Prime Minister Dr Keith Rowley has announced that the government will revisit the energy sector tax regime to ensure the country remains competitive.
Speaking during a virtual conference hosted yesterday by the Association of American Chambers of Commerce in Latin America and the Caribbean (AACCLA) themed, forecast for Latin America and the Caribbean, Rowley said, “We also intend to revisit the fiscal regime governing the petroleum sector to ensure that Trinidad and Tobago remains an attractive investment.”
A recent study by the IDB said T&T’s fiscal regime for the energy sector is one of the most uncompetitive in the region.
Only last Monday Finance Minister Colm Imbert announced a change in the applicati0n of the supplemental petroleum tax so that oil companies producing 2000 or fewer barrels of oil per day will not have to pay SPT unless the price exceeds US $75 a barrel. This measure is expected to be in place until 2023.
He told business leaders that activity in T&T’s energy sector is expected to ramp up in 2022 with the coming on-stream of a few significant projects.
Rowley said opportunities exist for US energy services companies to participate, especially as this country ventures further into the deep water.
In a wide ranging address Rolwey said enhancing connectivity in all its forms is also a necessary pre-requisite to support the upcoming renaissance of the domestic energy sector.
In September 2020, Rowley noted, Caribbean Airlines received approval from the United States Department of Transportation to fly the Port-of-Spain/Houston route.
He said while the ongoing COVID-19 pandemic may delay the projected commencement of flights, the addition of the Houston route is expected to bolster productivity by providing a fast and reliable service to our energy sector professionals.
On the country’s economy, Rowley said before COVID the budget deficit for 2020 was anticipated at $5.3 billion or 3.4 percent of GDP.
He added with the collapse in oil and gas price and the expenditure associated with the new pandemic this is now anticipated to be TT$16.8 billion or around 11 percent of GDP for fiscal 2020.
“The Central Bank’s Energy Commodity Prices Index (ECPI), which is an indicator of the average prices of T&T’s energy exports, declined 31.8 per cent (year-on-year) during the first seven months of 2020.
“The benchmark West Texas Intermediate (WTI), that oil price fell 34.7 per cent (year-on-year) to an average of US$37.44 per barrel over the first seven months of the year while the Henry Hub (HH) natural gas price declined by 33.0 per cent (year-on-year) to average US$1.80 per million British Thermal Units (mmbtu) over the same period,” Rowley explained.
He added the challenges of the energy sector had some important implications in slowing the inflows of foreign currency into the domestic market.
Purchases or conversions of foreign exchange in the market fell substantially in the first eight months of the year, by some 18.2 per cent,
Rowley said, adding that this resulted in some tightness in the foreign exchange market.