Kevon Felmine

While the Na­tion­al Gas Com­pa­ny (NGC) con­tem­plates rev­enue earn­ing from the sale of two off­shore plat­forms, en­er­gy econ­o­mist Gre­go­ry McGuire says the com­pa­ny's bal­ance sheet was se­vere­ly af­fect­ed by the de­ple­tion of its re­serves by the for­mer Peo­ple's Part­ner­ship gov­ern­ment.

Speak­ing at the T&T Ex­trac­tive In­dus­tries Trans­paren­cy Ini­tia­tive (TTEITI) fo­rum at the Oil­fields Work­ers' Trade Union's (OW­TU) Para­mount Build­ing, San Fer­nan­do, McGuire said the coun­try was liv­ing be­yond its means by spend­ing ex­ces­sive­ly while en­er­gy sec­tor rev­enue dropped from $21 bil­lion to $5 bil­lion in 2014/2015.

The gov­ern­ment at the time main­tained that the econ­o­my was sta­ble, but ac­cord­ing to McGuire, that was due to non-en­er­gy rev­enue be­tween the pe­ri­ods 2013/14 and 2014/15 in­creas­ing from $28 bil­lion to $39 bil­lion.

How­ev­er, it rep­re­sent­ed NGC's con­tri­bu­tions in the form of pay­ments of reg­u­lar div­i­dends, but al­so ex­tra div­i­dends, retroac­tive div­i­dends and its re­spec­tive tax­es as con­firmed in the EITI re­port.

"Think about it. If NGC was a pri­vate com­pa­ny, there was no way the share­hold­ers could come and say, 'lis­ten, we want ex­tra div­i­dends.' That has cer­tain­ly con­tributed to weak­en­ing the com­pa­ny's bal­ance sheet, weak­en­ing the com­pa­ny's ca­pac­i­ty to sus­tain it­self go­ing for­ward and re­al­ly rep­re­sents a poor use of the com­pa­ny's as­sets," he said.

"The oth­er fac­tor I want to point out to you is the size of the fis­cal deficit, which has grown from $2 bil­lion to $6 bil­lion in 2014/15 and is much larg­er in the cur­rent fis­cal year. In oth­er words the coun­try is liv­ing be­yond its means, which rep­re­sents debt.

Cit­i­zens to ad­just lifestyle

"If you can't earn enough mon­ey, you will have to bor­row to buy and there­fore the pre­vi­ous gov­ern­ment was bor­row­ing and has been draw­ing down the re­serves of NGC to make it ap­pear as if the econ­o­my was sta­ble."

With low oil and gas prices and no in­di­ca­tion of a re­cov­ery, McGuire said cit­i­zens should be learn­ing to ad­just their lifestyle choic­es.Ex­plain­ing the rev­enue drop for the sec­ondary school stu­dents in at­ten­dance, he put it sim­ply: "It is like your par­ents or a house­hold work­ing for $21,000 for a month and you dis­cov­er that you now have to live on $5,000 a month. It is that bad."

He said sev­er­al con­tracts with ma­jor gas pro­duc­ers end­ed or were com­ing to an end. Among them were BGTT and bpTT. He said if those con­tracts aren't re­newed, T&T can­not find new mar­kets for its gas and as petro­chem­i­cal in­dus­tries con­tin­ue to grow glob­al­ly, he said, the coun­try's US mar­ket will dis­ap­pear be­cause T&T can­not meet its cur­rent de­mand.

"That is where we are. We have not di­ver­si­fied the econ­o­my and we will have to live with that for the time be­ing. What is hap­pen­ing in the glob­al mar­ket is a ma­jor struc­tur­al change and it can't be re­versed. The prospects for high­er en­er­gy sec­tor earn­ings are dim be­cause pro­duc­tion is down right around.

"There is a ma­jor cri­sis in the gas stream and it is dif­fi­cult to at­tract new in­vest­ments be­cause of our loss of com­pet­i­tive­ness. There­fore, the en­er­gy sec­tor does not re­al­ly hold out much promise to be the source of re­cov­ery.

Di­ver­si­fi­ca­tion an im­per­a­tive

"Right now we have to add to an al­ready high debt bur­den in or­der to get mon­ey for fi­nances. From all of this, di­ver­si­fi­ca­tion re­mains an im­per­a­tive and I think al­so very im­por­tant is that cit­i­zens in gen­er­al need to learn to ad­just and take their lifestyles down to the next lev­el."

With busi­ness­es yearn­ing for­eign ex­change, which is se­vere­ly de­plet­ed from low­er oil and gas rev­enues, McGuire said T&T has ap­prox­i­mate­ly 13 months of im­port cov­er left. This means when for­eign ex­change dol­lars run out, the coun­try will no longer be able to im­port goods.

"For those of you who are too young to un­der­stand, that is where the crunch comes. When for­eign ex­change is too short, when you can­not im­port any­more. When you have a moun­tain of goods to im­port and we can­not buy, that is the cri­sis sit­u­a­tion.

"We are in this sit­u­a­tion where we are quite hap­py be­cause we still have about 13 months im­port cov­er and off to the Gov­ern­ment's next bud­get, which is due next month and in terms of how many months im­port cov­er we have. Bear in mind that it took five years in the last doom days to come to ze­ro and we are im­port­ing much more now, there­fore the fall will be much more rapid."