An­drea Perez-Sobers

Se­nior Re­porter

an­drea.perez-sobers@guardian.co.tt

The busi­ness com­mu­ni­ty, an econ­o­mist and an en­er­gy ex­pert call for ur­gent re­fo­cus on the econ­o­my, fol­low­ing the an­nounce­ment of the re­vo­ca­tion of the OFAC (Of­fice of For­eign As­sets Con­trol) spe­cial li­cences for the Drag­on and Cocuina fields be­ing re­voked by the Unit­ed States gov­ern­ment.  

On Tues­day, Prime Min­is­ter Stu­art Young said the gov­ern­ment would be ex­plor­ing le­gal op­tions with re­gard to re­vers­ing the de­ci­sion of the Unit­ed States gov­ern­ment. “I have been in touch with our at­tor­neys at law in Wash­ing­ton, DC. There is a process for, I wouldn’t say ap­peal of this re­vo­ca­tion, but there is a process for you to make an ap­pli­ca­tion for it not to be (re­voked) or for there to be amend­ments and we are go­ing to be en­gaged in that process on be­half of our cit­i­zens,” Young said. 

T&T was ini­tial­ly grant­ed an OFAC li­cence in Jan­u­ary 2023, which was amend­ed in Oc­to­ber 2023 to fa­cil­i­tate pay­ments in US dol­lars and was valid un­til Oc­to­ber 31, 2025. That amend­ed li­cence paved the way for the po­ten­tial ex­trac­tion of gas from Drag­on field in Venezue­lan wa­ters. 

A sec­ond li­cence was grant­ed on May 31, 2024 for the ex­plo­ration, pro­duc­tion and ex­port of nat­ur­al gas from the Cocuina-Man­akin field. That li­cence was grant­ed for two years and was due to ex­pire in May 2026.

Com­ment­ing on the turn of events, econ­o­mist Dr In­dera Sage­wan said this means short to medi­um term dis­as­ter for the econ­o­my as it spells the con­tin­ued con­trac­tion of the en­er­gy sec­tor.  

Both the do­mes­tic LNG and petro­chem­i­cal in­dus­tries she point­ed out are op­er­at­ing be­low ca­pac­i­ty, wait­ing for the Drag­on to breathe en­er­gy in­to them to bring them back to full pro­duc­tion lev­el, how­ev­er this is no longer on the cards. 

“This is mad­den­ing, to say the least be­cause econ­o­mists like my­self re­peat­ed­ly ad­vised from out­side that we should not be plac­ing all our eggs in this bas­ket!!! I don’t need to re­peat the host of rea­sons we shared in the pub­lic do­main, the most sig­nif­i­cant be­ing the US/Venezuela con­flict. We knew a Trump ad­min­is­tra­tion would spell bad news for this deal but yet, the gov­ern­ment would lis­ten to no one,” Sage­wan lament­ed. 

She stressed the is­sue of non-en­er­gy (ex­clud­ing petro­chem­i­cals) di­ver­si­fi­ca­tion, which gov­ern­ments have con­tin­ued to ne­glect, but seem to be hell bent on this love af­fair with oil and gas.  

Sage­wan said there is no easy way to say that T&T is look­ing down a dif­fi­cult road and there is no quick fix.  

“There is some new gas ex­pect­ed from BP and Shell, but that’s nowhere near what we need to bring our plants back up to ca­pac­i­ty,” Sage­wan dis­closed. 

Weigh­ing in on the mat­ter from an­oth­er per­spec­tive, en­er­gy ex­pert An­tho­ny (Tony) Paul said that based on his ex­pe­ri­ence, he be­lieves T&T still has tremen­dous op­por­tu­ni­ties to in­crease rev­enue from the cur­rent in­dus­try. 

“Do­ing this will al­so ad­dress the in­come side of the for­eign ex­change chal­lenge we face. We can start by sim­ply col­lect­ing the tax­es due to us un­der ex­ist­ing law and clos­ing ma­jor rev­enue loop­holes.

“The sig­nif­i­cant pro­vi­sions are well known to the re­spec­tive reg­u­la­tors, in­clud­ing suc­ces­sive min­is­ters of en­er­gy and fi­nance who, over more than two decades, have failed in their du­ty to up­hold or im­ple­ment mea­sures pre­scribed in law.  These self-in­flict­ed rev­enue loss­es have amount­ed to leak­ages in the or­der of hun­dreds of bil­lions of dol­lars (TT) since the turn of the cen­tu­ry,” Paul ex­plained. 

This mo­ment calls for a re­fo­cus on this coun­try’s in­de­pen­dence, shoring up on the sup­ply chain and ral­ly­ing the strong tech­ni­cal and com­mer­cial skills of those pa­tri­ots who place the na­tion­al in­ter­est at the front of their de­ci­sion mak­ing. 

“These re­quire a ro­bust sys­tem of gov­er­nance of the in­dus­try, with up­dat­ed reg­u­la­to­ry in­stru­ments and ca­pa­ble, en­abled and ac­count­able reg­u­la­tors,” said Paul.

 Busi­ness groups  

Chair­man of the Con­fed­er­a­tion of Re­gion­al Busi­ness Cham­bers, Vivek Char­ran, and vice pres­i­dent Ri­car­do Mo­hammed, high­light­ed the ram­i­fi­ca­tions for T&T econ­o­my. 

They both said many for­eign in­vestors re­ly on the OFAC li­cences to en­sure com­pli­ance with US reg­u­la­tions and the re­vo­ca­tion could lead to a de­crease in for­eign di­rect in­vest­ment (FDI), par­tic­u­lar­ly from US com­pa­nies, re­sult­ing in slow­er eco­nom­ic growth.

Char­ran and Mo­hammed said that if the li­cences were linked to the abil­i­ty to ex­port goods (like oil or gas) to US mar­kets, their re­vo­ca­tion may dis­rupt cur­rent trade re­la­tion­ships, lead­ing to a de­cline in ex­port rev­enues.

The im­por­ta­tion of es­sen­tial goods and ser­vices may al­so face chal­lenges, which can lead to in­creased costs for busi­ness­es and con­sumers, said the busi­ness group leades. 

Al­so, Char­ran and Mo­hammed in­di­cat­ed that the re­duc­tion of fu­ture tax rev­enue from the en­er­gy sec­tor can lead to low­er non-en­er­gy tax rev­enues for the Gov­ern­ment, im­pact­ing pub­lic ser­vices and de­vel­op­ment projects. 

“Over­all, the re­vo­ca­tion of OFAC li­cences can cre­ate a chain re­ac­tion of neg­a­tive eco­nom­ic ef­fects. These im­pacts would not on­ly af­fect the di­rect­ly in­volved busi­ness­es but could al­so re­ver­ber­ate through the wider econ­o­my, af­fect­ing em­ploy­ment, gov­ern­ment rev­enue and eco­nom­ic sta­bil­i­ty,” Char­ran and Mo­hammed said. 

Ang­ie Jairam, pres­i­dent of the Fyz­abad Cham­ber, said T&T has var­i­ous av­enues/prod­ucts for in­vest­ments, but this coun­try chose to re­ly on oil and gas and in­vest­ed very lit­tle wait­ing for the “Big Win”.  

She lament­ed that it could not be more ridicu­lous for T&T to find it­self in a hope­less po­si­tion. 

“As a busi­ness or­gan­i­sa­tion, we have been call­ing on the gov­ern­ment to open up and pro­vide in­cen­tives for the dif­fer­ent sec­tors, but not enough has been done to sus­tain our econ­o­my in the short or even long term.... T&T must move quick­ly for our sur­vival,” Jairam ar­gued. 

The Greater Tu­na­puna Cham­ber of In­dus­try and Com­merce (GT­CIC) ex­ec­u­tive di­rec­tor Ja­son Roach said this must not be seen as gloom and doom. 

“Look­ing ahead, we must be­gin ar­tic­u­lat­ing strate­gies to soft­en the im­pact of im­pend­ing in­fla­tion and eco­nom­ic down­turn. In the com­ing days and weeks, we can­not al­low our­selves to be dis­tract­ed by the pol­i­tics of the day. In­stead, we must scru­ti­nize our spend­ing and take a se­ri­ous look at our trade poli­cies,” Roach out­lined. 

He in­di­cat­ed that to­day’s glob­al nar­ra­tive re­flects the ero­sion of free trade as once ex­pe­ri­enced and ac­cel­er­at­ing eco­nom­ic co­op­er­a­tion with­in Cari­com could be a key step for­ward.  

“One cru­cial area for dis­cus­sion is the im­ple­men­ta­tion of a sin­gle mar­ket cur­ren­cy. If we look at lead­ing trade re­gions such as the EU and parts of Asia, they are ac­cel­er­at­ing the move to­ward uni­fied, sin­gle cur­ren­cies for trade. This con­cept should al­so in­clude digi­tis­ing that cur­ren­cy to meet the de­mands of the mod­ern econ­o­my,” Roach con­clud­ed.