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Opportunity lost

The missing years
Published: 
Saturday, September 13, 2014
Opposition Leader Dr Keith Rowley delivers his response to the national budget during yesterday's debate at Tower D International Waterfront, Port-of-Spain. PHOTO: ABRAHAM DIAZ

Following is Opposition leader Dr Keith Rowley’s response to the 2014/15 budget delivered in Parliament yesterday:

­Mr Speaker, this would be the 24th occasion that I would have had the opportunity of participating in a budget debate in this honourable House. For the fifth time as Opposition Leader, I am privileged to be called upon to respond to the budget statement of the Minister of Finance. This I consider not just as a duty but also an honour as I act on behalf of all the people of T&T. 

Mr Speaker, T&T is not a basket case. In fact for decades our favourable circumstances have placed us among the more fortunate in the region and I dare say the world. That having been said, Mr Speaker, the people of T&T have every right to harbour expectations of a better life as we proceed to develop our nation from year to year and from administration to administration.

Along the way on this journey there have been and will always be highs and lows, twists and turns—for that is life—but how we cope with the inevitable hurdles will largely depend on the quality and effectiveness of the leadership which is brought to bear on our circumstances whatever they may be.

It is against this background that whatever else we do today, September 12, 2015, we cannot properly address this assignment without reviewing and assessing this Government and the national challenges as they existed or were perceived in 2010 (four budgets ago) as against where we are today. In short, Mr Speaker, we compare what we set out to do as against what we have accomplished.

It is here that the budgeting process is located, that is, what we have earned, what we have spent and how well we have obtained value for money in fixing the nation’s problems as we pay our way forward. 

This is an opportune time to remind you, Mr Speaker, that we on this side, in a unique demonstration of co-operation for the national good, voted for the 2010 budget as presented by this Government. Armed with this “send-off” the Government proceeded to fail, and to do so spectacularly and regularly.

That is why, knowing that they have failed, last weekend, on the eve of the Government’s fifth budget statement, the Prime Minister sought to preface this budget by repeating their election campaign mantra of “the Treasury empty.” The Prime Minister said the PNM left the country with a fiscal deficit of six per cent of GDP. 

 Nothing is further from the truth, Mr Speaker! Here are the facts based, in part, on information from the Central Bank’s Annual Economic Survey and the Central Bank’s Economic Bulletin, July 2010, Central Bank Statistical Digest, Dec 2010:

• At the end of the fiscal period 2008/2009 there was an overall deficit balance of $ 6.6 billion TT, which was about five per cent of GDP
• At the end of May 2010, just when the PP took office, the deficit had dwindled to $77.9 million TT and not six per cent of GDP as stated by the Prime Minister.
• At the end of September 2010 the overall balance from government’s fiscal operations was a surplus of $188 million TT 

In the face of record high oil prices (at over $100 per barrel) and sustained gas prices well above the budgeted levels, this Government has operated a significant budget deficit in every year of its existence. With that embarrassing fact as its legacy, the Government is now looking for PNM company by attempting to mislead the population so as not to be held accountable for its own fiscal irresponsibility.

We will have none of it! The truth must be told to our children, notwithstanding the best efforts of the Prime Minister and the Minister of Finance, to tell them differently. Contrary to what they are now trying peddle to the population, except for 2009, the year of the global collapse/recession which affected us here, the previous PNM government had been consistently running budget surpluses as follows:

The Prime Minister’s statement on this matter and the numerous instances of the Minister of Finance not coming clean in this budget confirm that we cannot trust anything this Government tells us. What they do not attempt to hide by omission they misrepresent in naked untruths.

In order to have us at their mercy on these matters they have virtually shut down the Central Statistical Office (CSO) so that for the first time in my memory, there is no independent CSO data on which to base our references and reviews. We are confined to the Ministry of Finance and the Central Bank for statistical information about the economic and other performances of the country. The CSO doesn’t even have usable office space, with its staff demoralised, drifting in the streets with or without placards.

The Government just does not care.  

Mr Speaker, 2006/2008 were the peak years of this country’s earning and development, just prior to the 2009 global economic collapse. That occurrence found our country engaged in a series of progressive development initiatives, all of which were roundly condemned by this UNC Government coalition.

Today, after years of condemnation and scorn, not only heaped upon the individuals involved in the projects by on the very ideas themselves, this shameless Government, after humiliating and firing people, shutting down here, there and everywhere, delaying, bad-mouthing everything, now in the 2015 budget, have embraced and is now presenting as “new” concepts and programmes, the very things which they stalled and delayed.

 They now thump the desks for the Diego Martin highway which they stopped in 2010 and restarted only after the MP for Diego Martin North/East was thrown out of Parliament for agitating for the restart. Carenage Fish Market is now to be their major accomplishment after four years of spiteful neglect as a construction project.

After four years the abandoned partially constructed Bagatelle Community Centre and the Diego Martin Sports Complex do not warrant a mention. Today we are told that the abandoned multi-million-dollar Tarouba Stadium cannot be used for cricket because the soil is bad and Calder Hart built it. 

In this budget of shame they say we have no shame. All that has happened at the end of their tenure is that we as a people have had our development derailed and valuable time has been lost in the process. In our developmental history 2010-2015, this period will long be known as “the missing years.” 

After promising to bring new ideas and solutions to our problems and producing nothing but stumbling, bumbling disasters as alternatives, this Government, which deliberately refused to build on the foundations, now turn to some well-known elements of Vision 2020 for salvation. Permit me to quote for you, Mr Speaker, from the budget statement of 2005, and I want you to listen very carefully.

“We are also targeting a number of specific areas for further commercial expansion including:
• Yachting;
• Fish and fish processing;
• Merchant marine;
• Music and entertainment;
• The film industry;
• Printing and packaging; and 
• Food and beverage.”
Minister of Finance Patrick Manning PNM 2005

Nine years later, listen to this, Mr Speaker, “The Government proposes to provide incentives to develop the following “new” sectors which we are targeting 
• Firstly, food and beverage industry 
• The creative arts and entertainment sector in particular film, fashion and the music industry
• Thirdly, the maritime sector
• Finally, the yachting industry 
The Government proposes to strengthen this industry by introducing at the University of T&T (UTT) advance training for yacht building and maintenance”—Larry Howai 2014

Professor Andrew Ramroop of Savile Row London was slandered and driven away from UTT for wanting to impart his international image and knowledge to the fashion programme there. Four years later today, we recognise fashion for diversification.
After $350 billion dollars and no new ideas of their own they shamelessly resort to plagiarizing that which they despised and attempted to destroy. In this town without pity, this is the budget without shame. 

We on this side consider the document presented here last Monday to be nothing more than an extensive spending list. It was a testimony to gross negligence in the management of the country’s economic affairs that has been the hallmark of the PP administration.

Mr Speaker, the proposed budget is an election gimmick constructed and presented in the hope that the Government could give as much as possible in the expectation that this would wipeout the unpleasant memories that we have been living through for the last four years. The Government places its future on the misguided belief that the people of T&T are not intelligent and responsible.

If budgets of $35 and $40 billion under the PNM were condemned as “squander mania”  then what can we say about an almost $65 billion budget? At least during that period of expenditure we could have seen what was being done even when we didn’t agree with the priorities. Today not even the Governor of the Central Bank could say where the money is going. 

We expected the Government to come with an election budget and they did not disappoint. We expected them to go into overdrive on expenditure and they surely surpassed that!  Furthermore, we expected them to be short on revenue ideas and again they lived up to all of our very low expectations of them!  Mr Speaker, what was presented on Monday can best be described as the most irresponsible, reckless and dangerous approach to fiscal management that this country has ever seen.

What is even more frightening is that they are proud of this! Mr Speaker, we need to set the record straight, we have had enough of their outright dishonesty about PNM governance of this country! Let me begin on this note on which they are working hard to re-write the history of T&T.

In the six years when energy prices were above the budgeted price, from 2003 to 2008, the PNM’s track record is far superior to anything they can dream of.  Our management of the country’s fiscal affairs was reasonable and responsible. Let me read into the Hansard record the following:

So accumulated budget surplus for the six-year period equal plus $29.3 billion. This represented very important additions to national savings! This is what fiscal responsibility is all about. In fact, Mr Speaker, this huge national saving was instrumental in allowing them to be on the massive spending spree that they have been on during their entire term in office!   

Mr Speaker, we all know what happened in 2008 to 2009: the financial crisis hit and the world economy went into a serious recession. We were not immune to it. However, because of our strong fundamentals we were able to weather the storm and bounce back very quickly. The real tragedy was that this period coincided with a change of government where unpreparedness was their main distinction.

Oil prices dropped from an average of $100 to about $60 over that period in 2009. This resulted in an almost catastrophic fall in government revenue from about $56 billion to $39 billion in 2009, a decline of $17 billion in one year! So it is hardly surprising that T&T, like most of the world, ran a deficit in that year.    

As a result, in fiscal 2009 the deficit of $6.7 billion was about five per cent of Gross Domestic Product. This was after six consecutive years of accumulated surpluses of over $29 billion!  A budget statement is a one-year spending plan, so no government “inherits” a deficit in the true sense of the word. Deliberately deciding to run a fiscal deficit is purely up to the government of the day, it has nothing to do with what happened under any previous government, it is their policy decision to do or not do it!  

What successive governments “inherit” is national debt! The Government seems to be confused about the difference between the two things! Hence they are trying to play us for fool, once again, while embarrassing themselves parroting economic gibberish! As I noted above, Mr Speaker, what they actually inherited was a fair amount of national savings built up by the PNM over six years of budget surpluses!

This included over $9 billion in foreign exchange reserves at the Central Bank. And this motley crew has the audacity to still be talking about meeting an empty treasury when they came into office and they keep referring to the levels of savings as though it grew under their stewardship! How dishonest can that be?

Furthermore, in order to maintain stability, it is a fact that we did use up some of the savings to run a deficit in 2009. However, things were beginning to turn around in 2010, that is up until May, when they were unleashed on the population. That is when they promised to turn the economy around and they delivered by reversing a moderate recovery into a full-blown recession in the second half of the year.

At the end of fiscal year 2010, the budget deficit came in at less than one per cent. In fact, it is recorded as minus two of a per cent in the Central Bank reports!  Almost close to a balanced budget! So to boast about bringing down the budget deficit from five per cent to 2.3 per cent can only mean one thing: the minister is confused and doesn’t know what he is talking about, but that is no surprise to us on this side!

Mr Speaker, who is advising these people? Now let us examine their record of the past four years and see what they have offered the country. In the five budgets they presented this is what their record is:  

Mr Speaker, their combined total deficits over five years would have been a mind-boggling $33.4 billion dollars! In other words, they would have added this amount to the national debt!  This is what will be inherited by the next government, not whether you ran a deficit in one year or not. Thankfully, due to their general incompetence and their inability to implement projects the actual reported deficits have been lower than what they set out to do!  

So their plan is to spend almost $290 billion, generate very little or no economic growth during their term in office and without ever adding a single cent to national savings!  Mr Speaker, if this is not the height of irresponsibility and mismanagement of our country’s finance then what else can it be?

Mr Speaker, I am sure some misguided member from the other side will jump up and say, “But we added money to the Heritage and Stabilisation Fund.” Well, on that note the IMF reported to us! In last year’s Article IV Consultation Report, which the minister authorised for release only after the budget debate in the Lower House, the IMF addressed this issue and concluded that there is need for a medium-term policy which would allow the HSF to be funded only when there is a fiscal surplus. 

The event of funding the HSF while running fiscal deficits is in effect borrowing to save.

Manipulation of the Heritage and Stabilisation Fund requirements
Despite the fact that oil prices have been higher than estimated in 2014, and the revenues from petroleum are therefore higher than expected, the Government has not deposited a single cent into the Heritage and Stabilisation Fund for 2014. 

In fact, because of elevated oil prices, the revenue from oil should be at least 25 per cent above the original estimates.  On the face of it, this appears to be a flagrant breach, by the Government, of the Heritage and Stabilisation Fund Act, which clearly states that if the revenues collected from petroleum exceed the estimates by ten per cent, the surplus must be deposited into the Heritage and Stabilisation Fund. 

However, in another sleight of hand and act of deception, the Government has avoided depositing money into the fund by simply not collecting taxes from oil companies, in particular Petrotrin. And so, whereas Petrotrin is liable to pay taxes on its income from oil on a quarterly basis, like everybody else, the minister has allowed Petrotrin to break our income tax laws and not pay its taxes in 2014,

thereby suppressing the actual collection of revenues from petroleum and breaching the Heritage and Stabilisation Fund Act. 
He has in fact cheated the fund and future generations of money that should have been deposited into the fund, and thus facilitated the mismanagement, misuse of funds and disregard for procedure that is now rampant at Petrotrin under this Government. 
They are neither fooling the IMF nor are they fooling us! So, Mr Speaker, they run budget deficits, then borrow money to put in the HSF to comply with the law and proceed to beat their chest and boast about adding so much to our fund!  

Sleight of Hand with the Revenue Figures for 2014
The original estimate of revenue for 2014 was $53.6 billion. However, the actual revenue to be collected in 2014 has been revised to $58.4 billion, an increase of $4.8 billion. On the face of it, without drilling deeper into the figures, this sounds quite good, and gives the impression that the economy is indeed performing well.

However, a closer examination will reveal the sleight of the hand that the Minister of Finance has engaged in, since most of the additional revenue in 2014 has come from non-tax income, ie from what is referred to as “property income.” In particular, the “profits” from non-financial enterprises in 2014 has exceeded the budget estimates by $4.5 billion.

Again, this sounds good if you are not familiar with the terminology, but the reality is that this additional revenue was not really “earned” in 2014 at all. Instead, what the Government has done is to appropriate $6 billion from the cash reserves of state enterprises such as the National Gas Corporation.

These are reserves that have been built up over the years, and instead of earmarking and using these cash reserves for their intended purposes, such as development of our energy infrastructure and diversification and expansion of the economy through prudent investments, the Government has forced these companies to pay huge dividends in 2014 to cover its recurrent expenditure and to pretend that the economy is growing. 

This is in effect, a fraud on the population, because the Government really did not exceed its revenue projections in 2014. Instead, it just pulled cash reserves or savings out of the state enterprises—money that had been built up over many, many years—in a deceitful attempt to cover its wanton, wasteful and profligate expenditure patterns.

An examination of the figures also reveals that it intends to perpetrate this same sleight of hand again in 2015, by pulling another $5 billion out of the cash reserves or savings of the state enterprises, and pretending that this is revenue “earned.” This approach of course is unsustainable, because by the time they lose the next election, they would have sucked the state enterprises dry. 

What this means is that if this is allowed to happen these companies would be looking to the Minister of Finance for money for their own necessary investments and they would not be instruments of economics expansion as anticipated when they built up their own reserves. Their plan is that by the time the full effects of this folly is fully exposed they would have been long gone.  

severely hampers the monitoring and surveillance of the economy, but, more importantly, it does not instil confidence in the Government’s ability to effect meaningful policy formulation. The IMF Article IV report which the minister has been carefully silent about also points to the pursuit by the Government of expansionary fiscal policy which puts a certain amount of pressure on the Central Bank’s ability to pursue effective monetary policy in its effort to control the high levels of liquidity in the system.

Whilst private-sector credit has begun to grow after years of stagnation, the trend is for use in consumer durables such as motor vehicles and mortgages and not necessarily in investment in productive activity. 

The level of transfers and subsidies has become unsustainable with very little attempt to control its growth. Just look at WASA/Water Resources and see the scandalous award of contracts for huge sums with little to show for it. First it was “Water for all by 2000,” now it is 24/7 Water for all by Christmas.

Last year the big item was the Government’s attempt to control the gas subsidy by raising the price of premium gasoline. We were told that this vaps would push drivers to the cheaper fuel, thereby reducing the subsidy. One year later, not a word from the Minister of Finance as to the outcome of this policy. All we have heard about is that Petrotrin is in the invidious position of having to borrow to maintain its operating expenditure.

The Government has indicated its intention to eliminate existing subsidy arrears by the end of the fiscal year but has not indicated whether this would be done by direct borrowing, suppressing planned expenditure or running larger deficits than programmed. The other option here would be to request larger dividends from profitable state enterprises, viz, NGC, NLCB etc, a practice that is consistently being employed, but is not sustainable.

Non-energy revenue has continued to underperform, particularly non-tax revenue and there has been an arrears build-up in VAT which the Government has indicate it intends to liquidate by the end of the fiscal year.

The failure by the Government to implement some form of property tax, even after indicating it would do so in the last budget, continues to be of some concern that this Government governs for its own political well-being and not for the national interest. In the meantime millions of dollars are allowed to flow down the drain. Further there has been no discussion of any new revenue-raising measures to offset the increasing expenditure over the medium term.

The commitment to a balanced budget by 2016 is still being touted but there does not appear to be any planned activity to do so. To put this in context, the present budget outturn is expected to see a deficit of approximately 1.5-2.0 per cent of GDP; therefore there would have to be at least a five per cent increase in revenue to accommodate the growing trend in expenditure or a cut in expenditure by a similar amount. The Government does not say what are its expectations in this regard.

The underperformance of the capital programme is another area of concern since it reduces the level of government investment in infrastructure development which is necessary to provide the platform for economic growth and development.

Energy
During the last three responses to the budget presentation made by the Minister of Finance, I made the point that the energy sector, by far the most important economic activity of the country, contributing 42 per cent of our GDP, was facing a looming crisis—a crisis that was worsening. So far our pre

Tax amnesty and revenue authority
Mr Speaker, their fiscal irresponsibility does not end there. They have now opted for a second tax amnesty in three years! Frequent tax amnesties are often associated with countries that are in economic turmoil, it is not a reflection of prudent management.  
Nevertheless, it is clearly another feeble effort to raise money for the Government. This may be all part of their plan, along with the expected $1.5 billion from Phoenix Park IPO,  so that they can go running around boasting about bringing down the budget deficit as a percentage of GDP.  Again, who are they fooling?

Mr Speaker, all they are doing is degrading the revenue collection effort of the country. Instead of admitting that the Revenue Authority proposed by the PNM was the correct way to go, they rather engage in unsustainable gimmickry. We are committing here today that under the next PNM Government the establishment of a functioning Revenue Authority is a high priority in our country’s institutional development.  

IPO—Stock trading
This Government’s penchant for covering up wrongdoing knows no bounds. We had an IPO at FCB and the public responded with the expected enthusiasm. Unfortunately the process has been mired in major insider-trading scandals involving elements of the management and the board of FCB. During this scandal the Minister of Finance appointed an acting chairman of the board who now has serious questions to answer to the authorities.

What does the Minister of Finance mean when he said, “Despite the concerns expressed by the national community with respect to the inordinate purchase amount by one staff member of First Citizens which is now the subject to an investigation?”

Is the minister confirming that all the issues surrounding the acting chairman and others connected in the IPO scandal are now completely buried? Did this minister not give the public the assurance that the entire insider-trading scandal was being investigated?

Why then is the minister continuing to try to hoodwink the public that it was only one person, Mr Rahaman, who has questions to answer with respect to FCB IPO insider-trading scandal? This minister came to this job, in the eyes of many, bringing an image of trust and integrity. If this is anything to go by we might as well place our gaze elsewhere. 

Challenges to sustainable growth
The Government needed to adjust its expansionary fiscal policy stance to one of consolidation. It needed to take the population on board, informing them of our heavy reliance on the external energy sector which faces exposure to declining energy prices over the medium term in the face of the shale gas situation and other clouds which could rain on our parade with disastrous consequences for the quality of life that we have come to know.

Non-energy exports are on the decline in the face of shrinking purchasing power of regional markets, our largest trading partners. They choose instead ad-hoc policy measures instead of comprehensive policy prescriptions obtained by reference to any plan of sustainability.  

What we are witnessing is a baseline scenario which shows growing overall imbalance and a deteriorating fiscal position with increasing risk of unsustainable debt accumulation. For as long as we are heavily dependent on the energy sector the economy would be put at risk if, for any reason, revenues from that sector decline. The results of the Ryder Scott report show a continued decline in reserves.

The recent incentive programme instituted to encourage exploration and production, while necessary, further erodes revenues from the sector, the effects of which are immediately felt. The benefits from any successful drilling will only be experienced five to eight years from discovery. There is no stated plan to mitigate the negative effects which exacerbate the risks to the economy.

This Government promised to outline a diversification plan for the economy to support the economic transformation required for sustainable growth. Several ministers paraded but there is no discernible plan. Whilst legislative reforms in the financial sector are moving apace, the ability to ensure compliance is sorely lacking with the level of inefficiency prevailing in a collapsing and demoralised public sector.

The inability of the CSO to provide quality and timely statistics -carious position has been masked by consistent high oil prices and good gas prices for errant cargoes. At that time, I pleaded that the Government direct substantial efforts towards averting that crisis.

The Government’s response has been the Prime Minister’s announcement, about two years ago that “God is ah Trini,” whilst displaying a bottle of crude oil from the so called “new find” of light sweet crude from the “Jubilee field” which they said lay in shallow formations and should be in full production by as early as October of 2012. This they held up as the answer to our declining oil production, which has flattened out at 80,000 barrels per day, down from 100,000 in 2010.

Of course no “Jubilee oil boom” has been heard of since. We have had several expensive oil spills instead. 

We also had the Minister of Energy and Energy Affairs predicting that in five years, presumably based on his extensive experience in the energy sector, substantial oil and gas will be flowing. The current reality is that the long-awaited BP Juniper field to the rescue will not come on stream until 2017. Other anticipated new gas from BG will come on sooner but will only be keeping existing supplies stable.

What all of this mean is, contrary to what we have been led to believe, the gas supply would remain a major issue at ALNG and at Pt Lisas for some time to come. In typical UNC style they will tell you that it is PNM who didn’t do this and the PNM who didn’t do that but they will take no responsibility for not concluding crucial discussions about “cushion gas” or other arrangements to protect the load demands of the existing users at ALNG and Pt Lisas. 

Many of our downstream plants are regularly operating in fits and starts well below capacity to the detriment of profits and equipment. 

What is worse is that many of our major gas supply contracts are coming up for renewal in or around 2018, with the major issue of gas pricing not being addressed by the Government. Apparently this Government is waiting until we get to the edge of the precipice before we deal with this issue when we have virtually no negotiating room with the upstreamers who are required to keep our industries in Pt Lisas in business.

This environment of gas shortage coupled with pending gas-pricing issues being ignored make very negative conversations in investor boardrooms abroad. We have read recently that the Ryder Scott Report has indicated that the gas reserves of the country have dropped by another 17 per cent. This is the climate in which we must review our competitiveness and our response to challenges associated with hydrocarbons as the mainstay of our economy.

The Government knows about the role of revenue-generators in the energy industry and that is why they repeatedly announced numerous intentions to grow the investment in downstream operations, but like everything else they talked a lot, praise themselves lavishly but delivered absolutely nothing. No AUM II, no SABIC, no CARISAL, no nothing!

In an environment of gas supply issues and gas-pricing challenges they were announcing projects one after the other. Not one has materialised. In this budget they appear to have given up. We are left with one hopeful project—the Mitsubishi plant—and two big questions. Where is the gas? What is the gas price for the project?

Country’s historical development
The country needs to compare this situation with the development that took place in the late ‘70s and for the decades 1980 to 2000, when T&T under the PNM was able to establish itself as a leading international player in the gas intensive industries. 

“The Trinidad model,” as it is sometimes called, was greatly admired particularly by gas-rich developing countries which witnessed the growth of an international gas industry in a very small country with limited gas reserves of less than one per cent of the total world gas reserves. During this period (later 70s and decades 1980-2000), the country moved from a production utilisation of 150 million cubic feet of gas per day in 1978 to a current level of  over four billion cubic feet of gas per day.  

Also during this period, with the establishment of one  iron and steel complex, nine  fertilizer plants and seven methanol plants, the country has exported 18.6 million tons of ammonia, 2.4 million tons of urea and 23 million tons of methanol in the last four years alone. Since 1999, approximately 147 million tons of LNG have been exported and over 100,000 tons of melamine from the AUM1 plant commissioned in 2010.

A remarkable story by all standards of comparison and evaluation, from a country dominated by oil production and refining of oil. One major ingredient which made all this possible was certainty and confidence in a good investment climate. That situation is changing and the Government is oblivious to the disastrous consequences if things don’t get better soon. T&T’s economy is now driven by natural gas, accounting for 44 per cent of GDP.

Erosion of country’s success
However, notwithstanding those successes, the country is now witnessing a set of circumstances that have begun to erode T&T’s position as a leader in the gas-intensive industries. The concern which I want to share with you is that the erosion is happening more quickly than anticipated. As we review the past four years, we are confronted with the following facts:
1) Gas production has dropped.
2) The production of methanol, fertilizers and steel has also dropped.
3) Since the commissioning in 2011 of AUM1, which construction began in 2008/2009, the country has not been able to attract any new major projects that utilise gas.
4) The AUM2 project, which had been approved and gas contracts finalised, has not been realised and, with the potential investors involved in arbitration with the government, very likely will not be realised in the near future.
5) The ESSAR-sponsored project, which involved an investment in the iron and steel industry of over US$1.5 billion, was cancelled. 
6) There was the dispute over agreements with the German Consortium and the German Development Bank which led to protracted ongoing arbitration over the past three years: the Government was accused of oppression over a minority shareholder and lost the case. Now we have been forced to sell Clico methanol shares under the guiding hand of an arbitrator. This matter was concluded yesterday. 
I’d like the Minister of Finance to tell us what is the valuation the Government had put on the MHTL shares as of budget day. While the Government is salivating over the incoming windfall from the sale, this plus the cancellation of high-profile contracts such as the OPVs and the aluminum smelter and Alutrint could only have tarnished the country’s image as an investment location. 
7) Committed investors to the creation of an aluminum industry, including the downstream production of high-valued products, have been prevented from making these investments as the Government took a political decision, prior to any Court of Appeal decision on the matter, to abandon the project.  The aftermath of this has led to:
i) Two ongoing arbitrations between these investors and the Government where we are facing claims of hundreds of millions of dollars.
ii) A rejection by the Government of US$400 million on concessionary loan terms towards financing the development of the aluminum industry.
iii) The loss of attracting into T&T the largest private industrial conglomerate of Brazil.
iv) A power plant whose major load has disappeared, causing a significant payment by T&TEC without having the full benefit of the power plant.
v) The effective abandonment of the Union Estate at La Brea.
In all of this we lost good jobs and we lost significant earnings.

Shale gas
To compound these internal difficulties, the country is now faced with the rapid development of shale gas production in the USA which brings a new challenge to our gas industry.  The reserves of shale gas in the USA are now in excess of our proven reserves and the projected number for such reserves could exceed 600TCF. 

Already T&T has begun to experience the negative effects. Our sale of LNG to the USA now stands at 11 per cent of Atlantic LNG’s production compared to over 90 per cent in earlier years.  It is recognised that Atlantic LNG is seeking and has developed new markets, but the competition from the USA will increase as that country could become an exporter of LNG. Competition is also expected from Nigeria, Qatar, Angola and other new entries in LNG production.

Petrochemicals
As regards petrochemicals (ammonia/urea, methanol) plants of similar production in the USA, attracted by the competitive price of shale gas, are being restarted. For the first time in about 30 years, plants are being approved for construction within the United States.  
Of greater significance is the fact that companies, including some with stakes in T&T, are now actively planning or building new plants in the USA in direct competition with our own plants here.
     
Gas reserves
Over the past 20 years, prompted to some extent by our success, outside of T&T there has been an extensive search for gas reserves that has met with a great deal of success. 
For example, in addition to Nigeria, there are at least six countries in West Africa and possibly four countries in East Africa that now have estimated gas reserves—possibly, in excess of the remaining gas reserves of T&T.

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