The Prime Minister told us that we have attracted some TT$20 billion of foreign investment into the energy sector. That in itself is nothing to boast about since the history of the region is about foreign direct investment which has left most of our economies (including ours) unsustainable.
Part of this new investment is for the very high-risk exploration for petroleum in our deep waters and another bit is for the construction of a methanol-to-olefins plant. As all of us, I hope that these ventures are successful.
However, after a hundred years of exploiting our natural resources, together with a parasitic on-shore sector we are in the unenviable position of not being able to supply enough gas to our petrochemical sector and oil production has dropped from a high of 224,000 bbls/day to 80,000 bbls/day and is still decreasing.
The recent finds of both oil and gas extend our ability to produce the resource marginally. Hence to maintain our version of the plantation economy we need to become very lucky and find substantially more gas and oil, notwithstanding the situation of our market with regards to shale oil and gas which are eroding our comparative advantage therein.
Further, the high risk to the contractors exploring in the deep waters has forced harsh concessions on the Ministry of Energy: the contractors are allowed to claim up to 80 per cent of all commercial product as expenses and the rest is shared with Government according to the production sharing contract. However, our share of this 'profit petroleum' is in lieu of the contractor's taxes payable to Government.
Hence, the returns, if any, from the deep will be relatively low compared with the take of the contractor. In the PNM regime the contractor's expenses were set at 60 per cent, up from 45 per cent, but there were no takers then. But of more concern is that we have been depleting our natural resources to finance, in the main, our current account. We are still suffering from poor infrastructure, our water system is poor, our hospitals are insufficient and in poor shape.
And of importance we have not used any of the rents and taxes to develop replacement and productive assets that could provide financial support together with what remains of the energy sector and moreso beyond its lifetime.
The Prime Minister's one dimensional comment, that this new investment (which continues the depletion of the resource) will enhance our ability to provide associated jobs, build hospitals and highways and improve the standard of living of those in the SW peninsula, simply continues the unsustainable plantation model as we transfer our natural resource assets into spending money.
We were also told that one of our successful local companies intends to invest together with Mitsubishi in the building of a methanol–to-olefins plant. This kind of investment is what Prof Michael Porter speaks of as 'wealth driven' development where investments are made, not in innovation but in established industries that depend on their comparative advantages seeking only a return on investment.
Yet we need to create a new export economy that depends on the acquisition, implementation and creation of knowledge to make us globally competitive. Our local involvement in this plant is devoid of the required technological competence to build, innovate or develop the plant technologically.
However, it is my firm belief that without a government with the understanding, foresight and determination to build these new productive assets, to build a new embryonic and adaptive economic spiral, our future is that of Easter Island-we will deplete the resource and implode economically as we proceed to the extraction of the last drop of oil and whiff of gas.
Mary King
Via e-mail