Opposition "Ole
Talk" on energy
By Energy Correspondent
Trinidad Express
Port Spain
Petroleumworldtt.com
09 16 07
It has become the tradition in Trinidad and Tobago
for commentary on the Budget to focus only on
what the Government proposes.
We seem to forget that there is, in Parliament,
an opposition party or parties who see themselves
as the alternative to the Government. In a few
weeks time they will be coming to seek our vote
just like the incumbent party. This alone is sufficient
reason to critically analyse what the Opposition
has to say about the Budget and particularly the
energy sector. The energy sector is the driver
of this economy. In 2006, it accounted for 62 per
cent of Government revenue, 91 per cent of foreign
exchange earnings, and 45 per cent of GDP. What
can we make therefore of the comments made by the
opposition on the energy sector?
The
major energy sector issues raised during the
Budget debate were the level of gas reserves
and
the Ryder Scott report, transparency, the Heritage
and Stabilisation Fund, and the approach to industrialisation.
The opposition parties took very similar positions
on these matters. But how credible were their statements?
On the question of the Ryder Scott Report and the
reserves issue both opposition parties chastised
the Government for not laying the reporting Parliament.
The irony of this situation is that the matterof
Reserves Audit is nothing new. Both Mr Dookeran
and Mrs Persad-Bissessar were sitting members of
Government when previous reserves audit were conducted.
Neither ofthem sought then to "lay the report
in Parliament. They may have conveniently discovered
a new love for tarnsperancy. Speaking about the
consequences of a possible supply shortage , the
COP energy spokesperson observed that "downstream
industries are covered by 'deliver or pay agreements
which covers them from all costs incurred, if gas
cannot be supplied" This statement is flawed.
In the case of LNG for example, the gas producers
are the equity owners of the plant as well as the
marketers of the LNG. The people of Trinidad and
Tobago only have a very small equity interest in
Trains 1 and 4. It is therefore difficult to see
the connection between failure to deliver and "waste
of tax payers' dollars". To treat
with
the problem of perceived low reserves to production
ratio, the UNC proposes to "slow
down the rate of exploitation of hydrocarbon resources
until proven reserves can be located to support
additional demand". It is unclear however
what the UNC considers to be an adequate level
of reserves for both oil and gas. Is it ten years
or twenty years? Perhaps they may even consider
thirty. They may which to know however that a policy
of minimum reserves to production ratio has been
tried in other jurisdictions and proven to be a
huge disincentive to further exploration. Basically,
companies want to know that if they find hydrocarbons
they will be allowed to produce it. Capital lying
idle in the ground does not appeal to shareholders.
On the issue of the Heritage and Stabilisation
Fund, both parties again chastised the Government
for not putting more money into the Fund. These
are comments that this column would have made from
time to time. Unfortunately, both the COP and the
UNC sat in parliament when the Heritage and Stabilisation
Bill was passed. Reading their comments on the
Bill, one gets the distinct impression that they
never read its provisions. Their comments focused
largely on the need to avoid possible corruption
rather on the mechanisms governing the rules of
accumulation and withdrawal from the Fund. They
missed out on a golden opportunity and are now
wise after the fact.
Kamla Persad-Bissessar
Much comment has been made of the need for greater
transparency with respect to information and decisions
in the energy sector. Two weeks ago this column
argued that more information will certainly reduce
the confusion and widespread ignorance about the
energy sector that pervades the country. But calls
for greater Transparency from the Opposition parties
really ring hollow. It was the NAR administration
of which Dookeran was Deputy Leader, which was
accused of signing a new gas supply contract with
Amoco, few days before the 1991 elections. Under
the UNC term, several new contracts were signed
with downstream plants the details of which were
never known to the public or parliament. Some of
the more controversial were the agreement for Farmland
Mischem to leave the La Brea site and set up in
Point Lisas north, the proposed Norsk Hydro Aluminum
smelter , and most important, the Atlantic LNG
train 2 and 3 projects in which Trinidad and Tobago
has no equity position. The latter decision has
resulted in significant loss of value since the
state's ability to monitor where and how much value
accrues is severely constrained without an equity
stake. The point is that there is a huge gap, or
even contradictions, between the glib talk that
we hear from opposition benches and decisions taken
when they hold the reigns of power. Such contradictions
make it very difficult for the nation to choose.
Trinidad
Express
Sunday, September 16th 2007
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©2007 Trinidad
Express . All Rights Reserved.
