PE­TER CHRISTO­PHER

Se­nior mul­ti-me­dia re­porter

pe­ter.christo­pher@guardian.co.tt

The av­er­age price of T&T’s nat­ur­al gas ex­ports dur­ing the first nine months of the 2024 fis­cal year is down com­pared to the same pe­ri­od in 2023, says econ­o­mist Dr Valmik­ki Ar­joon. And he says the de­cline in en­er­gy rev­enue is im­pact­ing the over­all rev­enue col­lect­ed by the Gov­ern­ment.

He ex­plained that en­er­gy rev­enues for the first nine months of the cur­rent 2024 fis­cal year, are ap­prox­i­mate­ly $10.2 bil­lion which is $10.8 bil­lion low­er than the en­er­gy rev­enues earned for the same pe­ri­od in the 2023 fis­cal year. That is a de­cline of 51.4 per cent.

“In fact, when we look at the da­ta for the first nine months of the last fis­cal year, the en­er­gy rev­enues were just un­der $21 bil­lion. Now these low­er rev­enues for this year, they aren’t just be­cause of low­er pro­duc­tion lev­els, but al­so be­cause of low­er gas prices on the in­ter­na­tion­al mar­ket rel­a­tive to the last fis­cal year,” said the econ­o­mist.

How­ev­er, Ar­joon ex­plained that the re­turns were far low­er for the first nine months of this fis­cal year com­pared to last year. The re­turns were in fact good com­pared to even some of the pre-pan­dem­ic years due to the gov­ern­ment’s rene­go­ti­a­tion of en­er­gy prices for the sec­tor.

“What is note­wor­thy is that the en­er­gy rev­enues for the first three quar­ters of this fis­cal year are in fact high­er than the en­er­gy rev­enues from the im­me­di­ate pre-pan­dem­ic era. So what the da­ta shows us is that the rev­enues earned for the first nine months of this year are in fact high­er than the en­er­gy rev­enues for the same pe­ri­od in fis­cal 2018 by about 2.4 bil­lion, and high­er than the en­er­gy rev­enues earned in fis­cal 2019 for the same pe­ri­od by about 1.2 bil­lion, de­spite pro­duc­tion be­ing high­er in those years by well over 1 bil­lion stan­dard cu­bic feet of gas per day,” said Ar­joon.

“What this is telling us is that the en­er­gy rev­enues for this year so far are ac­tu­al­ly high­er than the rev­enues from the im­me­di­ate pre pan­dem­ic era, and this is like­ly be­cause of the rene­go­ti­at­ed high­er gas prices that we now re­ceive. And these gas prices are of course, a weight­ed av­er­age of the glob­al prices that doesn’t just in­clude the con­ven­tion­al Hen­ry Hub, but they al­so in­clude oth­er prices like the Japan Ko­rea Mark­er, the Dutch Ti­tle Trans­fer Fa­cil­i­ty and the UK Na­tion­al Bal­anc­ing Point.”

Ar­joon said the prices in these three bench­marks tend to be high­er than the Hen­ry Hub bench­mark, which has helped T&T earn high­er gas rev­enues, de­spite pro­duc­tion lev­els be­ing low­er than the pre-pan­dem­ic era.

How­ev­er even with this ad­just­ment, the econ­o­mist said the prices cur­rent­ly are still well be­low the prices on the mar­ket last year and as a re­sult the gov­ern­ment has been placed in a bit of a fi­nan­cial bind.

“Be­cause prices are still low­er, this would have caused the to­tal tax rev­enues for the gov­ern­ment for the first nine months of this year to be about $5 bil­lion low­er than last year. The tax­es on in­come and prof­its have fall­en by about $8 bil­lion and of course, be­cause of these slashed rev­enues, that would have pushed a speed of bor­row­ings to meet our fis­cal spend­ing oblig­a­tion.

“We’ve re­cent­ly seen that the re­serve re­quire­ment was low­ered to free up an ad­di­tion­al $3.9 bil­lion of ad­di­tion­al liq­uid­i­ty in or­der to fa­cil­i­tate more bor­row­ings for the gov­ern­ment from the lo­cal mar­ket,” said Ar­joon.

On Mon­day, the En­er­gy Min­istry put out a news re­lease stat­ing that while there was a dip in nat­ur­al gas pro­duc­tion in June, pro­duc­tion out­puts were set to nor­malise for the re­main­der of the year.

The re­lease said “pre­lim­i­nary da­ta shows that nat­ur­al gas pro­duc­tion for the month of Ju­ly 2024 in­creased to 2.3 bcf/d and fur­ther in­creased to 2.7 bcf/d in Au­gust with pro­duc­tion for Q4 2024 pro­ject­ed to av­er­age at 2.5 bcf/d.”