Government is about to engage international consultants to examine transfer pricing–a means to secure top energy revenues–and to look especially at Atlantic LNG, Finance Minister Colm Imbert said on Monday night as he wound up debate on the 2017 Budget in the Senate.
"I want to announce we're very close to engaging international consultants to look at transfer pricing and to look especially at Atlantic LNG. We're engaging experts in gas pricing and international legal experts to look at the contracts for Trains I, II, III, and IV for the LNG plant and see exactly how our LNG is sold," he said.
Imbert said it was necessary since there were allegations that the price that was reported to T&T from which the revenue flows, was not the correct price.
"We therefore need experts to see whether it is true or not," he said.
Imbert said an LNG cargo might leave Point Fortin heading to the United States where the benchmark price might be $2.80 and "half-way along the trip someone might purchase that cargo and the ship would just turn around and head for Japan or Europe where the price in the past was different, $3 or $10.
"So the cargoes are diverted before they reach their final destination. The person who gets the final sale of the cargo gets the benefit of the $10 price...there's an argument that T&T's revenue was being calculated on the lower price."
The minister added: "What the multinationals do is they sell the product to affiliated companies. Essentially they are selling it to themselves and then that entity unsells it to somebody else, so they really get far more revenue than they are reporting to us.
"But if you talk to the companies they say all of that is not true, all of that is mischief, lies and, therefore, the only way to deal with that now is to be scientific and professional about it."
Imbert said he had no doubt T&T could get more as a country from oil and gas companies based in the country.
"I can tell you this Minister of Finance, is going to look at that," he
On another issue, Imbert said organisations like Servol "would certainly receive favourable review from his Ministry but it cannot be like that for everything, it cannot be."
He explained: "Some organisations will just have to try and do more with less–that's why we have to run a deficit because if we didn't, we might have to cut Petrotrin by a billion and that might cause retrenchment which might cause an unfavourable reaction."