HOUSTON (Reuters) – Citgo Petroleum Corp stopped contributions to employee 401(k) retirement programs on Nov. 1 and ideas to minimize salaries on Jan. 1 to cope with the consequences of the coronavirus pandemic, sources acquainted with the moves reported.
In a message sent to personnel that was noticed by Reuters, the Houston-dependent firm said the steps were being vital for the reason that of the loss of desire resulting from the overall health disaster.
“The refining sector has been severely affected by the pandemic,” according to the message, which was despatched to staff members in late October.
U.S. gasoline desire is down by more than 10% in 2020 due to lockdowns taken to slow the distribute of the coronavirus, which has killed virtually 1.3 million persons throughout the world, which include far more than 240,000 individuals in the United States.
In a assertion on Friday, Citgo explained it “continues to take intense ways to control costs in get to navigate the challenging natural environment, together with quickly suspending employer contributions to the company’s 401(k) retirement system and a 10% reduction in salaries (reduction is applied on a tiered earning degree).”.
Gas desire has recovered considering the fact that the very first wave in the spring, but with infections on the rise in the United States and Europe, usage is predicted to fall again in coming weeks.
The corporation stopped an automated 3% contribution to worker 401K programs and a 6% match to worker contributions on Nov. 1, according to the message sent to workers.
As of Jan. 1, 2021, salaries of $100,000 or larger will be lowered by 10% and salaries involving $50,000 and $100,000 will be slice on a sliding scale setting up at 1% and continuing up to 10%, in accordance to the concept.
Citgo also mentioned no bonuses would be paid out.
The organization mentioned it hoped the cut in 401(k) contributions and pay out would be momentary.
“Key drivers for our enterprise – product or service need, refining margins and refinery utilization – are all down below acceptable amounts,” the message reported. “As a consequence, we have to make supplemental price tag reductions to defend our liquidity right up until the economy and field enhances.”
Citgo’s actions are the newest taken by U.S. refiners to contend with plummeting demand owing to the pandemic.
4 U.S. refineries have shut down this yr since of decline of need. Refinery utilization for August was 79% of countrywide capability of 18.6 million barrels per working day (bpd), in accordance to the U.S. Power Details Administration.
The cut in contributions to 401(k) strategies affects all personnel, but the pay back cuts that choose impact in January will not use to hourly staff members, the resources said.
Reporting by Erwin Seba Enhancing by Leslie Adler, Sonya Hepinstall and Kim Coghill