TRINIDAD 2

Portugal books LNG cargo from Trinidad and Tobago

Portugal books LNG cargo from Trinidad and Tobago

Image courtesy of REN

REN-operated Sines LNG import terminal in Portugal is set to receive a cargo of liquefied natural gas from Trinidad & Tobago.

The 136,600-cbm LNG carrier Galea is transporting the cargo from the Atlantic LNG project in Trinidad and Tobago.

Atlantic LNG in Point Fortin, capable of producing 14.8 mtpa of LNG, is owned by BP, Shell, PRC sovereign wealth fund CIC unit Summer Soca.

Data from the Port of Sines shows the vessel is scheduled to dock on May 25 at Sines LNG terminal, on Portugal’s Atlantic coast, which has a nominal send out capacity of 600,000 cubic meters per hour (5.26 bcm per year), with a peak capacity of 900,000 cubic meters per hour.

TTNGL Ltd

Phoenix Park safe from Atlantic supply fallout

An aerial shot of Atlantic's liquefied natural gas facility in Point Fortin.

An aerial shot of Atlantic’s liquefied natural gas facility in Point Fortin. Atlantic liquefied natural gas plant in Point Fortin.

Parent company TTNGL Ltd announced that any halt in natural gas liquids supplies from Atlantic train one will not disrupt Phoenix Park Gas Processors Ltd’s (PPGPL) operations. The SEC assures the public of the strength of PPGPL’s structure to withstand a shortfall if Atlantic is unable to provide liquefied gas in 2020 and 2021.

The SEC was responding to a forecast that Atlantic may be unable to expand train one production over the next two years, following “disappointing results” from shareholder BPTT on its drilling programme in the Columbus Basin, where two dry wells raised concerns in the industry.

TTNGL expressed optimism about the continuance of PPGPL despite the development at BPTT and Atlantic. “The public is advised that as a consequence of its commercial and operating structure, the performance of PPGPL will be marginally impacted should a cessation in delivered natural gas liquids (NGLs) volumes from Atlantic LNG Train 1 materialise in 2020 and 2021.” BPTT did not report decline in gas supply to Train one this year but PPGPL can substitute its source.

BPTT did not indicate any significant decline in natural gas volumes to Train 1 in 2019. Any potential decline in NGL volumes from Train 1 in 2020 and beyond (propane and butane in particular) can be substituted with NGLs derived from PPGPL’s product trading operations to ensure continued supply to its markets.

TTNGL is 75 per cent owned by the public, with a 25 per cent stake held by the National Gas Co Ltd (NGC). An investment holding company its primary asset is a 39 per cent shareholding in PPGPL with a core business of natural gas processing, NGL aggregation, fractionation and product marketing. PPGPL operates the country’s only natural gas processing and NGL fractionation plant and is the largest producer and marketer of propane, mixed butane, iso-butane and natural gasoline.

The holding company identified three main revenue streams –

Revenue from processing of natural gas supplied by NGC for delivery to petrochemical and other industrial consumers is the largest contributor to after-tax earnings. This revenue is derived by extracting NGLs from the gas stream, fractionating the NGLs into the component products, retaining and marketing these products.

A second revenue source is generated from fractionating NGLs purchased from Atlantic Trains one, two and three and marketing the products. PPGPL earns a fixed margin from this operation and in 2018 Train 1 NGLs accounted for 3.4 per cent of after-tax profits.

PPGPL earns revenue from third party processing/capacity fees under arrangements with Atlantic Train four for NGL processing and Petrotrin (now Heritage Petroleum) for the supply of iso-butane.

Consistent with best practices, PPGPL will continuously assess these impacts and provide the appropriate advisories to TTNGL As a shareholder of PPGPL, TTNGL noted the progress of its internationalisation agenda which is expected to improve financial results.

The Finance Minister Colm Imbert, in his mid-year budget review on May 13, had assured any fallout from a curtailment in Atlantic Train one expansion would not cause the economy to collapse. Continuous growth and momentum in the production of natural gas is driving the economy.

Im­mortelle en­coun­tered a me­chan­i­cal in­tegri­ty is­sue. There will be no pro­duc­tion from a sec­ond well which was wet. They drilled two in Cashima which may hold less than a hun­dred mil­lion scuffs (stan­dard cu­bic feet of gas) they expected. So they must re-eval­u­ate.

BPTT plugged and abandoned one well and another well remained commercially viable while producing lower volumes than expected – 50 or 75 million standard cubic feet compared to 100 million. BPTT pressed the “pause button” because of disappointing results from the two wells.

Government has better returns from Trains Two, Three and Four, currently running below maximum capacity (the overall plant including Train One is running at 85 per cent of capacity and gas allocated to Train One could be diverted to these newer more efficient trains.

Train One is the first and smallest of the trains. As one of the first LNG plants in the world, its structure was designed for future development, with incentives including tax breaks. The plant spent millions on hiring new staff and buying equipment to upgrade the train, which may be in jeopardy with no gas supply in 2020 to justify its extension.

Newer trains did not have as many incentives. Train one consumes just over 490 million standard cubic feet of gas per day, Trains Two and Three, just over 500 mmscf/day, and Train Four, the largest, about 700 mmscf/day. “If you are no longer supplying Train One you will be able to supply the others. So more revenue returns to the state,” Imbert said.

The fate of Train One came to the fore since “disappointing results” from BPTT on the infill drilling programme. Infill drilling is the practice of drilling additional wells within an already producing field. This will have a material impact on its production next year, including supply to Train One. Shareholders of Train One, of which Shell is the biggest followed by BPTT, will determine how to proceed given this information but the news was not alarming.

Any residual gas after supply is met at the other Atlantic trains, should Train One not come on line as anticipated, would be diverted to petrochemical companies. “TT gets more revenue from sale of gas to petrochemical companies than to Atlantic plant. So .. in totality it is nothing to be alarmed about… We’ll be fine. I am certain all gas we produce can be utilised.”

TT is still on track to meet its anticipated 3.8 billion standard cubic feet in 2019. For 2020, depending on BPTT’s review of geological data, the estimated production will be about 3.7 bcf/day, a drop of about 100 million standard cubic feet/day. Other producers could pick up the slack and even ramp up production. “When you look at all the gas producers we do not think it will significantly impact production.”

BPTT’s regional president, Claire Fitzpatrick said, “Despite BPTT’s recent exploration successes such as Savannah and Macadamia and ongoing success in the development of the Angelin field, these recent drilling results remind us that there is inherent uncertainty in the subsurface.

This is the nature of our business and we will continue to leverage the latest technology to find and develop resources. We remain committed to the development of our acreage in the Columbus Basin and will continue to progress the Angelin, Cassia Compression and Matapal Projects as planned.”

State strategy is weak and areas for potential or projected growth must focus centred on technical and vocational development. TT can export services to Guyana where the burgeoning oil and gas sector needs riggers, drillers, and underwater welders.

An absurd agree­ment with PRC to de­liv­er gas that NGC does not pro­duce may hit the buffers as US tariffs bite. In­stalled plant ca­pac­i­ty in the LNG and petro­chem­i­cal sec­tors re­quires 4.1 bil­lion stan­dard cu­bic feet a day to op­er­ate at full ca­pac­i­ty. The pro­jec­tion was to in­crease av­er­age dai­ly pro­duc­tion of 3.628 bil­lion scufs in 2018 to 3.9 bil­lion scufs, reach­ing four bil­lion scufs in 2020. Pro­duc­tion im­proved to 89 per cent of ca­pac­i­ty. BPTT cur­rent­ly ac­counts for 50 per cent of the gas pro­duced with 250-300 bil­lion scufs per day go­ing to Train 1.

For the fis­cal year Ga­le­o­ta crude, which fetch­es a high­er price than Brent, av­er­aged US $64 a bar­rel. BHP crude av­er­aged US$56.22 while Her­itage Mo­lar av­er­aged US $59.17. West Texas In­ter­me­di­ate av­er­aged US $55.03 , well be­low the US $60 plus on which the bud­get was pred­i­cat­ed.

MAYARO MP Rushton Paray says the economy is ten per cent smaller than it was four years ago because of failed economic policies, with 40,000 people unemployed, challenges in accessing foreign exchange at banks and $40 billion overdrawn on the exchequer account on September 30, 2018.

Feeding the 40,000/60,000 ??

Government owes debt to unions, companies, individuals and to TTEC which suffered an explosion in the capital. With over 300,000 citizens homeless,  the In­ter Amer­i­can De­vel­op­ment Bank fa­cil­i­ty of $US100 mil­lion can release aid for costs of TT $620 mil­lion a year for 40,000 – 60,000 Venezue­lan refugees to avoid giving the children’s bread to the dogs   but the Finance Minister denied that Government needs foreign aid and said accepting aid would be a foreign policy decision, since international aid comes with conditions.

This policy of exploiting altruism of volunteers, NGOs and diaspora mirrors the debacle in 2017-2018 floods, when bureaucrats failed to declare a national disaster, delaying access to the ICRC, fearing accountability while citizens suffered before accepting aid of USD10 million, like Maduro, now receiving aid in brutal bolivarian battlegrounds. Government spent TTD60 million on 2018 flood relief, amply covered by the aid, hence there are funds for flood victims in the award of $227.5 million to Ministry of Social Development in the budget review.

MID YEAR BUDGET REVIEW BY THE MINISTER OF FINANCE

https://www.finance.gov.tt/wp-content/uploads/2019/05/Mid-Year-Review-Presented-by-the-Hon-Minister-of-Finance-May-13-2019-in-the-HoR-1.pdf

“I rise to present the 2019 mid-year budget review in the context of both the global economic situation and our domestic economy and to ask that this House adopt the Second Report of the Standing Finance Committee of the House of Representatives for the Fourth Session (2018/2019), Eleventh Parliament on the consideration of proposals for the Supplementation of Appropriation for the fiscal year 2019.

“On the face of it, global economic growth appears robust. The world economy is projected to expand at a steady pace of 3 per cent in 2019 and 2020 and growth rates in many developed economies are close to their potential, while unemployment rates have fallen to historical lows. Among the developing economies, the Asian regions remain on a strong growth trajectory, while many commodity-exporting countries are continuing a gradual recovery. However, short-term risks are rising, with the potential to disrupt economic activity. These include escalating trade disputes and an undercurrent of geopolitical tensions.

“Trinidad and Tobago must be ever mindful that a small commodity producing economy is vulnerable to exogenous shocks. Government weathered the oil price shock from 2014 to the present. In mid-2014, oil prices were at a high of US$100 per barrel. By the end of 2014, prices had fallen to US$57 . Government expenditure continued up to the election in 2015 as oil prices averaged US$46, sinking to $33. By 2016, oil prices fell to US$26 , averaging US$38 per barrel. Despite a modest recovery since 2016 prices remain volatile. Reduced oil prices affect natural gas prices, which are lower than they were 12 years ago. The shock of 2014/2015 resulted in reduction in annual petroleum revenues of $20 billion, from $28 billion in 2014 to $8 billion in 2016. These figures in Appendix 20 of the 2018 Review of the Economy represent a 38% reduction in Government revenue which few countries can survive. Government stabilized our economy and growth returned.

Domestic Economic Conditions

“In October 2018, the Central Statistical Office estimated that the economy had grown in real terms by 1.9% in 2018, reversing the decline that started in 2014. Since the last Budget Statement, major international agencies, IMF, the United Nations Economic & Policy Analysis Division and the World Bank confirmed our economic recovery. The IMF confirmed that our economy began to improve in 2017 and returned to growth in 2018. I have quarterly GDP figures from Central Statistical Office for 2017 and 2018. In the 2nd quarter of 2017, GDP declined by 5.6%. In the 3 rd quarter, it declined by 3.3% and in the 4 th quarter, it declined by 1.9%. Decline in GDP was slowing as the year progressed, hence the reason the IMF said that our economy began to improve in 2017.

“In the 1st quarter of 2018, GDP switched from negative to positive, growing by 0.9%, followed by growth of 2.1% in the 2 nd quarter of 2018 and growth of 1.5% in the 3 rd quarter of 2018. 3 consecutive quarters of economic growth in 2018 are a clear indication of an economic recovery. In 2015, under very difficult conditions, with a drop in revenue of almost 40%, the new Government put in place a programme of macroeconomic adjustment and reform. This established the framework and policy strategies for paving the way to a resumption of self-sustaining growth and prosperity. By 2018, a disciplined fiscal stance had become a feature of Government’s macroeconomic policy framework to bring expenditure in line with revenue potential. The expenditure-reduction and revenue-enhancement programmes represented a challenging policy agenda. Yet, we kept the programme firmly on-track, acting decisively to adapt and to strengthen policies as events unfolded. We curtailed unproductive spending and embarked on continual improvement in efficiency of operations of Government and the public sector. 2019 budget estimates reflected the results of our efforts when we budgeted for an expenditure of $51.77 billion with revenue of $47.72 billion, supported by public financing of $4.05 billion or a deficit of 2.5 percent of GDP, within international norms. Recovery in a global slowdown was due to the disciplined fiscal strategy embedded in our economic transformation agenda. With the revival of growth now established and projected to stabilize around 2.0 percent annually by 2021, we are strengthening supporting policies, strategies and reforms to ensure that growth over the long-term would be sustainable, bringing lasting employment and greater equality of incomes and opportunities.

“We are ensuring that natural gas production will continue to be a major driver of economic growth. Because of the efforts of our energy sector negotiating teams, natural gas production increased in 2018 to an average of 3.63 billion standard cubic feet per day, an 8 percent increase over the 2017 average of 3.36 bcf per day. Gas production continues to increase and is expected to reach an average of 3.8 bcf per day in 2019. Production is already averaging 3.81 bcf per day in the first quarter of 2019. This data is on the Ministry of Energy website.

“BP announced that it may be unable to guarantee a continued gas supply for Train 1 of the Atlantic LNG plant. 2 BP wells with unsatisfactory results are infill wells in existing gas fields. Unlike exploration wells, infill wells are normally brought into production immediately. One of these infill wells will go into production with lower volumes than anticipated, leaving one unproductive well. In February 2019, gas production almost reached 4.0 bcf per day, the highest production since March 2015! The Ministry of Energy, after consultation with the majors advised that gas production is still expected to average 3.8 bcf per day in 2018.

“BHP Billiton announced the discovery of a significant gas field in 2018, and another encouraging gas find in April 2019 and intends to make a huge financial investment in Trinidad and Tobago. Oil production is projected to stabilize in 2019 and thereafter trend steadily upwards from the current 60,000 barrels per day in 2019 to over 80,000 barrels per day by 2023. This projected expansion is partly due to the performance of the newly established Heritage Petroleum which has begun to ramp up exploration and production, as well as the planned activities of other local oil producers. We envisage resumption of refining at Point a Pierre by December 2019, since strong proposals for reopening the refinery are expected. Caribbean Gas Chemical Methanol to Dimethyl Ether Plant is expected to come on stream later this year.

“Expansion in the energy sector has had a knock-on effect on the non-oil sector. I commend commitment by the Trinidad and Tobago Manufacturers Association (TTMA) to convert Trinidad and Tobago into a model of production for the region by doubling manufacturing output through local and foreign investment. We are supporting this comprehensive manufacturing strategy as we strive to eliminate waste and corruption, improve the national work ethic and the processes for doing business.

“China Harbour Engineering Company will modernize the south-west peninsula with a new dry-dock and shipbuilding/ ship repair facility in La Brea. Market assessment and feasibility studies have been completed and the public-private-partnership arrangement to implement this project would be in place in the near future. Beijing Construction Engineering Group executed a contract in February 2019 for the design and construction of the new Phoenix Park Industrial Estate in Couva. Both projects will generate high-value jobs during the construction and operational phases. The Moruga Agro-Processing and Light Industrial Park will transit from the design stage to the construction stage.

“Our model of economic adjustment minimized the negative impact on citizens. Inflation remains at low levels, at 1 percent in 2018, the lowest in decades. Our social agenda is averting marginalization and alleviating poverty. Our social safety net is protecting the vulnerable from the shortterm costs and dislocation of adjustment:

  •  Eligible former employees of PETROTRIN will soon benefit from a land distribution programme, involving ownership of residential lots and access to agricultural sites with associated financial support;
  •  Vulnerable persons are being supported with effective social policies. The social safety net base for retirees, working families, senior citizens and major vulnerable groups has increased by more than $5,000 since September 2015 from $156,000 to over 161,000 persons.
  •  We distributed over 1,000 additional food cards and 2,500 additional public assistance grants. We increased the number of persons in receipt of senior citizens’ pensions by $1,600 and raised the cap on pensions.

We invested in education, health and housing programmes:

  •  The Government Assistance for Tuition Expenses Programme (GATE), the Higher Education Loan Programme (HELP) and free universal education at primary and secondary schools are generating human resources to meet the requirements of a growing economy;
  •  Our hospital development strategy will provide access to quality healthcare:
    • Arima Hospital is over 75 percent completed;
    • Point Fortin Hospital is over 60 percent completed;
    • The new Sangre Grande Hospital and
    • Reconstruction of Port of Spain General Hospital Central Block are at early stages of work commencement.
    • Delivery of health care at Couva Hospital will commence shortly.

Affordable quality housing is meeting the demand of over 175,000 applicants. We are completing previously stalled projects, with almost 1,000 units delivered. We are initiating new projects to provide safe and affordable housing units for citizens:

Under the Aided Self-Help Housing Programme

– 700 qualifying individuals are preparing to construct their homes on residential service lots developed by the Housing Development Corporation (HDC); under the Housing and Village Improvement Programme;

– 57 homes are being reconstructed or improved in Samuel Cooper Road in Moruga; under the public-private-partnership arrangement

– 201 units are in construction in Cunupia, 72 units in Fyzabad, 160 in Mt Hope, 98 in Trestrail Arima, 58 in Malabar, Arima, 53 in Corinth, 102 in Harmony Hall, Marabella, 86 in Preau Village, Moruga, 210 in South Quay, Port-of-Spain, 65 in Gomez Trace, Moruga and 504 in Curepe.

Involvement of the private sector is being consolidated with the decision of Republic Bank to secure a US$75 million loan from the International Finance Corporation – the private sector arm of the World Bank Group – to assist home construction for middle-income households.

We are ensuring that our housing construction programme, including the public-private-partnership arrangement, is put on a self-sustaining basis, given our objective to complete 6,000 units by 2020 and to roll out 3,000 per annum thereafter. The proceeds of our first issue of housing bonds, at the attractive rate of 4.5% per annum over 12 5 years, due within the next two months, would be utilized to accelerate the housing programme, with the proceeds from mortgages issued by the Trinidad and Tobago Mortgage Finance Company (TTMF) being utilized to finance on an ongoing basis development and sale of houses.

Key attributes of the housing bonds : the bonds would be offered to individuals in the first instance; the bonds would be underwritten so that any bonds not subscribed by individuals would be placed with institutional investors on the secondary market after the close of the bond issue; initial investors with a minimum of $5,000 investment will receive priority for a housing unit, once that investor meets the eligibility criteria of the HDC. With over 75,000 qualified persons on the HDC list, we expect to assist a significant number of persons.

Economic resilience has been anchored on wide ranging infrastructure activity, including expansion of the road network , coastal protection and advances in the delivery of air and sea services to Tobago and port development: San Fernando to Point Fortin Highway was rescued in 2015, with the main contractor in bankruptcy. We recovered $1 billion from the funds for the project and construction is now well underway, with completion scheduled for December 2020;

  •  Churchill Roosevelt Highway Extension to Sangre Grande is being constructed in phases with completion scheduled for January 2020;
  •  The Valencia-Toco Highway is at an advanced stage of design completion and environmental impact assessment;
  •  The Moruga Main Road is being rehabilitated with scheduled completion in 2020;
  •  Coastal protection works are re-establishing communities;
  •  Preparation for the construction of a new modern airport terminal building in Tobago is well advanced.

The Andean Development Bank of Latin America is providing technical assistance for the project and the main terminal is being constructed by a design-build-finance contractor with associated works by sub-contractors with public financing. Construction is scheduled to commence in December 2019, with practical completion by early 2021.

Caribbean Airlines is managing the Airbridge and adjusting its schedule to facilitate smooth travel . In 2018, CAL provided 1,053,910 seats to and from Tobago with usage of 86 percent or 962,302 seats. In the first 3 months CAL provided 250,071 seats with utilization of 223,991 seats or 90 percent. CAL became profitable in 2018.

The Seabridge is being consolidated with the arrival shortly of the new modern fast ferry Jean de La Valette leased for a one-year period, providing additional capacity for 800 passengers and 230 cars. This will join the Galleons Passage and the TT Spirit to provide the necessary surplus capacity to allow maintenance of the existing vessels.

In mid- 2020 the sea bridge will be further upgraded and rationalized with the arrival of two new state-of-the-art fast ferries, under construction for Trinidad and Tobago by Austral Ships Pty Limited and Incat Tasmania Pty Limited. I intend to grant approval to Tobago to raise loan financing on the local market of $300 million for development projects, including health and sport facilities, housing, roads and bridges, coastal protection and the innovative “Intelligent Island” ICT project.

We have completed three- and one-half years of management of the economy, repaired fiscal accounts and addressed collapse in revenues. We expect to stabilize growth at approximately 2.0% annually by 2021. These considerations led the Government in its 2019 Budget Statement to programme revenue and expenditure estimates of $47.72 billion and $51.77 billion respectively with a deficit of $4.05 billion or 2.5% of GDP.

Fiscal consolidation remains an ongoing project with strengthening of tax administration by the proposed Trinidad and Tobago Revenue Authority and the Gambling and Gaming Commission. The Joint Select Committee meetings for these two g institutions have concluded and the reports of the Committees with the amended legislation will be laid in this House for debate and passage. (the Revenue Authority Bill JSC Report was actually laid today)

Public sector debt which had been rising in the context of unavoidable fiscal deficits has stabilized at 62% of GDP in 2018 – well within international benchmarks.

Import demand has been curtailed with imports down to US$5.24 billion in 2018, while exports exceeded imports: at US$8.33 billion in 2018. The country now enjoys a significant balance of payments surplus, a reversal of the 2016 situation, when balance of payments was negative.

Foreign reserves were impacted over the last 3 years, as a result of Government’s policy decision to defend the exchange rate to minimize inflation and avoid the adverse impact of a currency shock on the cost of living. With over 8 months import cover, official gross foreign reserves far exceed typical benchmarks of reserve adequacy. With the expansion of the energy sector reserves are sustainable into the foreseeable future.

Central Bank figures show the decline in foreign reserves slowed considerably, falling only US$150 million between September 2018 and March 2019. Financial buffers remain substantial: on May 3rd, 2019, the Heritage and Stabilization Fund (HSF) reached an all-time high of US$6.1 billion, while foreign exchange reserves at the Central Bank amount to a healthy US$7.3 billion, or a combined amount of US$13.4 billion.

Local banks hold US$2.5 billion for commercial and individual transaction purposes. Sound and stable macroeconomic conditions, particularly low inflation and stable interest rates laid the foundation on which savings and investment are being generated in an environment of certainty with improving prospects for growth. The fiscal outturn for the first half of 2019 for the fiscal accounts points strongly in the direction of fiscal sustainability.

2019 budget was predicated on an oil price of US$65/ barrel and a gas price of US$2.75 MMBtu, from which current prices are not deviating significantly. Global energy prices declined by 17% over the period October 2018 – February 2019, resulting in a loss of revenue, particularly royalties on oil and supplementary petroleum tax. Oil prices fell after a high of US$70 per barrel in October 2018 to a low of US$49 in December 2018; prices have recovered to an average of US$63 in April 2019. Gas prices hover around US$2.65 per MMBtu, down from US$3.26 per MMBtu over the period October 2018 – April 2019 .

Mid-Year Fiscal Outturn

Revenue in the first half of 2019 was $706 million above the programmed revenue estimated in the context of the budgeted $47.72 billion for the year. As a result of tight cash flow, expenditure in the first half of 2019 was $2.55 billion below programmed expenditure, in the context of the total budgeted for the year of $51.77 billion.

The originally estimated fiscal deficit for 2019 was $4.05 billion; but for purposes of administration, with capital revenue programmed for the second half of the year, a deficit of $5.11 billion was programmed for the first 6 months of the year. However, the actual recorded deficit for the first half of 2019 was only $1.85 billion, another indication of prudent management. The achievement of the stabilization objectives with revenue and expenditure now in broad alignment represents a solid foundation on which transformation and growth would now be anchored.

Revenue

The increase in revenue of $706 million in the first half of 2019 was mainly due to higher than anticipated receipts from: taxes on income and profits: $195 million, taxes on international trade: $28 million, non-tax revenue: $105 million and capital revenue: $926 million. These increases were partially offset by lower than anticipated receipts from taxes on goods and services of $578 million.

The better than projected performance of taxes on income and profits was primarily due to higher receipts of $452 million from other non-oil companies. This was offset by lower than projected receipts of $395 million from oil companies, as a result of the 17% decline in oil prices in the first quarter of fiscal 2019.

Non-tax revenue performed above expectations due in the main from equity profits from the Central Bank and state enterprises. Capital revenue was higher than expected due to transactions related to the repayment of debt owed by CLICO to the Government.

Expenditure

Recurrent expenditure for the first 6 months was lower than the anticipated, at $23.63 billion, with reductions in expenditure in goods and services and interest payments amounting to $1.47 billion.

Projected Fiscal Performance for 2019

We recognize the importance of the achievement of sustainable growth, not only the overall fiscal position but the very nature of the expenditure being envisaged. We intend to direct resources into areas which support not only the private sector in its business activities but also in enhancing growth and development, including:

  •  Infrastructure rollout, roads, highways, bridges and hospitals;
  •  Discharging arrears to commercial suppliers and contractors and liquidating VAT refunds – with a view to improving business conditions. As a result of a policy of maintaining key public sector investment, in particular in infrastructure as well as to put tax relations with the commercial sector on a current basis, total expenditure has been revised upwards to $52.07 billion, an increase of approximately $300 million over the budgeted 2019 expenditure of $51.77 billion.

Because of lower oil, total revenue which was budgeted at $47.72 billion is projected to fall by $221.0 million to $47.50 billion with a resultant overall fiscal deficit of $4.57 billion compared with $4.05 billion as budgeted. The oil price used in the 2019 Budget Statement will therefore be adjusted to US$60 per barrel of oil, but with gas prices averaging US$ 3.26 per MMBtu over the period October 2018 – April 2019, the gas price assumption has been revised upwards to US$3.00 per MMBtu from US$2.75 used in the original 2019 budget.

We are providing through supplementation $1.839 billion for the envisaged expenditure in 18 areas:

Judiciary. $57.682 million for salaries and arrears of salaries; for filling vacancies; for arrears of rent for 19 locations; for renewal of subscription for software at the Family Court;

Service Commissions. $3 million for security services and for assessment of senior officials in the public sector;

Office of the Prime Minister. $12 million for operational costs of the Children’s Authority and for payment for children assigned to private community residences;

Ministry of Finance. $709 million to reimburse the Infrastructure Development Fund for financing the exit costs of the Petroleum Company of Trinidad and Tobago. This will ensure adequate funding for the development programme for the rest of the year;

Comptroller of Accounts. $18 million for pensions and gratuities for contract officers;

Ministry of National Security. $200 million for CCTV camera services, janitorial services, for the Civilian Conservation Corp programme and for the Strategic Services Agency;

Ministry of Attorney General and Legal Affairs. $50 million for legal fees;

Ministry of Education. $50 million for examination invigilators; school feeding caterers; and examination fees for students;

Ministry of Labour and Small Enterprise Development. $39.3 million for the OJT programme;

Ministry of Public Utilities. $200 million for outstanding payments to DESALCOTT for desalinated water;

Ministry of Rural Development and Local Government. $39 million for salaries for municipal police officers; for provision of water trucking services and rent at the municipal corporations;

Ministry of Works and Transport. $85.7 million for daily-paid employees and for charter-hire of a new high-speed vessel for the Seabridge;

Police Service. $75 million for salaries and allowances for police officers, for payment of utilities and rent and equipment acquisition.

Ministry of Foreign and CARICOM Affairs. $1.6 million for minor equipment purchases;

Ministry of Communications. $10 million for TTT for live broadcast productions;

Ministry of Social Development and Family Services. $227.5 million for increases in senior citizens pensions and for flood victims;

The Public Sector Investment programme is being increased for:

    • Personnel Department. $2 million to outfit a new building for the staff ;
    • Ministry of National Security. $7 million for maintenance of vessels utilized by the Coast Guard;
    • Ministry of Housing and Urban Development. $48 million to pay contractors for the refurbishment of HDC apartments, for the Housing and Village Improvement Programme and for works in greater Port-of-Spain;
    • Ministry of Foreign and CARICOM Affairs. $4.42 million for refurbishing the Washington Embassy and the London High Commission .

Procurement

The Office of Procurement Regulation (OPR) has 95% of its required staffing. OPR software application is being installed to facilitate the establishment of a database on public procurement, including information of tenders received, the award and value of contracts.

The Procurement Depository, required in accordance with Section 26 of the Act is expected to be accessible within three months. OPR will soon roll out handbooks for the guidance of procuring entities across the state sector. Since the last Report to Parliament in February on the Procurement Regulations, essential for implementation of the Act, OPR reviewed comments submitted by the Ministry of Finance and external Senior Counsel and reverted to the Ministry of Finance at the end of March 2019.

Comments on the redrafted regulations will be submitted by the Ministry of Finance to the Procurement Regulator. Further proclamation of important Sections the Act can be achieved by August 2019. Following Proclamation, the Regulator proposes a workshop for familiarizing procuring entities with the Regulations together with a six-month transition period to allow them to fulfill their requirements.

Conclusion

Data from the Central Bank, Central Statistical Office, Ministry of Finance, Ministry of Energy and in the public domain, confirms recovery from the oil shock of 2014 to 2016 and a stabilized economy. Local banks are recording unprecedented growth in income and profits. Republic Bank increased annual profits after tax from $1.17 billion in 2015 to $1.32 billion in 2018, a rise of 13%, with total assets rising from $66 billion to $70 billion. First Citizens Bank increased profits after tax from $630 million in 2015 to $674 million in 2018, an increase of 7% and total assets rose from $37.5 billion to $42 billion over the period.

This information is available on websites of the banks. On consumer credit, the net credit to the private sector by banks and lending institutions, a well-established indicator of private sector investment and consumer confidence, grew from $51 billion in December 2015 to $58 billion in December 2018, an increase of $7 billion or 14% over the period.

Year on year, retail prices rose by only 0.8% between March 2018 and March 2019, while food inflation was contained at 2% year on year. These are some of the lowest inflation rates for decades, a direct result of fiscal and monetary policy.

Total life insurance contracts grew from $3.8 billion in 2015 to $4.4 billion in 2018. Other indicators of the health of the insurance industry, such as total assets, annuities, deposits, mutual funds, all show significant growth over the last 3 years.

Total money supply in circulation rose from $85 billion to $89 billion over the last 3 years. Mortgage lending for home ownership increased significantly since 2015. Vehicle sales continue at an average rate of over 25,000 new registrations per year, with the total number of vehicles now over the 1 million mark! This data is available on the Central Bank website.

These positive developments over the last 3 ½ years established a foundation for expansionary initiatives. Accordingly, we see no need to impose additional burdens on citizens. In this context, to allow the Revenue Authority to start with a clean slate, I wish to announce a 3-month tax amnesty in this year, starting in mid-June 2019 and extending to mid-September 2019.

This amnesty will extend to ALL forms of taxation and appropriate legislation to give effect to this measure will be introduced within weeks. Taxpayers are urged to take advantage of this amnesty, file outstanding returns and pay their back taxes, because once the new Revenue Authority comes on stream, future amnesties are unlikely. Success is the result of a vision conceptualized out of office and implemented in office.

No other road would have brought such success. Growth of real incomes is among our principal objectives as the only means of securing rising living standards on a sustained basis. We are changing gears to achieve this objective and to put this economy on a clear path to progress and prosperity.

I commend to this House the Report of the Standing Finance Committee and the supplementation of 2019 Appropriation in the sum of $1,839,189,300. I thank you and I beg to move.”