CAF invests US$35m loan in Eximbank
Director representative for the Development Bank of Latin America and the Caribbean (CAF) Bernardo Requena and Minister of Finance Colm Imbert signed a US$35 million investment to strengthen the Export Import Bank of TT services. The loan will boost financing to grow operations of over 100 small and medium enterprises (SMEs).
The credit facility will secure US$35 million in additional funding to expand Eximbank financial services and support to SMEs and emerging sectors and position them to better compete in local, regional and international markets.
The initiative was part of Eximbank’s 2022-2026 strategic plan which focuses on increasing access to credit and innovative financial solutions for small businesses, such as the creative industries, ICT and renewable energy. The financing will help businesses invest in plant upgrades, digital transformation and technology deployment, as well as product quality improvements to position them for export growth and long-term sustainability.
Imbert said the enhanced financing option will empower businesses to innovate, complete globally and contribute to economic growth. Collaboration with CAF will give Eximbank the ability to expand its support to small business.
“Our goal is to create an environment where small and medium enterprises can thrive and this initiative is a major step in that direction.”
Requena said the collaboration will be transformative.
“By providing the resources and financial tools they need to thrive, we are supporting their growth and broader economic development. This partnership is aligned with CAF’s mission to build resilient, innovative and sustainable economies across Latin America and the Caribbean through agile and flexible financing options.”
This is the latest in a series of CAF donations and investments. In March CAF donated US$250,000 for oil spill relief following the discovery of the Gulfstream barge spill in Tobago. In December 2022, CAF donated US$200,000 for flood relief. In 2020 CAF loaned TT$150 million for covid19 response.
Global refining divestment
24 October
Energy minister Stuart Young told the Senate on October 23 refineries are closing globally as leaders decide there is no money in refining.
“ ..global leaders in oil and gas were telling me of the difficulty they are having and how they are considering shutting down some of the state-of-the-art refineries they have, for example, in India. “They described because of the technology, it is so clean what is being produced. Our refinery is not a state-of-the-art refinery, and they said the margins have shrunk so much, there is no money in refinery business any more. They are one of the world’s leading producers of oil.”
A March 28 report, with the headline “Over 20 Per Cent of the World’s Oil Refining Capacity Is at Risk of Closure,” stated that weakening refinery margins and carbon taxes put a fifth of global refining capacity at risk. Europe and PRC face the highest closure risk due to declining demand and environmental regulations. The rise of electric vehicles and biofuels is transforming the industry, potentially leading to widespread refinery closures. This was a global problem in the energy sector, of which TT is a small player.
“The outcome of what I’ve just said, and what I am telling the population without fear of contradiction, is that the refining business is an extremely difficult one, even with a source of crude that you are producing and have some control over the price, as well as with the most technologically advanced refineries in the world, which unfortunately ours is not.”
These were some of the contributing factors which led to the difficult decision to mothball the Petrotrin refinery.
“Petrotrin may have been a net foreign exchange earner when barrels of oil were being produced at 150,000 or even up to 178,000 barrels of oil per day, but the truth is, it is not. It was experiencing significant losses because it was an older refinery and because we had to purchase the vast majority of crude.. over 100,000 barrels of oil a day.
“.. a price of US$75 of oil, had to be paid in US dollars, US$7.5 million a day, to put crude oil into an outdated refinery.”
The refinery became financially unfeasible and faced significant losses that threatened TT’s economic existence.In 2011, Petrotrin was making a profit, which fell by 50 per cent to $1 billion in 2012. In 2013 it made only $15 million profit and made a loss of $200 million in 2014.
By 2018, the loss was $16.4 billion.Young advised against promises by the opposition to revive the refinery if they returned to power. After the government shut the refinery, it wanted to be able to restart it without cost to taxpayers. There had been several attempts, starting in 2018-2019. People worldwide have shown interest in restarting the refinery.
“In 2023/2024, we continued to receive unsolicited expressions of interest. We narrowed it to ten and then opened it because we were still evaluating. Three more people included Jindal Steel and Power, Jomore International, BB Energy, and SARS Enterprises.”
Cabinet appointed an evaluation committee that reduced the number to three firms: CRO Consortium, Inca Energy LLC and Oando PLC.
Young asked for complete due diligence on ChemiTech, D Rampersad and Company Ltd and Ocala Services Ltd. Aa consortium does not, in law, become a registered, incorporated consortium, as a gathering of legally incorporated companies.
“The only one incorporated in TT is D Rampersad and Company and the directors and shareholders of that company are well known . It is a local entity operating in TT for almost 50 years. ChemiTech is an engineering, procurement and construction company, headquartered in the United Arab Emirates. None have a link to Jindal. A responsible government, even governments in waiting, would want what is best for TT.”
After shutting the refinery, TPHL engaged Scotia Capital Inc to manage the process. Project Soca, (2019-2020) saw the OWTU-owned Patriotic Energies and Technologies Co Ltd selected as the preferred bidder. Government bent over backwards to find a way for the OWTU to run that refinery, even giving them exclusivity that no other company got through the three rounds.
“We cautioned them at the time because some of the characters we saw advising them, we knew were not going to give them the right advice.”
The bid failed because they were unable to raise the capital for the transaction.
“They said let the taxpayers issue tradeable bonds that they can use. We came out of it because it was costing the taxpayers. We could not put that at risk on the taxpayers, so unfortunately that failed.”
Project Calypso (2021-2022) was terminated when the committee determined that preferred bidder Content Consortium LLC was unable to raise the capital as well. In the current process (2023 2024), TPHL continued to receive unsolicited Expressions of Interests. With taxpayers paying to preserve the refinery, the authorities selected 10 bidders and reopened the process, and more entities bid. They include Jindal Steel and Power, BB Energy and Sarge Enterprises.
TTSE considers digital tracker of S&P 500
2024, 11/01
At the 2024 Trinidad and Tobago Stock Exchange Capital Market Conference, Chairman of the T&T Stock Exchange (TTSE) Ian Narine noted a challenge with the availability of foreign exchange. It is extremely difficult to access foreign exchange for portfolio investing purposes. Therefore, he proposed, what if a digital asset or digital assets can be created to track the price movements of a foreign asset class and have that price denominated and traded in TT dollars?
“What isn’t discussed at all,” is the extreme difficulty in accessing foreign exchange for portfolio investing purposes.
He made a similar proposal during his address to the conference last year.
Narine proposed, “What do you think about being able to trade digital assets on the T&T Stock Exchange? There have been lots of discussions around a digital economy, but this means more than just e-payments, digital money and digitalisation.
“Digital also means fractionalisation, tokenisation and the development and trading of digital assets. These topics have been absent from our conversations. Until now.”
Many local investors look longingly at the 21 per cent increase in the US benchmark S&P 500 index over the course of 2024. That also creates a demand for US dollars.
“So what if local investors can hold an asset denominated in TT dollars that would also have appreciated by exactly 21 per cent because the asset price tracked the changes in the S&P 500 index. That is the prize.”
TTSE is of the view that it can accommodate a digital product.
“We have assessed it is practical to harness a live external feed and plug it into our trading platform. This will allow the digital asset to track the price of the underlying index transparently and consistently.
“We have assessed that the best framework at this time, to allow this type of asset to be traded, is what is known as a ‘spot market’ trade.”
TTSE has drafted trading rules to this effect and has submitted it to the regulators for discussion, which has been constructive to date. To properly manage investment risk there must be diversity into foreign markets while resident in T&T.
“If a digital asset solution works then it helps to address the demand and allocation of scarce US dollar resources. If it works then it can also positively impact institutional pension plans and those individuals seeking to invest for their retirement. These are some of the possibilities.”
Stating this concept raises questions, Narine said the first can be whether this might have a negative impact on local stocks as investors show a preference for the US stock market, which the S&P 500 represents.
“Less than three per cent of the local population is directly invested in the T&T stock market. The major reason why they don’t participate to a greater extent, is that in a rising market they can’t get the shares they want and in a falling market they quite understandably, prefer not to try to catch a falling knife. So, they stay out.
“Now imagine if digital assets can draw the public in to participate. Imagine holding a core portfolio of the digital S&P 500 index and then being able to add local stocks to your portfolio as you go along.”
Hence, the answer to that objection is that it is likely to have a positive impact on local stocks through greater avenues for investor participation and portfolio diversification.
TTSE continues to grow from strength to strength.
Chief executive officer of the T&T Stock Exchange, Eva Mitchell, outlined the work of the TTSE so far in 2024.
She said this year has been notable in terms of listings,as the TTSE welcomed two new additions which brought over 1300 new investors into the market, demonstrating that even in challenging times, opportunities for growth continue to emerge. Turning to market activity, Mitchell reported a surge in new client brokerage accounts, approximately 3,000 this year, doubling from the same period last year.What’s more impressive, is that retail clients now account for 80 per cent of the total number of trades with actual trade value of $500 million year to date.
[This confirms the urgent need to DIVEST ALL STATE ASSETS to raise revenue and create a shareholding democracy, generating jobs, prosperity and security.]
High prices hurt
2024, 10/25
UWI economist Prof Roger Hosein advised that one of the key inflation rates is that of food prices.
“If you have a relatively fixed income and food prices go up, for a category of low-income households, food is the first place they spend their money. Food prices have gone up about 43 per cent since 2015, something the man and woman in the street are very concerned about.”
This continues to affect not only disposable income but also consumption. In looking at rises in food prices and the inflation rate, certain factors need to be taken into consideration.
“You must take not only the rate in one month or two months but also the level across a certain time period given that incomes have been fixed or only marginally increased in the last 10 years . So that real income is down. When you compare the growth of nominal wages with growth in prices since 2015, some people are under more pressure than before.”
The Central Statistical Office (CSO), in its latest Consumer Price Index Report, stated the food prices index rose by 1.34 per cent between September 2023 and September 2024. The overall inflation rate remained steady at 0.4 per cent for the month of September.In the CSO inflation report, the sub index for food and non-alcoholic beverages grew from 149.2 in August 2024 to 150.2 in September 2024, an increase of 0.7 per cent.
“This was the result of rises in the prices of fresh whole chicken, cucumbers, carrots, parboiled rice, oranges, Irish potatoes, bodi, cabbage, ripe bananas and cheddar cheese.”.
Price drops in other foods softened the full impact of these hikes, namely:
“…the general decreases in the prices of ochroes, onions, white flour, hot peppers, pumpkin, garlic, green sweet peppers, chocolate malt beverages, eggs and eddoes.”
Compared with August 2024, September data showed increases in the sub-indices for alcoholic beverages and tobacco of 0.3 per cent and for health of 0.2 per cent. There also was a decrease in the sub-index for clothing and footwear of 0.2 per cent, while all other sections remained unchanged.
Unhealthy industrial relations
2024,10/26
In a positive, proactive move Chief Personnel Officer Dr Daryl Dindial invited 11 public sector unions and associations to a meeting to discuss the current economic landscape and the state’s financial status.
All but two accepted the offer to join the virtual talks, intended to set a positive tone for the public sector wage negotiations due to take place in the coming months.Those talks seemed like a good idea but, viewed alongside other developments on the labour front over the past week — worrying indicators of the deteriorating industrial relations climate — the outlook becomes decidedly negative. In a system that requires collective bargaining for the settlement of terms and conditions of employment, the large number of expired collective agreements and drawn-out, contentious negotiations are symptoms of an unhealthy situation.
The threat of industrial action related to stalled negotiations looms large across several sectors.
T&TEC staff staged protests at their workplaces, demanding a settlement of salary negotiations and improved health and safety practices. Although T&TEC is classified as an essential service and workers are prohibited under the Industrial Relations Act (IRA) from taking strike action, there were ominous hints of work disruptions which could impact the electricity supply.
Caribbean Airlines (CAL) pilots recently staged protests over outstanding wages and increments. So far, those protests have not disrupted flights but there are fears industrial action might not be too far off. The situation was concerning enough for officials from the Tobago Division of the T&T Chamber of Industry and Commerce to appeal to the pilots to delay any planned action during the weekend Tobago Carnival.
Contentious issues include job security, inadequate wages and delayed negotiations, as pilots have been working under expired contracts for the past nine years. They are not satisfied with the Government’s response to their complaints.
Trouble is also brewing at the Port of Port-of-Spain, with industrial action earlier this month over the slow pace of wage negotiations, among other issues.
These developments are all signs of the poor state of industrial relations countrywide, at a time when stakeholders should be focusing on creating sustainable jobs, ensuring job security and achieving the competitiveness vital for economic progress. It is bad enough that the country is still yoked to the IRA, labour legislation introduced over half a century ago that has not kept pace with the evolving economic and social environment. Industrial action of any form will lead to disruptions, losses in production and adverse economic consequences for this country, still recovering from an economic downturn followed by COVID-19.
These might have been among the facts conveyed to the unions that met with the CPO. However, as well-meaning as that gesture might have been, it isn’t much help in the prevailing industrial relations landscape. The absence of genuine tripartite processes is not conducive to productivity and growth.
The inability to complete collective agreements and settle disputes promptly denies fairness and justice to employees and employers alike.
What T&T needs is an upgraded industrial relations system that supports changes in the work environment and embraces technological advancements. Getting to that stage requires a collaborative and cooperative approach by business, labour and government.
Hilaire: no alarm over debt
2024, 10/26
Even as debt was red flagged as a global concern at International Monetary Fund (IMF) annual meetings in Washington DC, Central Bank Governor Dr Alvin Hilaire says Trinidad and Tobago is well placed to avert the problem of rising debt levels.
” Of course, we do have a burgeoning global debt problem. Many countries increased debt in the wake of the pandemic, to deal with vaccines, public health, social support. So their debt has gone up in a context where interest rates were very high. So good news all over…. with the geopolitics in the Middle East, Ukraine, elections, we have to be very careful and vigilant.”
IMF Director of the Fiscal Affairs Department, Vitor Gaspar, warned that global debt to GDP ratios could top 100 per cent by the end of the decade as he presented the analysis of the IMF Fiscal Monitor report.
Hilaire, part of T&T’s contingent at the IMF summit, attended the G24 and other meetings. While Gaspar had valid concerns about global debt, alarm bells need not be sounded for T&T just yet.
” Trinidad and Tobago is in the fortunate position that, when we entered the pandemic, we had important buffers. One, we have good reserves. Two, we had a strong Heritage and Stabilisation Fund. And three, we had fairly low debt, so that the Government and the Central Bank were able to provide fiscal and monetary support, with little increase in debt because we were able to draw down on those buffers.”
The 2024 Review of the Economy, one of the 2025 budget documents, reported government debt of $100.23 billion as at September 30, 2019, the end of the 2019 financial year, with Debt to GDP ratio of 61.9 per cent.
The provisional estimate of Government debt at the end of the 2024 financial year rose to $140.58 billion, an increase of 40 per cent in the six-year period. Provisional estimate of debt to GDP at the end of the 2024 financial year was 75.6 per cent. T&T domestic debt rose from $72.91 billion in 2019 to an estimated $103.84 billion at the end of the 2024 financial year on September 30, an increase of 42.4 per cent.
Foreign debt in TTD rose from $$27.32 billion in 2019 to an estimated $36.73 billion in 2024, an increase of 34.4 per cent.
Estimated debt of $140.58 billion at September 30, 2024 comprised central government domestic debt of $73.99 billion, central government external debt of $36.73 billion and non-self serviced government guaranteed debt of $29.84 billion.
Hilaire stressed that the government must be careful with economic policy to avoid problematic debt leading to delinquency.
“So again, we are in a fairly decent place, but vigilance is the key, because if you don’t have important reforms, then things could go out the window.”
Foreign reserve investments drive Central Bank to $1.58B profit
2024, 10/17
Year *CBTT profits
2023 *$1.58B
2022 *$550.66M
2021 *$756.48M
2020* $1.37B
2019* $1.88B
2018* $1.47B
2017* $1.04B
2016* $713.42M
2015* $699.73M
2014* $329.88M
The monetary authority and regulator of financial institutions, the Central Bank of Trinidad and Tobago (CBTT) declared a net profit of $1.58 billion ($1,587,477,000) for financial year ended September 30, 2023, an increase of 188 per cent compared to the $550.66 million profit reported in 2022.
The Central Bank Act requires the institution to remit all of its profits to the Consolidated Fund.
The Central Bank’s $1.58 billion net profit for 2023 financial year is recorded in the budget document Draft Estimates of Revenue for the Financial year 2025 as equity profits in the revised estimates for 2024.
In the revised estimates for 2024, the Central Bank’s $1.58 billion eclipses the $914.69 million in interest, dividends and surplus generated by loss-making state enterprises.
The Central Bank’s net profit for 2023, recorded in the Consolidated Fund for the 2024 financial year, equals 3.24 per cent of the revised estimate of total revenue for 2024 of $48.76 billion ($48,764,897,868).
In the ten-year period from 2014 to 2023, the Central Bank’s net profit in 2023 was only surpassed in 2019, when the institution generated $1.88 billion. In the ten-year period, the Bank contributed $10.38 billion to the Consolidated Fund.
In its 2023 annual report, published on May 10, 2024, the Central Bank disclosed that it earned $1.52 billion “in income from foreign currency assets.”
When investment expenses, realised loss from currency translations and net loss realised on disposal and amortisation of investments are netted off, the Bank generated $1.32 billion from its foreign currency assets portfolio. That was ten times more than the $130.82 million the Bank recorded in its 2022 financial year.
The Central Bank’s total revenue for the year ending September 30, 2023, was $2.408 billion, with $1.327 billion coming from net investment income on foreign currency assets and $1.023 billion from net revenue from local currency assets. That means 55 per cent of the Central Bank’s total revenue came from the income generated by its foreign assets. The balance, mainly interest income of $950.43 million, came from the Bank’s TT-dollar assets.
Asked what are the general areas that the Central Bank derives income from, a spokesperson for the institution said: “Generally speaking, the Central Bank’s foreign income reflects earnings from investments of foreign reserves. Local income principally includes interest charged on customer accounts and supervisory fees. See the Bank’s published accounts for more details.”
The Bank’s 2023 annual report actually shows a decline in its foreign assets for that year compared to 2022.
As at September 30, 2023, the Central Bank’s total foreign currency assets amounted to the TT-dollar equivalent of $32.38 billion, compared to $39.63 billion in the 2022 financial year:
* The institution held $16.24 billion in foreign currency cash and cash equivalents at the end of its 2023 financial year, compared to $20.36 billion at the end of September 30, 2022.
* Its foreign currency investment securities at the end of its 2023 financial year amounted to $19.14 billion, compared to $19.27 billion in 2022.
Questioned on what happened in the Bank’s 2023 financial year, which led to $1.50 billion in investment income from foreign currency assets, the spokesperson said, “A key contributing factor was relatively high external interest rates.”
It was pointed out to the spokesperson that the estimate of Central Bank’s equity profits for 2025 in the Draft Estimates of Revenue was $1.60 billion, slightly higher than the $1.58 billion that went into the Consolidated Fund for 2024. Does that mean that the Central Bank has communicated to the Ministry of Finance that what the Bank did in 2024 will recur in 2025?
“Each year the Central Bank’s provides an estimate of its profit for the upcoming year to the Ministry of Finance, which the Ministry utilises as a base for its own Draft Revenue Estimates,” the spokesperson responded.
Central Bank expenses
The Bank’s operating expenses for 2023 totalled $821.12 million. That was 54.4 per cent higher than the $531.86 million in expenses for the 2022 financial year.
The largest contributor to the Central Bank’s operating expenses in its 2023 financial year was salaries and related expenses, which amounted to $350.55 million. The Bank’s salaries and related expenses in 2023 more than doubled compared to 2022 when it totalled $167.35 million.
The Bank’s expenditure on salaries and allowances for 2023 totalled $246.10 million, 15.6 per cent more than the $212.91 million for the 2022 financial year. The major contributor to the increase in salaries and related expenses in 2023 was $60.32 million spent on pension and post-retirement medical plans in that year.
The Central Bank spent $104.13 million in ‘other operating expenses’ in its 2023 financial year, compared to $100.11 million in 2022. The main expenses in that category were computer-related, $32.74 million in 2023 compared to $29.21 million in 2022, and maintenance cost of $27.75 million in 2023 ($27.61 million in 2022).
Governor speaks
In the foreword to the annual report, Central Bank Governor, Dr Alvin Hilaire, praised the “firm commitment and diligence of the staff” of the Bank, noting that it registered major successes in the execution of its 2021/22 – 2025/26 strategic plan. One of the achievements he pointed to was the implementation of the Electronic Cheque Clearing System. The annual report states that the ECCS was successfully implemented in February 2023. The operator of the ECCS is Infolink Systems Ltd (ISL).
The ECCS was the cause of a major dispute between the Minister of Finance, Colm Imbert, and Auditor General, Jaiwantee Ramdass, over revenue discrepancies as a result of the new system.
The financial statements for its 2023 financial year were signed on December 15, 2023, by AG Ramdass, who opined that “the financial statements…present fairly, in all material respects, the financial position of the Central Bank of Trinidad and Tobago as at September 30, 2023…”
The Central Bank Act
“35.(1) The Bank shall establish and maintain a General Reserve Fund.
(2) The Bank may, with the approval of the Minister, establish Special Reserve Funds of specified amounts.
(3) The Bank may place in the General Reserve Fund or the Special Reserve Funds, or in both the General Reserve Fund and the Special Reserve Funds, an amount that does not exceed ten per cent of the net profit of the Bank for a financial year.
(4) The net profit of the Bank for a financial year shall be determined after—
(a) allowing for the expenses of operations, including replacement and acquisition of assets for the operations of the Bank;
(b) provision has been made for bad and doubtful debts, depreciation in assets, contribution to staff pension benefits and other contingencies.
(5) Subject to subsection (7), at the end of each financial year, after allowing for the amount referred to in subsection (3), the net profit of the Bank shall be paid into the Consolidated Fund.
(6) When the sum standing to the credit of the General Reserve Fund equals the authorised capital of the Bank, no further contribution to the General Reserve Fund shall be made.
(7) Any loss incurred by the Bank during a financial year may be met from the General Reserve Fund or from the Special Reserve Funds where the General Reserve Fund is insufficient.
(8) Where the General Reserve Fund and the Special Reserve Funds are insufficient for the purpose referred to in subsection (7), the Bank, with the approval of the Minister, may carry forward and recoup the losses from future profits before further payment is made into the Consolidated Fund.”
The Central Bank’s capital and its general reserve fund each total $800 million.
Tobago
2024, 10/17
The Government is taking a hands-off approach when it comes to outstanding compensation for fishersk and those affected by February’s oil spill.
Months after paying the Tobago House of Assembly (THA) $50 million for expenses incurred from the environmental tragedy, Finance Minister Colm Imbert said ensuring that all affected persons were paid was not his responsibility.
While acknowledging fishers were still demanding outstanding payments for work done during the oil spill, he said the THA did not account for what they did with the funds and he was yet to receive any outstanding claims from THA Secretary of Finance Petal-Ann Roberts.
During a Standing Finance Committee , Imbert said, “I saw complaints in Tobago from fishermen that they didn’t receive any money. That is not our responsibility. We sent THA $50 million. It’s up to the THA to decide what to do with that $50 million. They could have paid contractors employed to clean up the oil. They could have paid fishermen. That is their responsibility. My responsibility is simply to be a conduit of funds.
“We did not ask the THA to give us full justification for the $50 million. What we sent to them was just a global estimate based on an assessment of what we thought an initial release of funds should be, but we don’t get involved with the adjudication of claims. It is not for me to say whether there are outstanding claims or not and I am yet to receive the documentation that I asked for from the Finance Secretary with respect to additional claims that were not covered by the $50 million.”
Chief Secretary Farley Augustine maintained the $50m was insufficient.
“The claims from the fisherfolk tallied at a whopping $47.3 million. There is no way $50 million can pay bills to service providers and contractors and then pay the claims of $47.3 million.
From day one, we have said that $50 million wasn’t enough for the claims. Minister Imbert knows from the submissions of the THA that $50 million he sent did not budget for claims by fisherfolk for damages to their property and industry. THA had to prioritise paying contractors who we have a legal duty to pay. As for relief funding to the fisherfolk, we hope to make some additional support available from this fiscal notwithstanding not getting the allocation for it.”
Fisherfolk to get international aid
All may not be lost as Energy Minister Stuart Young said fishers could get help from the International Oil Pollution Compensation (IOPC) fund. After being accepted by the IOPC, all legitimate and reasonable expenditure will be reimbursed by the international fund.
Tobago fishersk can submit claims to the Ministry of Finance, who will then forward them to Young for submission to the IOPC.
Government submitted two claims which were being processed. Alternatively, fishers can reach out to the international body themselves.
“The state succeeded in its request to the IOPC, an international body that deals with oil spills. They have acceded to our submission that Trinidad and Tobago, and in particular the oil spill in Tobago ,should fall within that IOPC fund. They have accepted and agreed, and it is an order of the IOPC that the Government’s legitimate and reasonable expenditure will be reimbursed by the IOPC and that includes claims from Tobago and the THA.
We have already begun submitting those claims. We’ve made two submissions to them already that are being processed. At this stage, they’ve indicated that all is in order and we, the taxpayers can expect to receive reimbursement for legitimate and reasonable claims. The IOPC appointed a claims manager in Trinidad. That manager’s representatives went to Tobago. It may have also been in collaboration with or at least the consent of members of the THA and they indicated to the fishermen the process.
The fishermen may make their own independent claims, independent of the THA and the Government.
The IOPC is an international body that deals with thousands of these types of claims across the world.”
Augustine does not believe the IOPC will include funding for Tobago.
“All of the international funding and grants sent to the country to make payments for oil spill and Tobago isn’t considered in getting some of that funding.”
Government submits claims for Tobago oil-spill compensation
Before the Standing Finance Committee of the House of Representatives approved a $2,580,255,500 budgetary allocation to the Tobago House of Assembly (THA) on October 16, Ministers Colm Imbert and Stuart Young said that the government can expect reimbursement for expenditure incurred as a result of the oil spill which occurred offshore Tobago on February 7.
The oil spill was caused by an overturned barge, the Gulfstream, found lodged on a reef and leaking bunker fuel off the coast of Cove.
The barge was being towed by The Solo Creed, when it got into difficulty. The owners of either vessel have yet to be identified.
Young reminded MPs, “The State succeeded in its request to the IOPC (International Oil Pollution Compensation Funds), an international body that deals with oil spills. They have acceded to our submission that TT, and in particular the oil spill in Tobago, should fall within that IOPC fund.”
Imbert said that the THA received $50 million in the mid-year review in May to help with the oil-spill clean-up. The IOPC accepted and agreed that the government’s legitimate and reasonable expenditure will be reimbursed by it.
“That of course includes claims from Tobago and the THA. We have made two submissions to them already that are being processed.”
Young said, “I will lead a team in the next few weeks to the IOPC (in the UK) to continue that discourse and to provide them with the further updates on the processing of our payment.”
An IOPC teamwas in Tobago last week.
“At this stage, they have indicated that all is in order and that we the taxpayers can expect to receive reimbursement for legitimate and reasonable claims.”
Imbert said he met THA Finance Secretary Petal-Ann Roberts before the 2024/2025 budget was finalised. He advised Roberts that “claims (from the THA) should be sent to the Ministry of Finance for onward transmission to the Minister of Energy who would then send those claims to this international oil-spill fund.”
Fishermen can apply for compensation directly
Pointe-a-Pierre MP David Lee asked how Tobago fishermen who were affected by the spill could make claims for damages. Imbert reminded him of the $50 million allocation to the THA which he mentioned earlier in the meeting.
“The process for recovery of damages and losses by persons over there (Tobago) is through the THA. They will make the claims to the THA. The THA will pass the claims to the Ministry of Finance. The Ministry of Finance will pass them on to the Ministry of Energy who will submit the claims to the IOPC. That’s the process. It is not a process whereby the Minister of Finance is settling claims.”
This was not his role or the ministry’s.
“We are simply providing funds and this is a mechanism to provide the funds.”
Young said Tobago fishermen could make claims directly to the IOPC if they wished.
“The IOPC has appointed a claims manager in Trinidad. That claims managers’ representatives went to Tobago. I believe it may have also been in collaboration with, or at least the consent of members of the THA and they have indicated to the fishermen the process (to submit claims). The IOPC is an international body that deals with thousands of these types of claims across the world.”
When he visited the IOPC office in the UK in April, the IOPC was dealing with 3,000 applications from thousands of Filipino fishermen who were affected by an oil spill near Manila.
Government ‘taking a chance’ on Solo Creed
The Gulfstream arrived at Sea Lots, Port of Spain, on August 22
Maritime attorney Nyree Alfonso warned the decision to arrest the Solo Creed tug in Angola may cost taxpayers more than the $244 million already spent on clean-up efforts. The Solo Creed was towing a barge, Gulfstream, which overturned off the coast of Tobago in February, causing a massive oil spill which damaged the marine ecosystem and negatively affected fishermen’s livelihoods. After Gulfstream overturned, the Solo Creed fled the area and failed to report the incident to the authorities.
On October 24, the Ministry of Energy said the Solo Creed had been located in Angola and the government was taking action against the boat and its owners.
“Pursuant to proceedings filed by the Republic of Trinidad and Tobago in the Republic of Angola, the tug Solo Creed has been ordered by the Court to be arrested to secure the claim of Trinidad and Tobago.”
The arrest would allow TT to “protect the fruits of its claim” and recover costs to clean the spill. $244 million is a preliminary figure as the full cost continues to be tabulated. The tug will not be allowed to leave Angola unless security is lodged to secure TT’s interest.
“That security will provide protection towards satisfying the claim and compensate for the damage resulting from the oil spill off Tobago during the towing operations of the barge in February.”
Alfonso said while this decision may be in the pursuit of justice, it may end up costing taxpayers in the long run.
“Justice must be done and must be seen to be done. But spending money to arrest a boat of low value when you’re looking at this kind of liability and any other liabilities that you are expected to meet when you arrest a boat, then you have to ask, ‘Is that justice or am I just trying to say I did something and it looked good?’”
Silence on cost
When a boat is arrested, the court holds the vessel until the claimant is paid. Alfonso said that based on her estimated value of the Solo Creed, there is little chance anyone will put up security for the boat, given the size of the government’s claim. Solo Creed is not a new vessel and it is common knowledge in the industry that as a boat begins to age past its point of commercial feasibility some nefarious owners choose to put it to other use.
“If the owners want to get back their boat, they put up security (in escrow) and say, ‘I will take my boat in return for the security and then we’ll litigate and fight in court. Nobody in their right mind will put up more money than their vessel is worth and my rough estimate is that this boat is worth maybe $US500,000 – US$750,000. So that means the likelihood of somebody coming forward to put up security is next to nil. As vessels come to the end of their commercial life, some owners will risk them. Because they might be caught carrying sanctioned oil or some other kind of contraband. And therefore, owners tend to only use boats that are not the diamond and gold in their fleet. So the returns are high, but the risks are low.”
Questions over the incident may lead the owners to believe it is cheaper to forfeit the boat than to come forward and face additional consequences. If this is the case, the government will then have to sell the boat at a reduced price to recover any costs. These are often considerable, with lawyers’ fees alone costing tens of thousands of US dollars.
“When people come to buy a vessel in a judicial sale, you’re looking for a fire sale. You don’t pay optimum prices when it comes to buying a house in a mortgage sale so it’s the same story here. Aside from lawyers, it costs money to keep the boat under arrest… security charges, port charges, the Admiralty Marshall has to be paid because the arrested vessel is in their custody. So your tab is running in terms of expenses. And if the owner does not come forward and put up security, ultimately, you may have to sell that boat in order to realise any value from it.”
“So this is going to cost you money upfront and you have to pray that everything goes right and that you’re able to recover some money by selling the boat but with all the expenses having to be covered first before any money is put in, you’re taking a chance.”
If the government were her client, she would have advised them to undertake a cost-benefit analysis before trying to arrest the boat.
“I see no point in arresting the vessel because of the great distance between the (value of the) claim and value of the vessel. When you arrest a vessel, the owner or the owner’s interest or the insurance company is not obliged to put up any more money than the vessel is worth. So the devil is in the details.”
Finding ‘murky’ owners is difficult
The Government will continue to pursue all legal proceedings to ensure its rights and interests are protected and vindicated, including hunting the owners.
“We will take all steps to hold the owners and or persons interested in the vessel accountable for the extensive damage caused to the livelihood of the people and environment of Tobago.”
From her experience in the industry, Alfonso said the government will have a hard time finding Solo Creed’s owners as many boat owners exist on paper only and hide behind shell companies.
“They flag their vessel or register their vessel in flags of convenience, with no ties to the country where your vessel is registered and no assets within that jurisdiction… and the only thing the company owns is the vessel.”
Even if the owner is found, recovering money will also be difficult.
“(Companies) might own 50 vessels, but every single vessel is owned under the name of a different company. All the companies have the same fax or phone number, the same physical address but every single vessel has a slightly different owner so that when you take one, you can’t touch the rest of the fleet. So you may have a paper company with no assets other than the vessel itself.”
Companies are also registered as limited liability companies, so holding the beneficial owners to account is difficult.
“The ownership of the vessel seems to be as dark as the vessel and as murky and mercurial as the vessel and its operations.Therefore, unless you’re reaching beyond the vessel into the ownership of the vessel and you can tap into that to get back money, I think it’s an academic exercise”
More than oil spill damages
Pursuit of damages for the Tobago oil spill is not the sole focus after arrest of runaway Solo Creed. On October 23 in the Senate, Minister of Finance Colm Imbert celebrated a court order issued in for the tug in Angola, boasting, “That is performance, PNM style. We tracked down that (vessel) and we arrested it!”
Seeking to recover at least $244 million in damages, the Ministry of Energy said on October 25,
“The government will continue to pursue all legal proceedings. We will take all steps to hold the owners and/or persons interested in the vessel accountable.”
However, that process is not straightforward, even factoring in the arrest of the tug over 6 months later. Two vessels of murky provenance caused February’s environmental disaster 16 kilometres off the coast of Tobago: the Solo Creed and the Gulfstream barge, reportedly used to ship asphalt and damaged due to frequent thermal cycling. Claims and counterclaims swirl about their ownership. Fraud relates to registration certificates. Both vessels are part of the resurgent trend of a global “dark fleet,” triggered by outlaws to dodge sanctions.
Government efforts to claim compensation through international treaty bodies illustrate the complications. In addition to legal proceedings, the ministry continues the pursuit of recovery through the International Oil Pollution Compensation (IOPC) Fund, for which Energy Minister Stuart Young flew to London, UK, in April.
The claim before the IOPC has been fraught from day one, since it can be argued that if the vessels are uninsured, a payout could undermine the stability of the IOPC compensation regime. While such an argument has, at least initially, not prevailed, it is unclear whether any compensation might fully cover the preliminary $244 million estimate of damage.
These issues suggest the state must do more than wait for damages. Authorities must examine and improve emergency oil spill response capabilities, inclusive of training. More worrying than the spill is the sense that local mechanisms simply could not cope, while consuming public funds. To prevent recurrence, it is vital to bolster coastal surveillance, after reports the barge was leaking since it left Pozuelo Bay, Venezuela, en route to its planned destination.
The Senate passed the 2024-2025 budget on its third day of debate after its previous passage in the House of Representatives. Imbert said he was looking forward to presenting his eleventh budget in 2025, in reference to the general election due next year. Imbert began his wrap-up by chiding the Opposition for presenting two extra senators to speak in the debate beyond its six permanent senators. Calling this action “a complete travesty” and “a violation of the Constitution”, he vowed not to recognise the contributions of the two acting senators, referring to Dr Tim Gopeesingh and Dominic Smith.
The oil contaminated part of Tobago’s coast and also reportedly reached Grenada and Bonaire, spilling 51,000 barrels of oil, with the Government donating $50 million towards clean-up out of $134 million sought by the Tobago House of Assembly (THA). The arrest of a ship means its restriction by court order to secure a maritime legal claim and to prevent fleeing to avoid penalties.
Regarding the allocation to Tobago, including the Tobago House of Assembly, Imbert said $3.2 billion for 63,000 people worked out at $50,0793 per person. This exceeded the $35,000 per capita allocation for Grenada ($4.1 billion for 117,000 people), St Lucia’s allocation of $25,000 ($4.75 billion for 179,000) and the $40,370 per capita for Barbados ($11 billion for 282,000 people.)
Justifying Tobago’s new airport terminal, he said Panama City’s fine airport had made it a regional hub, as in Singapore. He urged people to think big for Tobago rather than be limited to mom-and-pop-scaled hospitality. It would be the Government’s priority to establish proper refuelling facilities at a marina in Tobago, to boost tourism.
On the minimum wage, he had been moved by constituents who were MTS workers, but if the level was set too high in private businesses, workers could lose their jobs.
Standards for competitiveness
2024, 10/16
Minister of Trade and Industry Paula Gopee-Scoon, told the World Standards Day stakeholder appreciation and networking event at Macoya, Tunapuna, T&T can position itself within the global digital ecosystem, harness the power of AI and focus on high value information and communication technology (ICT) services.
Minister Gopee-Scoon and Trinidad and Tobago Bureau of Standards (TTBS) chairman Lawford Dupres presented a certificate of appreciation to Professor Clement Imbert during the TTBS’s World Standards Day and 50th Anniversary Event at its auditorium on the Trincity Industrial Estate in Macoya .
Noting that the role of standards is now more critical than ever, Gopee-Scoon said, “It is the foundation upon which we build safety, quality, and trust across industries. Despite their importance, standards are invisible and often overlooked.”
The International Organisation for Standards (ISO) published over 22,000 standards world-wide, covering almost every aspect of industry and human activity. These standards represent a concerted global effort to harmonize practices, enhance quality and ensure safety.
“For T&T, they are crucial in maintaining our national competitiveness in an increasingly interconnected global economy.”
The national standards body, the T&T Bureau of Standards (TTBS), Gopee-Scoon is s central to the development of standards that support the economy.
“By doing so, the bureau not only enhances the quality and safety of products and services, but also fosters an environment that is conducive to innovation and competitiveness. This commitment to standardisation is crucial for opening new markets and facilitating trade, ultimately driving innovation and sustainable economic growth.”
In sharing global statistics, Gopee-Scoon said the World Bank estimates that the digital economy contributes more than 15 percent of global gross domestic product (GDP), and in the past decade, it has been growing at two and a half times faster than physical world GDP.
More specifically, artificial intelligence (AI) can potentially contribute as much as US$13 trillion to the global economy by 2030, according to a report by the multinational strategy and management consulting firm McKinsey and Company.
The theme of the 2024 World Standards Day was Industry, Innovation, and Infrastructure in the age of Artificial Intelligence (AI).This theme resonated deeply given the challenges and opportunities in today’s rapidly changing world.
This year’s celebration coincided with the 50th anniversary of the TTBS.
HSF withdrawal of US$209.56M
HSF net asset value dips
2024, 10/16
The total net asset value of the Heritage and Stabilisation Fund as at June 30, 2024, was US$5.76 billion, a 2.32 per cent decline from US$5.89 billion as of March 31, 2024.
This was reported in the HSF’s quarterly investment report for the period April 1 to June 30, 2024, published on the website of the Ministry of Finance .
Of this total, the investment portfolio was valued at US$5.75 billion, while the remaining portion was held in operating cash accounts to meet the day-to-day expenses that arise from the management of the Fund. The report indicated that during the quarter, a total of US$209.56 million ($1.41 billion) was withdrawn from the Fund under section 15 of the HSF Act (2007) for the financial year 2022 / 2023.
“Assets within the US short duration fixed income mandate were liquidated to meet the obligation.”
Section 15 (1) of the HSF Act states,
“Subject to subsections (2) and (3), where the petroleum revenues collected in any financial year fall below the estimated petroleum revenues for that financial year by at least 10 per cent, withdrawals may be made from the Fund as follows, whichever is the lesser amount: (a) either 60 per cent of the amount of the shortfall of petroleum revenues for that year; or (b) 25 per cent of the balance standing to the credit of the Fund at the beginning of that year.”
For the quarter that ended June 30, 2024, the report said the HSF’s investment portfolio returned 1.38 per cent, while its benchmark increased by 0.77 per cent. Strong US equity market gains and the Fund’s relatively higher allocation to the US core domestic equity mandate helped to drive performance. This was augmented by positive contributions from the fixed income mandates and international equities.
The HSF outperformed by 61 basis points compared with its strategic asset allocation (SAA) benchmark. Relative asset allocation positioning and external managers’ active investment decisions drove excess returns. Overweight allocation to equities and corresponding underweight position in fixed income was positive for performance.
In addition, the Fund benefitted from the strong outperformance of external managers’ strategies, most notably in the non-US core international equity and US core domestic fixed income mandates.
In September, Finance Minister Colm Imbert announced that the current value of the HSF was US$6 billion. In June 2022, the value of the HSF was US$4.7 billion, which was attributed to instability in the international financial system at that time.
“Now two years later, because of prudent management, the value of the HSF has increased to US$6 billion, an increase of US$1.3 billion.”
The 2023 annual report said that the fund stood at US$5.39 billion at the end of September 2023, a 14.4 percent increase compared with US$4.71 billion at the end of September 2022.
In the summary of the annual report, available in May 2024, HSF chairman Ewart Williams said the Fund returned 10.59 per cent for the 2023 financial year, “partially recovering from the steep losses during the previous financial year, when the Fund declined 16.52 per cent.”
Heritage thwarts access to Moruga bridge
2024, 10/25
Heritage Petroleum has restricted access to a makeshift bridge in Moruga, sparking frustration among farmers who rely on it to access their farmlands.
The bridge, funded and built by farmers in December 2021 after the original structure collapsed, connects farms to the Guayaguayare region.
Moruga MP Michelle Benjamin asked Heritage to meet farmers, over 70 of whom are cannot reach their lands without taking a longer route via Guayaguayare. She urged Heritage and the Ministry of Works to consider installing a Bailey bridge.
Heritage Petroleum explained that the bridge, constructed near an active ten-inch crude oil and condensate pipeline, posed a risk to both the community and the company’s operations, citing safety concerns regarding the integrity of the bridge, noting potential damage to the pipeline.
“This struture was constructed in the immediate vicinity of an active ten-inch crude oil and condensate pipeline that is critical to the operations of Heritage and other operators from the East Coast. There are serious concerns regarding the integrity of the makeshift structure, the possible impact use of it can have on this active ten-inch pipeline, and the safety risks the unauthorised bridge poses to its users.”
Heritage said. its efforts to alert stakeholders to these concerns have gone unheeded, leading the company to take the decision, “as a reasonable and prudent operator, to restrict access.”
Heritage officials had met with stakeholders to sensitise them about the issue.
“The company remains open to continued dialogue to resolve the matter. We remind the public that Heritage operations are high-risk, and all laws, rules, and regulations are implemented to protect both the community and Heritage assets.”
Farmers are now requesting that Heritage rebuild the bridge in the heart of the petroleum industry. This petty dispute symbolises the status of Cinderella Agriculture, with an even more miniscule budget.
The obvious solution is for all operators from the East Coast to cooperate to build a permanent bridge.
Woodside Energy advances Australia, Trinidad projects amid bumper production
Amanda Battersby
16 October 2024