Energy input in Heritage Fund decreases

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.