In just over a week Finance Minister Colm Imbert will present his seventh budget.
This budget comes at a time when the gains of vaccination worldwide continue to be threatened by the relatively large number of people who either don’t have access to vaccines or simply refuse to take them. This has led to the emergence of variants, including the deadly Delta that has killed so many in India and across the world.
So Imbert is planning in a time of great uncertainty and at a time when the world’s economy has still not fully reopened.
We have seen our Caribbean brothers and sisters subjected to significant no movement orders and other types of limitations on travel and gatherings that continue to hurt business. When you add to that the tourism sector continued struggle, the region and by extension T&T has a challenging time ahead.
But you see Imbert has three other major problems that his government has to bear a lot of responsibility for.
He firstly has an economy that is heavily leveraged, one in which the debt to GDP (gross domestic product) is closer to 85 per cent according to the Central Bank of T&T.
This leaves him with limited fiscal space to do the kind of deficit financing that may be necessary to give the economy the stimulus it requires to get out of this slump. The truth is this government operates with smokes and mirrors.
From the time Imbert took over as Finance Minister he has promised to reign in spending and live within our means.
For sure some spending has been cut, but the fundamental challenges of transfers and subsidies and the unsustainable size of the public service have not been dealt with, as the Government continues to kick the can down the road to perdition.
The second challenge Imbert has is directly linked to the first, that is the myriad of state enterprises, many unprofitable and many facing serious issues of poor governance.
It may be easy to focus on the usual suspect like CEPEP or WASA or even Lake Asphalt and National Quarries Limited but today I want to pay a little attention to the two big ones, Heritage Petroleum/Petrotrin and the National Gas Company Limited (NGC).
On Tuesday, Heritage announced a settlement with AV Oil and Gas Limited (AV Oil) which it said avoided the payment of tens of millions of dollars in damages.
The company also entered into an Enhanced Production Service Contract (EPSC) with AV Oil for the purchase of crude oil.
According to Heritage, the settlement is rooted in the partial award delivered on June 11, 2021 by the arbitration panel in favour of AV Oil which found that Petrotrin had failed to establish that AV Oil was engaged in seal-tampering or any other inappropriate practices in the process of the delivery of crude oil to Petrotrin during the period April 2016 to July 2017.
The panel of arbitrators found that Petrotrin did not have reasonable grounds for suspecting that AV Oil had misconducted itself or otherwise been involved in wrongful or fraudulent activity which would have normally entitled Petrotrin to terminate the IPSC Agreement under Article 29.1. According to the release on Tuesday, to assist with its considerations and having regard to the view of the legal team, the Board said it sought not only one but two legal opinions, one from Rolston Nelson SC, a leading Senior Counsel in commercial law, a former Justice of Appeal and a former Judge of the Caribbean Court of Justice, and Simon Hughes QC, a leading Silk specialising in arbitrations in the construction and energy sectors in the United Kingdom.
It was the opinion of these senior specialist attorneys that further litigation was not advisable, the chances of success were low, and settlement of the matter should be pursued.
The Heritage Board must be commended for its detailed explanation about the thinking that led to its decision to discontinue litigation and settle.
There is no doubt that part of the stench surrounding this issue is the fact that it was first raised on a political platform by the Leader of the Opposition Kamla Persad-Bissessar followed by the Prime Minister, Dr Keith Rowley, revealing that the owner of company accused of stealing from a state enterprise is his personal friend.
So you have your friend’s company victorious, the Espinet Board that initiated the action fired shortly after the “discovery of the irregularities” and replaced by a Board headed by your personal Attorney Michael Quamina.
The matter is then settled with your friend’s company after a failed arbitration. Quamina has made it clear that he recused himself from anything dealing with AV Oil.
These things happen in small societies and the challenge that Imbert and the Government face is how can you build trust in the state enterprise sector and ensure that there is a strong governance structure.
Heritage and its pre-predecessor company have to answer whether the reports from respected consulting companies that pointed to irregularities were false, fabricated or just plain wrong?
What is the company going to put in place or has put in place to assure the country that the Catshill disaster will not recur and that all of the companies selling crude to Heritage, their production can be verified as accurate.
But while Heritage statement has been forthcoming on this matter the same cannot be said of the NGC.
Having invested and lost half a billion dollars in at least two major failed projects its President Mark Loquan appears untouchable, with the Prime Minister bringing him into the political realm, speaking from the podium of a PNM meeting, insisting that Loquan has the full support of the political directorate.
In any half serious company Loquan and the Board of the NGC would be gone. Not in this place of mimic men. But Mr Loquan’s contract has two more months left. Let’s see what happens.
No one is happy to see what the NGC has come to but pretending all is well while Rome burns may work for the politicians but not the country.
The loss of the half a billion dollars is what we know, how many other projects have gone bad? How much money wasted? How much lost.
Don’t forget this is the same company that spent a billion dollars on a failed waste water programme, was building and lighting grounds in UNC constituencies, was fixing roads to suit the then-political directorate, went on a carnival fête spending spree for its executive, spends millions of dollars trying to portray a narrative that is often at variance with the truth.
So the NGC has a recent history of poor governance that is hurting the country’s ability to maximise returns from its hydrocarbons.
The third and final challenge that Imbert faces is the ability to show imagination and implement any reforms that will lead to a repositioning of T&T and the building out of a new economy.
Data is often a good predictor of the future. If that is the case it is likely more of the same come October 4.