GEISHA KOW­LESSAR ALON­ZO

An­nu­al­ly, Gov­ern­ment sub­sidis­es T&T’s pub­lic util­i­ties—the Wa­ter and Sew­er­age Au­thor­i­ty (WASA) and Trinidad and To­ba­go Elec­tric­i­ty Com­mis­sion (T&TEC)—to the tune of over $2.5 bil­lion, ac­cord­ing to es­ti­mates made by for­mer Min­is­ter of Fi­nance, Colm Im­bert in Sep­tem­ber 2020.

In light of this stag­ger­ing fig­ure, could this be sus­tained giv­en T&T’s cur­rent eco­nom­ic state?

While he agrees that now is not the time to in­crease wa­ter and elec­tric­i­ty rates, econ­o­mist Dr Justin Ram, how­ev­er, is ad­vis­ing that Gov­ern­ment look at re­duc­ing its sup­port of some State-owned en­ter­pris­es and that they should ei­ther be “shut down, pri­va­tised or turned in­to pub­lic-pri­vate part­ner­ships.”

“Or even some of those state-owned en­ter­pris­es that need to be­come a lot more ef­fi­cient,” Ram told the Busi­ness Guardian in an in­ter­view adding, “One of those four cat­e­gories, you have to place all of those state-owned en­ter­pris­es and de­cide how you want to move for­ward.”

What are the four cat­e­gories?

Ram fur­ther ex­plained that the Gov­ern­ment needs to ask,”Do you need this State-owned en­ter­prise or not? Well, then you should shut it down if you don’t need it. If you need it and it is prof­itable, then you could pri­va­tise it. If you need it, it is some­what prof­itable, but it al­so pro­vides a good so­cial ser­vice, then you turn it in­to a pub­lic-pri­vate part­ner­ship.

“And of course, if it is some­thing that will not cre­ate a prof­it, but it pro­vides very, very good so­cial ben­e­fits, then you need to keep it as a state-owned en­ter­prise, but try to make it a lot more ef­fi­cient.”

On which state-owned en­ter­pris­es he thinks need to be shut down, Ram said he could not say with­out do­ing a prop­er analy­sis.

He how­ev­er, em­pha­sised that it is very im­por­tant that Gov­ern­ment ex­am­ines the prof­itabil­i­ty of state-owned en­ter­pris­es and de­pend­ing on where they fall with­in that spec­trum, then make a de­ci­sion as to what to do. So any­thing that is not prof­itable and pro­vides no so­cial ben­e­fit, you should seek to shut that down,” Ram main­tained.

Re­gard­ing trans­fers to house­holds Ram agreed that is some­thing Gov­ern­ment cer­tain­ly needs to look at. How­ev­er, he agreed with Gov­ern­ment’s de­ci­sion not to in­crease pub­lic util­i­ty rates at this time as it could re­sult in un­due stress on the pop­u­la­tion.

“You don’t want to be putting too much pres­sure on house­holds right now, be­cause if you do that, peo­ple don’t have jobs to go and get right now. Right now, the pri­or­i­ty has to be to im­prove the busi­ness en­vi­ron­ment and to im­prove the over­all growth rates of this econ­o­my ini­tial­ly. That for me is the cor­rect se­quence of events.

“Be­cause we have seen in the past, not nec­es­sar­i­ly here, but some gov­ern­ments have tried to en­gage in aus­ter­i­ty, there­by try­ing to cut gov­ern­ment ex­pen­di­ture and hop­ing that would lead to the growth but that nev­er re­al­ly quite pans out like that,” Ram stat­ed.

He added what needs to be done is to pro­mote growth in the econ­o­my now.

Over the week­end, Min­is­ter of Pub­lic Util­i­ties Bar­ry Padarath, told Guardian Me­dia that the Gov­ern­ment would hold true to the promise it made on the cam­paign trail not to raise elec­tric­i­ty rates at this time.

He said the Gov­ern­ment in­tends to re­view the op­er­a­tions of pub­lic util­i­ties com­pa­nies, par­tic­u­lar­ly the WASA and TTEC, to im­prove the qual­i­ty of sup­ply and the man­age­ment be­fore any­thing else is fur­ther done.

The RIC, which reg­u­lates the de­liv­ery of ser­vices by T&TEC and WASA, had rec­om­mend­ed an in­crease in elec­tric­i­ty rates and ser­vice charges for T&TEC cus­tomers and had pro­posed that all rates—for res­i­den­tial, com­mer­cial and in­dus­tri­al users of elec­tric­i­ty—in­crease by vary­ing amounts.

It had al­so rec­om­mend­ed that cus­tomers be billed on a month­ly cy­cle in­stead of the ex­ist­ing bi-month­ly cy­cle, adding that cus­tomers would be billed un­der a four-tier rate sys­tem in­stead of the pre­vi­ous three tiers.

Res­i­den­tial cus­tomers were ex­pect­ed to see an in­crease from 15 to 64 per cent; com­mer­cial cus­tomers will in­crease from 37 to 51 per cent, and in­dus­tri­al cus­tomers were ex­pect­ed to see an in­crease from 58 to 72 per cent.

Ramkissoon: T&T has abused sub­si­dies

Econ­o­mist Dr Ronald Ramkissoon took a dif­fer­ent take on the is­sue, stat­ing that as a coun­try, “we have tak­en ad­van­tage of or abused” many of the sub­si­dies that suc­ces­sive gov­ern­ments have al­lowed.

“We waste wa­ter, we waste elec­tric­i­ty, and there’s wastage across the board. We have be­come in­ef­fi­cient in the de­liv­ery of some of these ser­vices.

“In oth­er words, if we can in­crease the sup­ply of any prod­uct with­out in­creas­ing the cost through a more ef­fi­cient sys­tem, then fine. But I think all these ideas, sug­ges­tions have to be put on the ta­ble and we must un­der­stand that the econ­o­my is in a very dif­fi­cult place and we have to find an­swers,” he ex­plained.

He said if T&T is go­ing to have al­ter­na­tive poli­cies, as any gov­ern­ment is en­ti­tled to have, those al­ter­na­tive poli­cies need to be put on the ta­ble, to what the pre­vi­ous Gov­ern­ment had.

Ramkissoon added the pop­u­la­tion al­so needs to be aware of what those al­ter­na­tives are and what are the al­ter­na­tives to “rea­son­able rev­enues.”

“And we need to see those al­ter­na­tive pro­grammes, strate­gies. We need to see them put in­to place and let’s see if they’ll work,” Ramkissoon added.

He fur­ther stressed there needs to be oth­er sources of rev­enue for T&T.

“Un­less the coun­try finds al­ter­na­tive ways of rais­ing rev­enue, then if we con­tin­ue to run deficits, and if we con­tin­ue to sub­sidise ser­vices with­out ref­er­ence to how we are go­ing to fund them, we are on­ly go­ing to dig our­selves in­to a deep­er and deep­er hole.

“I am not say­ing whether we should keep or not keep the sub­si­dies, re­gard­less of whether it is re­lat­ing to what­ev­er util­i­ty. What I’m say­ing is that we need to un­der­stand, and the gov­ern­ment needs to un­der­stand, that we are go­ing to have to find rev­enues to con­tin­ue to sub­sidise what­ev­er we have been sub­si­dis­ing. And if we can do that, fine,” he said.

Ramkissoon not­ed that the econ­o­my is not de­liv­er­ing the kind of rev­enues that it used to, not­ing that the al­ter­na­tives are there.

These in­clude the sell­ing state as­sets as well as bor­row­ing but he warned they all have cer­tain im­pli­ca­tions.

“Our debt, in par­tic­u­lar ex­ter­nal debt, is al­ready very high. Do we want to con­tin­ue fund­ing sub­si­dies through bor­row­ing? Do we want to sell state as­sets? And there are some good rea­sons why we should di­vest some state as­sets in­to the hands of the pub­lic but do we want to do that? How quick can we di­ver­si­fy this econ­o­my that we have oth­er sec­tors gen­er­at­ing the rev­enues that will al­low us to con­tin­ue to pro­vide sub­si­dies? Does every­one need sub­si­dies, or should it not on­ly be for the very poor and those who re­al­ly can­not af­ford, are ques­tions we have to ad­dress,” Ramkissoon asked.

While he did not specif­i­cal­ly in­di­cate whether he sup­port­ed an in­crease in pub­lic util­i­ties rates ought, Ramkissoon said he was sim­ply lay­ing on the ta­ble what the op­tions are, as he main­tained that T&T can­not con­tin­ue to run large deficits.

“It has im­pli­ca­tions for the for­eign ex­change. It has im­pli­ca­tions for the fis­cal ac­counts and the man­age­ment of the macro­econ­o­my,” he added.