought with the $2 billion was stock to blend for us to meet specification.

So it wasn't a loss as such. It was part of the operating expenditure in meeting specifications. Interestingly I should add that the feedstock for the cat cracker over last 12 months strangely has been valued higher than cat products. This means that we sold the cat feed and made more money than when it was running.

So to determine whether this whole exercise was profitable or not has to be looked at. But over the period that was not an expenditure over which heads should roll. It is more of an operating expenditure for blending stock," he said.