GEISHA KOW­LESSAR ALON­ZO

Lo­cal busi­ness­es sup­port­ing T&T’s back­bone oil and gas sec­tor are warn­ing of a “crip­pling ef­fect” on op­er­a­tions as the coun­try’s per­sis­tent for­eign ex­change short­age shifts from a mar­ket chal­lenge to a sys­tem-wide con­straint.

Com­pound­ing these pres­sures is a re­newed call for greater util­i­sa­tion of lo­cal con­tent, as com­pa­nies push for poli­cies that sup­port do­mes­tic sup­pli­ers who are al­ready nav­i­gat­ing se­vere fi­nan­cial and op­er­a­tional head­winds.

The Busi­ness Guardian spoke to sev­er­al ser­vice providers at the En­er­gy Con­fer­ence which was host­ed by the T&T En­er­gy Cham­ber at the Hy­att Re­gency.

Fayed Ali, gen­er­al man­ag­er, Ra­di­an HA, which en­com­pass­es all as­pects per­tain­ing to the scaf­fold in­dus­try, ex­plained the com­pa­ny is fac­ing dif­fi­cul­ty sourc­ing the for­eign cur­ren­cy re­quired to im­port es­sen­tial prod­ucts used by ma­jor en­er­gy-sec­tor clients, adding that the chal­lenge has in­ten­si­fied to the point where re­ly­ing on of­fi­cial bank­ing chan­nels is dif­fi­cult.

“It has been quite chal­leng­ing in reg­u­lat­ing the stock and in­ven­to­ry as op­posed to what you have out­stand­ing. Cer­tain cred­it fa­cil­i­ties, which it is what T&T busi­ness have or had, would give you a time­line that you have a cou­ple of months to pay. But now, you know, be­cause of our in­con­sis­ten­cy be­cause we can’t get it from the bank, it makes it dif­fi­cult for us to ac­tu­al­ly have that.

“...One of the ma­jor is­sues is that we have to wait on the banks for al­lo­ca­tions,” Ali ex­plained. “Some­times it takes months and months. It has even felt like a year. Even then, we might on­ly get 20 or 30 per cent of what we re­quest­ed,” he ex­plained.

The com­pa­ny sup­plies scaf­fold­ing ma­te­ri­als, tools, gear, rope ac­cess sys­tems, and spe­cialised equip­ment to the oil and gas in­dus­try—much of it sourced from Eu­rope.

The com­pa­ny al­so trains off­shore work­ers, of­ten bring­ing in cer­ti­fied in­struc­tors from the Unit­ed King­dom.

All of these ser­vices re­quire for­eign cur­ren­cy.

Cus­tomers, how­ev­er, typ­i­cal­ly pay in T&T dol­lars, cre­at­ing a mis­match that leaves sup­pli­ers scram­bling for for­eign ex­change to meet in­ter­na­tion­al oblig­a­tions.

Ali not­ed that while some con­trac­tors work­ing with ma­jor down­stream op­er­a­tors may re­ceive pay­ments in US dol­lars, they do not nec­es­sar­i­ly pass on for­eign cur­ren­cy to their own sup­pli­ers.

“They could choose a rate, say, $7.5 to US$1, and say, well, if you’re will­ing to agree to 7.5, then no prob­lem. We could pay in­voic­es against that in US for $7.5. If not, well, it’ll just be, a reg­u­lar bank pay­ment. So when they make their pay­ments in TT cur­ren­cy, now you have to go to the bank to ap­ply for for­eign,” Ali fur­ther ex­plained.

Vishal Bhag­wat, of South­ern Sup­plies Ltd, a safe­ty sup­pli­er based in T&T which al­so does some re­gion­al trade, echoed these con­cerns.

“For­eign ex­change is a prob­lem for every­one,” he said adding, “And hope­ful­ly this gov­ern­ment will do some­thing to get more for­eign ex­change in­to the coun­try but it has been a big prob­lem for us...nine­ty per cent of the stuff we sell, we im­port.”

JP Ros­tant, a di­rec­tor at Rosco Pro­com al­so not­ed that mount­ing for­eign ex­change short­ages were re­strict­ing the com­pa­ny’s—and the sec­tor’s—abil­i­ty to meet de­mand.

Rosco Pro­com, a 75 year-old en­gi­neered prod­ucts and ser­vices provider and mem­ber of the 100-old Agos­ti­ni Group, sup­plies crit­i­cal me­chan­i­cal, elec­tri­cal, oil and gas, and rig­ging so­lu­tions to the na­tion­al en­er­gy in­dus­try.

Ros­tant ex­plained that many of the spe­cialised, en­gi­neered prod­ucts re­quired in the oil and gas in­dus­try must be im­port­ed, mak­ing US cur­ren­cy es­sen­tial.

“Every day, it’s a bat­tle. It’s a back-and-forth con­ver­sa­tion with cus­tomers for pay­ment in US dol­lars, for the banks to ac­cess US to im­port goods. A lot of the prod­ucts are en­gi­neered prod­ucts that we im­port. That’s what you need to sup­port the en­er­gy in­dus­try in Trinidad. It’s not some­thing that you can go to Massy stores and buy. They have to be im­port­ed, and there are a lot of ob­sta­cles to get­ting ac­cess to US dol­lar cur­ren­cy,” he ex­plained.

Ros­tant said a ma­jor part of the prob­lem lies in the gov­ern­ment’s abil­i­ty to at­tract for­eign di­rect in­vest­ment.

“In­stead of hav­ing cap­i­tal flight out of the coun­try, even lo­cal com­pa­nies that have ac­cess to US or have stored US dol­lars choose to in­vest their US dol­lars out­side of Trinidad. If there was eas­i­er trans­fer of US dol­lars or more avail­abil­i­ty, you wouldn’t have hoard­ing, and you wouldn’t have peo­ple try­ing to guard their US dol­lars so close­ly.

“I think open­ing up US dol­lar trans­ac­tions is a core so­lu­tion or po­ten­tial so­lu­tion to hav­ing the econ­o­my grow and hav­ing peo­ple build that trust in lo­cal com­pa­nies,” he ad­vised.

Pro­mote lo­cal con­tent

As con­ver­sa­tions in­ten­si­fy around the state of lo­cal con­tent with­in T&T’s en­er­gy sec­tor, Laing, one of the coun­try’s long­stand­ing con­tract­ing firms, is re­it­er­at­ing its un­wa­ver­ing sup­port for a stronger lo­cal in­dus­try. The com­pa­ny is now in its 44th year of op­er­a­tion. George Laing, the com­pa­ny’s ex­ec­u­tive di­rec­tor em­pha­sised that lo­cal con­tent re­mains es­sen­tial for de­vel­op­ing and sus­tain­ing home-grown ex­per­tise.

Laing stat­ed that the com­pa­ny has al­ways “sup­port­ed 100 per cent lo­cal con­tent,” high­light­ing that Laing it­self is ful­ly lo­cal­ly owned and built on the foun­da­tion of serv­ing the do­mes­tic en­er­gy sec­tor.

“We have al­ways thrived on be­ing a lo­cal con­trac­tor,” he said not­ing, “Lo­cal con­tent is def­i­nite­ly the way to go and will ob­vi­ous­ly ben­e­fit small­er con­trac­tors. It is dif­fi­cult for a small­er con­trac­tor to com­pete against those multi­na­tion­al.”

How­ev­er, Laing ac­knowl­edged the com­plex­i­ty of the is­sue.

While multi­na­tion­al op­er­a­tors do utilise lo­cal con­trac­tors, the re­quire­ments placed on them are sub­stan­tial.

“It’s a two-sided sword,” he ex­plained say­ing, “Yes, multi­na­tion­als do use a lot of lo­cal con­tent con­trac­tors how­ev­er, these lo­cal con­trac­tors must still meet in­ter­na­tion­al stan­dards. They need to have the safe­ty stan­dards. You need to have the nec­es­sary cer­ti­fi­ca­tion, pro­ce­dur­ers and poli­cies in place to ob­vi­ous­ly en­sure what­ev­er job you’re ex­e­cut­ing for these multi­na­tion­als are to a cer­tain stan­dard.”

Nicholas Mo­han, project lead with Tech­ni­cal In­te­grat­ed Ser­vices, ac­knowl­edged that im­prov­ing lo­cal con­tent in­te­gra­tion re­mains an area that re­quires con­tin­ued de­vel­op­ment as well as en­cour­ag­ing more in­ter­na­tion­al in­vestors in­to the en­er­gy mar­ket.

Tech­ni­cal In­te­grat­ed Ser­vices (for­mer­ly Trinidad In­spec­tion Ser­vices) de­liv­ers in­te­grat­ed so­lu­tions that safe­guard cus­tomers’ as­sets on­shore and off­shore.

De­spite the coun­try’s long-stand­ing ex­per­tise in oil and gas ser­vices, Ros­tant said multi­na­tion­al up­stream op­er­a­tors still un­der­es­ti­mate the range and qual­i­ty of so­lu­tions avail­able lo­cal­ly.

“Along the line of lo­cal con­tent recog­ni­tion, I think a lot of the multi­na­tion­al com­pa­nies, the up­stream op­er­a­tors, don’t have a full un­der­stand­ing of the ser­vices that we can pro­vide lo­cal­ly. We’d love to see, or we hope to part­ner with them bet­ter to make them aware of those ser­vices that we do pro­vide,” he stat­ed.