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Tuesday, July 22, 2025

Energy input in Heritage Fund decreases

by

20131016

Con­tri­bu­tions to the Her­itage and Sta­bil­i­sa­tion Fund (HSF), T&T's US$5 bil­lion sov­er­eign wealth fund, have plum­met­ed over the past three years, ac­cord­ing to re­ports is­sued by the fund. Con­tri­bu­tions to the fund have been falling steadi­ly, from US$451 mil­lion in 2011, to US$207 mil­lion last year, then to the cur­rent fig­ure of US$42 mil­lion.

Min­istry of Fi­nance of­fi­cials, Min­is­ter of En­er­gy and En­er­gy Af­fairs Kevin Ram­nar­ine and of­fi­cials of the Cen­tral Bank of T&T were asked why. Min­istry of Fi­nance and Cen­tral Bank of­fi­cials point­ed to de­clin­ing oil rev­enue, while Ram­nar­ine point­ed to the Min­istry of Fi­nance and the Econ­o­my for an an­swer.Fol­low­ing a re­quest for a com­ment from Fi­nance Min­is­ter Lar­ry Howai, who was in Wash­ing­ton at­tend­ing meet­ings of the In­ter­na­tion­al Mon­e­tary Fund (IMF) and the World Bank, a min­istry spokesper­son e-mailed a re­sponse.

"The Gov­ern­ment is re­quired by law to de­posit 60 per cent of the sur­plus of ac­tu­al oil rev­enue over pro­ject­ed oil rev­enue. In each of the years re­ferred to, the Gov­ern­ment de­posit­ed at least 60 per cent of the sur­plus as re­quired by law. It is, there­fore, not a con­scious de­ci­sion by the Gov­ern­ment to re­duce de­posits. It is just that the sur­plus rev­enue has been re­duc­ing pro­gres­sive­ly."

Un­der the HSF Act No 6 of 2007, Sec­tion 13 (2), the Gov­ern­ment has un­til the end of Oc­to­ber to make an­oth­er cash con­tri­bu­tion. Asked if it would be mak­ing an­oth­er con­tri­bu­tion be­fore the end of the month, Howai said: "There will be no fur­ther de­posits for the 2013 fis­cal year. The next eval­u­a­tion will be made in Jan­u­ary 2014, and if a sur­plus oc­curs, the Gov­ern­ment will de­posit as re­quired by law."

The Cen­tral Bank said: "The size of de­posits in­to the Her­itage and Sta­bil­i­sa­tion Fund by the Min­istry of Fi­nance broad­ly de­pends on how much ac­tu­al en­er­gy prices ex­ceed bud­get­ed pro­jec­tions of these prices. At the start of each fis­cal year, in es­ti­mat­ing rev­enue from tax­es on the en­er­gy sec­tor, the Gov­ern­ment makes its pro­jec­tions of en­er­gy prices (as well as vol­ume of pro­duc­tion, etc).

"In gen­er­al, the larg­er ac­tu­al en­er­gy prices turn out to be rel­a­tive to the pro­jec­tion, the greater would be the de­posit to the Her­itage and Sta­bil­i­sa­tion Fund. De­posits are nor­mal­ly made with­in one month af­ter the quar­ter, so if a de­posit is due for the Ju­ly to Sep­tem­ber 2013 quar­ter–this would be de­ter­mined by the Min­istry of Fi­nance–then the de­posit could be made by the end of Oc­to­ber."Ram­nar­ine said in an e-mail: "I think Fi­nance is best placed to an­swer this one."

The min­is­ter had no fur­ther re­sponse when told both the Fi­nance Min­istry and the Cen­tral Bank point­ed to oil rev­enue.The pur­pose of the HSF is to save and in­vest sur­plus pe­tro­le­um rev­enues de­rived from pro­duc­tion busi­ness to cush­ion the im­pact on or sus­tain pub­lic ex­pen­di­ture ca­pac­i­ty dur­ing pe­ri­ods of rev­enue down­turn whether caused by a fall in prices of crude oil or nat­ur­al gas.


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