Oil prices force Govt cutback on spending
Newsday/Sureash Cholai
JUST COOL: A relaxed Prime Minister Patrick Manning gestures
to Opposition MPsduring sitting of the House of Representatives on Saturday, Nov. 2008
Trinidad & Tobago Newsday
Petroleumworldtt.com
11 17 08
The Government appears to be on something of a campaign to reassure the population about public sector spending in light of the fall in oil prices and the international financial crisis.
Speaking on separate occasions on Friday night and Saturday evening both Energy Minister Conrad Enill and Finance Minister Karen Nunez-Tesheira raised the issued and indicated that the Government is re-examining its expenditure plans in light of the drastic fall in oil prices.
Yesterday Finance Minister Karen Nunez-Tesheira made a presentation on the global financial crisis and its possible effects on the local economy to a meeting of the PNM General Council in San Fernando.
PNM party chairman and Energy Minister, Senator Conrad Enill, indicated at a press briefing following the meeting that the Minister said the strengths and weaknesses of the local economy were analysed by Nunez-Tesheira who stressed that the country would “not spend more than we earn.”
“Any measure we take we will try to ensure that it minimises unemployment, reduces inflation but at the same time, those areas we consider important for the accomplishment of Vision 2020 — we name them education, health, housing, infrastructure, social services — we intend to focus on,” he said.
“Trinidad and Tobago's economy and our banking system were not affected at that time, what we are seeing today though is the impact that created a softening of oil prices and a softening of gas prices, in those circumstances the expectations you had before for revenue may not hold,” he said.
Enill said “two or three possible scenarios” were analysed by the Ministry of Finance and this may lead to a ‘‘rephasing” of Government's projects.
“If you notice what is happening in the energy sector, there were plants which were due to have maintenance later on in the year, what they have done is that they have brought it forward so that the programme for the year still continues just the phasing has changed,” he said.
“If a project, for example at this point in time, has not started, then we are suggesting that the project be rephased while we understand what is taking place so that what will take priority is projects under construction, projects at some stage of development and new projects will be looked at for a little later on,” he said.
Enill gave similar indications at a Christmas Dinner and Award ceremony hosted by the Quarry Association of Trinidad and Tobago (QATT), on Friday evening.
After urging Government to assist the industry and downstream sectors, which may be affected by the global financial crisis, QATT president Ramdeo Persad said, “As recent as yesterday Honourable Conrad Enill said Government ministries have been mandated to develop contingency plans and defer drawing board plans if possible, in the face of falling oil prices.”
Questioned after the official proceedings, Enill said Government is currently taking stock of their position in light of falling oil prices and seeking to adjust spending to a figure lower than the total expenditure of TT$49.4 billion which was projected in the Budget presentation made by Nunez-Tesheira on September 22.
“You look to see where you are at, you look to see whether there are projects you have not done yet and decide that until you know exactly what is going on with the oil prices, those projects will not get priority, the projects that will get priority will be those that are currently underway and those that you are committed to,” he said.
Enill explained that just three weeks ago, oil experts were projecting that oil prices would average US$130 per barrel. Commenting on how dynamic the situation has been for the past few weeks, he said OPEC is working on lowering production, expecting that future oil prices will remain relatively stable at $60-$65 per barrel in 2009.
Government, he said, is more optimistic, expecting an US$85 -$110 oil price. “So at this point in time, what is required is for you to take stock, make sure you know where you are and make the decision, if they are new things that require additional expenditure, you delay it until you know exactly what the final position is,” he repeated adding, “We are not going to know that for another two to three months.”
Enill added however that measures, which will be implemented after the review is completed, would not be announced publicly. “If Government decide to do a review, as we would, all that would happen is that we will manage it internally, there is no need requirement to do anything differently until we go to a mid-year review,” he said.
Asked whether Government will lower the actual expenditure figure of $49.4 billion, he responded “A budget is an expenditure and there is no requirement to change it at any point in time, you have to work within it. If $50 billion is budgeted and you have $40 billion, you have to work with that.”
In his official address, Enill also urged QATT members to also take stock, reduce and eliminate waste and improve productivity. “While we have challenges, we can overcome this period of uncertainty if we pay attention to these three things,” he said.
He explained although demand has reduced in the United States, China has taken up the slack. Oil demands are at 6.4 million barrels a day and continues to grow due to the continuous expansion of the economy. Considering these facts, the increase in demand from China will have a ripple effect on international energy markets. No matter where the demand is coming from, we have the stocks and the ability to supply,” he asserted.
Enill received the President's Award from the association, for his outstanding contribution to the industry.
QATT's president for the sixth consecutive term, Persad, praised the minister for his work done in favour of the association.
By
Leiselle Maraj and Richardson Dhalai
from Trinidad & Tobago Newsday
Trinidad & Tobago Newsday
Sunday, November 16 2008
Copyright© 2008
respective author or news agency. All rights
reserved.
We welcome the use of Petroleumworld™ stories
by anyone provided it mentions Petroleumworld.com
as the source. Other stories you have to get authorization
by its authors.
