TRINIDAD

Pact with BP, Shell

The government entered into an agreement with Shell and BP over gas pricing and LNG activities.

New pric­ing arrange­ments, ex­ten­sion of the At­lantic LNG Train 1 by a fur­ther five years and the abil­i­ty of the Na­tion­al Gas Com­pa­ny (NGC) to ex­port liqui­fied nat­ur­al gas (LNG) will lead to “significant” financial benefits , including job security in the industry, reeling from refinery regression. Details of the pricing agreement were not revealed. The gas pricing formula followed months of discussions from April in Lon­don.

NGC, N2000 sign gas sales deal

The National Gas Company (NGC) and Nitrogen (2000) Unlimited (N2000) have signed a new gas sales agreement to power the latter’s anhydrous ammonia plant in Point Lisas. While NGC said the commercial terms of the agreement will allow for continued operation of the ammonia plant, it did not disclose the duration of the contract.

NGC and N2000 began negotiations following the conclusion of an agreement for a natural gas supply with Caribbean Nitrogen Company Ltd (CNC) in April.

CNC, N2000’s sister plant, shut down operations at the end of January after failing to resolve a contract negotiation dispute with NGC. After nearly two months of discussions, the parties finally came to an agreement.

The CNC and N2000 plants began production in 2002 and 2004 respectively.

“The parties were able to agree upon and achieve the deadline for the conclusion of negotiations. Agreement was reached on terms and conditions that were acceptable to both parties in keeping with current and prospective industry conditions,” NGC said.

BPTT

BP announced sanction of Cassia Compression and Matapal gas projects in Trinidad 14 December 2018. BP Trinidad and Tobago announced the sanction for two new gas developments offshore Trinidad, Cassia Compression and Matapal. The Cassia Compression project will enable BPTT to access and produce low pressure gas reserves from currently-producing fields in the Greater Cassia Area, maximizing recovery from these existing resources. The project will involve the construction of a new platform, Cassia C, BPTT’s 16th offshore facility. Gas production from the Greater Cassia Area will be routed to Cassia C for compression before being exported via the adjacent existing Cassia B platform. First gas from the facility is expected in 3Q 2021.

BPTT Regional President Claire Fitzpatrick said: “The Cassia Compression project will be important in maintaining the stability of Trinidad’s gas production and the supply to downstream customers and Atlantic LNG. The final investment decision for this project was made possible with the conclusion of the first phase of negotiations with the Government of Trinidad and Tobago, which included resolution of several commercial issues.” The Matapal project will develop the gas resources discovered by BPTT in 2017 with the Savannah exploration well. The project will be a three-well subsea tie-back to the existing Juniper platform. With production capacity of 400 million standard cubic feet of gas a day, first gas from Matapal is expected in 2022. Both the Cassia Compression and Matapal projects represent continued investment and development of BPTT’s acreage and will help ensure that BPTT continues to meet its supply commitments to both Trinidad’s National Gas Company and Atlantic LNG. Notes to editors • Cassia C will be located 57 kilometres off the south-east coast of Trinidad. The platform will have a throughput capacity of 1.2 billion standard cubic feet of gas a day. • The Cassia C jacket will be fabricated in La Brea, Trinidad and the topside structure in Altamira, Mexico.

 Further information BP press office, Houston: +1 281 366 4463,

BP’s LNG footprint below.

Following official closure of Petrotrin, Energy Minister Franklin Khan says newly established companies have rehired 18 former salarymen who faced extinction at the SOC. Heritage Petroleum, the core company, hired 39 senior and middle managers, 16 of whom are former Petrotrin employees. Paria Trading employed three senior managers, two of them former Petrotrin employees. Guaracara Refining will be the custodian of the refinery assets and with limited employment. Khan was willing to supply the titles of positions, but terms and conditions should be confidential to the employee. Employees who contributed to the Petrotrin Employees Pension Plan received benefits statements before the date of closure but Khan could not say whether the statements were audited.

All plants and processing plants at the Petrotrin refinery have been safely shut down in accordance with proper environmental practices. Hydrocarbons were removed and the processing plants placed under a nitrogen atmosphere, an inert atmosphere, to prevent corrosion, fires and ignitions. The refinery is closed, the steam plants down and “everything is safe.” Government was now seeking a request for proposal (RFP) for someone to run the refinery. It was a routine operation and a CEC was not needed. Activities were conducted in consultation with the EMA and under the authority’s supervision.

While there were no employees at present at Guaracara, third-party service contracts have been awarded. Staff are monitoring the refinery, supervising the refinery and doing maintenance work. The contract was awarded via a public RFP and was won by Damus Ltd.

THE Opposition Leader said it was a “dark day” as Petrotrin’s light went out with thousands being laid off work. “The economic calamity and catastrophe is … the death and closure of Petrotrin.”

GOLDEN GOODBYE

Petrotrin stated $2.7 billion in “exit payments” had been paid into employees accounts. Some employees would have to wait for the funds to “reach their accounts.” “The payments disbursed comprised $1.8 billion in termination packages; $201 million for outstanding vacation; $560 million in back pay; $150 million for medical and other benefits; and $55 million in payments for outstanding promotions. All 3,400 permanent employees will receive exit payments and 1,229 or 55 per cent of the company’s temporary workers received ex gratia payments.” Petrotrin chairman Wilfred Espinet said: “This is a difficult time … and we hope that everyone affected is able to establish a positive and secure future …. Given the size of the disbursement and the mix of payments, the funds would not reach all employees accounts before midnight on November 30.”

Petrotrin “withheld the employees’ potential tax liability and placed these funds in escrow” to avoid delays in disbursing payments. “The Company will remit the withheld funds once employees have satisfied the Board of Inland Revenue that their taxes are up-to-date. Following the closure of operations, the Company will continue to ensure that affected persons and their families will have access to support services for the next six months – services include stress management, change management and financial counselling.” Petrotrin employees who held their own press briefing said the failure to inform them about the income tax requirements was another example of disrespect from the company.

Trinidad Petroleum Holdings Ltd, the new holding company that will manage the assets of a deconstructed Petrotrin, said commercial banks expect the transfers to be completed and all workers should have their funds in their accounts. The payments are part of the company’s $1.8 billion in termination packages, $201 million for outstanding vacation, $560 million in backpay, $150 million for medical and other benefits and $55 million in payments for outstanding promotions.

3,400 permanent employees received exit payments and 1,229 or 55 per cent of the company’s temporary workers received ex gratia payments.

The company claimed that since $2.7 billion was “unprecedented” it took longer than anticipated to process.

Trinidad Petroleum had been “forced to suspend all access to its facilities by non-essential personnel following several incidents of vandalism, sabotage and obstruction by union members and other workers. The damage and destruction included vandalism to mobile oil field equipment, a fire tender, state property and privately owned vehicles.

The closure was critical to ensure the safety and well-being of all legitimate personnel and to protect and preserve valuable state assets. With immediate effect, only people with valid identification, specific company passes and who are listed for access will be allowed into the facilities, no exceptions.

Heritage Petroleum Company Ltd, established to take over Petrotrin’s exploration and production business, was investigating “acts of sabotage” on one of its lines in Grand Reviere, Rancho Quemado. A 2.7-inch flow line was visibly severed and about five barrels of oil spilled. The spill was contained in an area of about 20 feet and there was no environmental damage. The line has been repaired and about 80 per cent of the oil recovered. The company was working with the authorities and plans to ensure those responsible are prosecuted.

Fires burned in the old drilling of­fice and can­teen at Petrotrin LNE, San­ta Flo­ra, rem­nants of the chaot­ic scenes that un­fold­ed as work­ers were of­fi­cial­ly ter­mi­nat­ed from the SOC.

At the en­trance of the ad­min­is­tra­tion build­ing where con­trac­tors were installing the sign and flags bear­ing the Her­itage Pe­tro­le­um Com­pa­ny Ltd name and lo­go, smoke rose from the ash­es of doc­u­ments and oth­er of­fice sup­plies burnt at the gate.

At Trin­mar Op­er­a­tions in Point Fortin, armed mil­i­tary of­fi­cers were de­ployed to the base to re­move work­ers who had re­fused to leave un­til they were paid.

OWTU Trin­mar said work­ers had not been paid mon­ey for salaries was is­sued late by the Gov­ern­ment. Work­ers stayed up un­til mid­night and were then told that pay­roll of­fi­cers were strug­gling to get all the in­for­ma­tion processed.

“It is un­fair to work­ers af­ter the com­pa­ny gave a com­mit­ment in writ­ing that on or be­fore No­vem­ber 30 they will pay work­ers all that they were of­fer­ing. The union ob­tained a court or­der af­ter it filed an in­dus­tri­al re­la­tions of­fence against Petrotrin. The union and Petrotrin … out­lined all the is­sues with re­gard to pay­ment. The com­pa­ny gave a com­mit­ment that the work­ers would have been paid … and they didn’t de­liv­er …. .. it is De­cem­ber 1 and work­ers have not re­ceived their mon­ey. We are call­ing for jus­tice for 1,100 ca­su­al work­ers who have gone home with noth­ing … The com­pa­ny has been disin­gen­u­ous .. nu­mer­ous court rul­ings .. showed that these work­ers would have been on the in­side and would have been con­sid­ered as reg­u­lar work­ers and en­ti­tled to com­pen­sa­tion or ex-gra­tia pay­ments.”

The Min­is­ters of En­er­gy and Fi­nance were asked to ho­n­our their com­mit­ment and en­sure all work­ers are paid. Prime Min­is­ter Row­ley was asked not to re­nege on his promise that the union would be giv­en pref­er­ence to pur­chase the Pointe-a-Pierre re­fin­ery with favourable con­di­tions. The union has part­ners in place and is pre­pared to make a move soon.

Ken­son was award­ed a con­tract to sup­ply man­pow­er for off­shore op­er­a­tions at Trin­mar. Damus Ltd was re­cruit­ed to sup­ply man­pow­er to the Guaracara Re­fin­ing Com­pa­ny Ltd, lo­cat­ed at the Pointe-a-Pierre Re­fin­ery.

Ri­ots and con­fronta­tion led to Amal­ga­mat­ed Se­cu­ri­ty be­ing de­ployed to man fa­cil­i­ties in Point Fortin, San­ta Flo­ra, Point-a-Pierre and Pe­nal. These once vi­brant assets are vir­tu­al ghost towns. The on­ly area with op­er­a­tions was the Pointe-a-Pierre bond where tankers were fill­ing fu­el for ser­vice sta­tions. The sign that once read Petrotrin has now been re­placed with a Paria Fu­el Trad­ing Com­pa­ny sign.

Sol­diers over­saw the re­moval of equip­ment while po­lice pa­trolled . Five fires were set at de­funct build­ings at Petrotrin LNE . Mo­bile drilling rigs were dri­ven in­to the road and their tyres slashed to block en­try in­to San­ta Flo­ra.

Po­lice cau­tioned against ma­li­cious­ dam­age­ of state prop­er­ty, the build­ing, equip­ment and premis­es of Her­itage Pe­tro­le­um Com­pa­ny. The Po­lice Com­mis­sion­er not­ed the con­cerns re­gard­ing the com­pa­ny’s premis­es. Of­fi­cers would main­tain ac­tive pa­trols to pre­vent fur­ther acts. Per­sons were warned against tam­per­ing with ma­chin­ery and equip­ment and tres­pass­ing on the com­pound. Any per­son found com­mit­ting or con­spir­ing to com­mit of­fences would be ar­rest­ed and charged.

Politicians con­demned the clo­sure of the com­pa­ny. Not on­ly was Petrotrin de­stroyed but al­so the lives of work­ers and the econ­o­my . Gov­ern­ment is guilty of per­pe­trat­ing a griev­ous act on the ba­sis of a false pro­pa­gan­da nar­ra­tive. “On­ly to­day has the coun­try be­gun to ful­ly ap­pre­ci­ate some of the truth of the sit­u­a­tion.”

Her­itage Pe­tro­le­um probes sev­ered line

Her­itage is work­ing with au­thor­i­ties to find the par­ties re­spon­si­ble for sab­o­tage on one of its lines in Grand Re­viere, Ran­cho Que­ma­do. The com­pa­ny plans to use all le­gal means to en­sure they are pros­e­cut­ed. The line is now op­er­a­tional. All reg­u­la­to­ry agen­cies, in­clud­ing the Min­istry of En­er­gy and En­er­gy Af­fairs, En­vi­ron­men­tal Man­age­ment Au­thor­i­ty (EMA) and the Oc­cu­pa­tion­al Safe­ty and Health Agency (OS­HA) were no­ti­fied. The com­pa­ny is com­mit­ted to en­sur­ing that all its as­sets and peo­ple op­er­ate safe­ly and with­in the law.

Her­itage Pe­tro­le­um Com­pa­ny CEO Mike Wi­ley was “on the ground” vis­it­ing San­ta Flo­ra lo­ca­tions to en­sure the se­cu­ri­ty of in­stal­la­tions as the com­pa­ny be­gan work.

Trinidad Pe­tro­le­um Hold­ings Com­pa­ny (TPHC) chair­man Wil­fred Es­pinet con­firmed the sit­u­a­tion fol­low­ing Wi­ley’s first of­fi­cial day of op­er­a­tions. On the over­all start-up of op­er­a­tions of the re­struc­tured SOC fol­low­ing the of­fi­cial shut­down , Es­pinet said, “There was no in­ter­rup­tion of op­er­a­tions and the tran­si­tion went off with­out event. The re­spec­tive planned ac­tiv­i­ty of all the new com­pa­nies went off with­out hitch and we’re now con­cen­trat­ing on en­sur­ing that these op­er­a­tions are at the lev­el of ef­fi­cien­cy they were de­signed for.”

TPHC is the hold­ing com­pa­ny which suc­ceed­ed Petrotrin fol­low­ing clo­sure of op­er­a­tions and start of the re­struc­tured en­er­gy company. Apart from Her­itage Pe­tro­le­um, the Paria Fu­el Trade com­pa­ny (which is han­dling fu­el trad­ing/bunker­ing) al­so be­gan op­er­a­tions. Guaracara Re­fin­ing com­pa­ny which cov­ers the now-de­funct re­fin­ery as­sets, is not in op­er­a­tion. Damus Ltd is en­sur­ing re­fin­ery preser­va­tion, main­te­nance and su­per­vi­sion,

Her­itage’s op­er­a­tions in­clude wells un­der the com­pa­ny’s con­trol and con­trac­tu­al pro­duc­tion-shar­ing arrange­ments with oth­er par­ties. At the Her­itage plant, Wi­ley, met his man­age­ment team and en­sur­ed all sites were safe fol­low­ing in­ci­dents with out­go­ing work­ers. Her­itage de­scribed those cas­es as “iso­lat­ed mi­nor” in­ci­dents where “a tyre was slashed and the like,” but there was no co-or­di­nat­ed ac­tion. Se­cu­ri­ty has in­creased at all com­pa­ny lo­ca­tions since the sit­u­a­tion and there have been no more in­ci­dents.

At Guaracara Re­fin­ing Com­pa­ny, Es­pinet said there are queries about the re­fin­ery from in­ter­est­ed par­ties. “But we’re not in­volved in this (yet), those things have a less­er pri­or­i­ty than the safe op­er­a­tions of the new com­pa­nies which start­ed. Damus will be on site at the re­fin­ery un­til we is­sue the Re­quests for Pro­pos­als in­ter­na­tion­al­ly for of­fers of in­ter­est in the re­fin­ery. We’re con­cen­trat­ing on get­ting the re­quired ex­per­tise to help us in­sti­tute the RF­Ps. I’d hope the process will start soon and the RF­Ps may be out by Jan­u­ary.”

TPH­CL hold­ing com­pa­ny said pay­outs have ended for salaries, ter­mi­na­tion back­pay, out­stand­ing va­ca­tion pay­ments and pay­ment for processed pro­mo­tions .

BIR re­quired em­ploy­ees to file tax re­turns for 2017 to process the tax-ex­emp­tions on their ter­mi­na­tion pay­ments. Em­ploy­ees were asked to sub­mit a copy of their tax sta­tus.  Fail­ure to sub­mit doc­u­ments would re­sult in the funds be­ing re­mit­ted to the BIR.

Ce­dros coun­cil­lor Shankar Teelucks­ingh, a lo­gis­tics su­per­vi­sor at Trin­mar Op­er­a­tions said it was un­for­tu­nate the com­pa­ny took this po­si­tion be­cause as a law-abid­ing cit­i­zen he filed his tax­es on time. He logged on­to the In­land Rev­enue Di­vi­sion e-Tax page and got the state­ment of his tax­es. The com­pa­ny could have done the same . “Why is it they are pe­nal­is­ing me as an em­ploy­ee for what the Prime Min­is­ter promised, that un­der $500,000 will be tax-free. Al­most $175,000 in tax­es they with­held for me as an em­ploy­ee.”

Per­ry­lal Sinanan, due to re­tire in 2019, said it was shame­ful how the com­pa­ny put work­ers on the bread­line. “Af­ter 37 years, to­day I am in front of the BIR to … file for 2017 and .. no­body knows what is go­ing on here. They just send every­body out .. ..in the field…It is a sad state through­out the coun­try and it will be worse lat­er … I am very sor­ry… this is how the com­pa­ny goes.”

Es­tate Cpl De­osaran Moone­sar, who spent 17 years at the com­pa­ny, said his sev­er­ance was taxed so he filed his tax-re­turn to get an ex­emp­tion. When em­ploy­ees arrived at the Pointe-a-Pierre Re­fin­ery to sub­mit ev­i­dence that tax­es were paid , armed sol­diers and Amal­ga­mat­ed Se­cu­ri­ty of­fi­cers in­formed them that no unau­tho­rised per­sons could en­ter. Trinidad Pe­tro­le­um Hold­ings Ltd (TPHL), the par­ent com­pa­ny of Petrotrin, sus­pend­ed ac­cess to its fa­cil­i­ties af­ter van­dal­ism and sab­o­tage of its as­sets.

Work­ers sent to Petrotrin Sports Club at Guaracara Park to sub­mit doc­u­ments found noth­ing to process the doc­u­ments.

Fired workers weigh uncertain futures

Former Petrotrin employee Shankar Teelucksingh shows the media a copy of a Petrotrin document relating to taxes during an interview at Guaracara Park, Pointe-a-Pierre, yesterday.
On week­days, Shankar Teelucks­ingh would have been in his of­fice at Trin­mar Op­er­a­tions in Point Fortin en­sur­ing there were ad­e­quate re­sources be­ing sent to the off­shore plat­forms to pump the oil that sus­tained the economy for decades.

The shut­down of Petrotrin left a void for those who toiled in the oil­fields. His voice crack­ed when he spoke in Pointe-a-Pierre af­ter he and his col­leagues were blocked at the re­fin­ery gates, where they were in­struct­ed to drop tax doc­u­ments to qual­i­fy for a tax ex­emp­tion on their sev­er­ance pay. “I am feel­ing very dis­heart­ened. My fam­i­ly is be­ing af­fect­ed in terms of our next move…get­ting back on our feet and what is go­ing to hap­pen. I am rea­son­able … I’m speak­ing on Petrotrin/Trin­mar op­er­a­tions, where my sweat, blood and tears re­main in terms of pro­duc­ing oil and gas for the na­tion for the past 33 years.”

Ter­mi­nat­ed work­ers spoke on be­ing job­less. While some had mon­ey that would car­ry them for the next few months un­til an­oth­er job is found, they dreaded being at home. Teelucks­ingh, like oth­ers, is yet to come up with a plan to move on.

While work­ers need to re­tool for new jobs, the grow­ing un­em­ploy­ment rate led to pes­simism . Many ap­plied for jobs in the Paria Fu­el Trad­ing Com­pa­ny and Her­itage Pe­tro­le­um Com­pa­ny Ltd but got no re­ply.

The Ken­son Group of Com­pa­nies was award­ed a con­tract to sup­ply man­pow­er for Her­itage Pe­tro­le­um Com­pa­ny Ltd while Damus Ltd will send work­ers to the Guaracara Re­fin­ing Com­pa­ny Ltd. Ken­son Pro­duc­tion Ser­vices Ltd (KP­SL) ad­ver­tised at least 20 va­can­cies, in­clud­ing con­trol and in­stru­men­ta­tion tech­ni­cian, elec­tri­cal tech­ni­cian, me­chan­i­cal tech­ni­cian, lo­gis­tics co­or­di­na­tor, rig­ger and ware­house at­ten­dant. These po­si­tions were once held by Petrotrin em­ploy­ees who were made re­dun­dant while there was still a need for the jobs they per­formed.

For­mer em­ploy­ees said while an op­er­a­tor got $120 per hour the rates are sig­nif­i­cant­ly less. Elec­tri­cal and in­stru­men­ta­tion tech­ni­cians are be­ing of­fered $74 per hour, health safe­ty and en­vi­ron­ment of­fi­cers $94 per hour and com­pres­sor tech­ni­cians $100.

Teelucks­ingh be­lieves there is no fu­ture for his fam­i­ly and is look­ing to Guyana for a sus­tain­able liv­ing. “My friends in Guyana are en­cour­ag­ing me to come across. I am al­so think­ing about leav­ing … My chil­dren don’t have a fu­ture here as are many oth­er fam­i­lies and we have to think about our next gen­er­a­tion, where they will go and if they will be ex­posed to min­i­mum wage to work in the oil in­dus­try while CEO’s from for­eign coun­tries come here and work for al­most $.5 mil­lion.”

OWTU

Petrotrin work­ers protest­ed in front of the Pointe-a-Pierre re­fin­ery, marching in a cir­cle block­ing the en­trance to the bond. de­mand­ing sev­er­ance and back pay, as po­lice and sol­diers stood guard. The gate was locked by Amal­ga­mat­ed Se­cu­ri­ty. Gas tankers were rerout­ed through an­oth­er en­trance. 1,000 per­ma­nent and tem­po­rary work­ers were promised sev­er­ance and back pay monies.

“.. we were told …, they have man­pow­er chal­lenges un­der PWC (Price Wa­ter­house Coop­ers) and they are un­able to tell us when they will be able to make that pay­ment…. 1,000 work­ers … are now fac­ing Christ­mas with­out any in­come and with­out any em­ploy­ment.”

Ag­griev­ed work­ers in­tend to con­tin­ue the ac­tion un­til they get an an­swer . The com­pa­ny was now be­ing man­aged by PWC who ap­point­ed one or two peo­ple to man­age ben­e­fit, pen­sions etc, but those peo­ple were get­ting their ad­vice from PWC. “They can’t give any an­swer with re­spect to pay­ment. I would have con­tact­ed them via tele­phone and they would have ad­vised me that right now they are heav­i­ly con­strained and un­able to tell us when we will be paid.” Per­ma­nent and tem­po­rary work­ers were taxed 25 per cent.

Work­ers filed tax re­turns and sub­mit­ted proof to the com­pa­ny last week. They are un­able to ad­vise when and if they can’t com­plete it by a cer­tain time they will still be re­mit­ting tax funds to the BIR. “So we will now have to wait un­til a TD4 is sent to us to file our tax re­turns to get our mon­ey back that they took from us this year.” A work­er who was not paid was sen­tenced to one year in prison. “… work­ers are frus­trat­ed and an­gry.  “We .. have been vil­i­fied by our very own gov­ern­ment …. we can’t even in­quire about what we are en­ti­tled to.” Oth­er work­ers received a very small ex gra­tia pay­ment. “So … some­body .. work­ing .. for over 30 years .. left with .. $20 to $30,000 … they tax it 25 per cent and .. .. it is not a sev­er­ance, so they can’t get that mon­ey back. ..tem­po­rary work­ers .. worked for over 20 years and nev­er re­ceive one gra­tu­ity pay­ment be­cause they on­ly pay a gra­tu­ity if you work for more than 12 weeks. So the com­pa­ny ..work you for 11 weeks or less.”

Economy slowing

Central Bank in its quarterly monetary policy announcement reported primary economic indicators are down, as growth slackened and inflation remains “sluggish” because of weak domestic demand.

After a rise in economic activity late 2017 and into the first half of 2018, spurred by Juniper and other energy projects coming on stream, growth has slowed.

Following a “positive out turn in the first half of 2018,” production indicators in the third quarter showed declines. The year-on-year increase in natural gas production waned and several natural gas facilities shut down for maintenance within that period. Crude oil production fell and methanol output was down because of repair work to plants.

Preliminary non-energy indicators were lower in the third quarter of 2018 year-on- year, particularly construction and distribution.

Inflation remained steady and low at one per cent, compared to the same period last year, with food prices contracting and core inflation (minus food) steady. High prices for fresh vegetables after the late October/November floods were offset by lower prices for dried vegetables, fruit and meat. The $1 per litre increase in super gasoline from October caused only a small rise in general transportation costs to date. Throughout 2018 domestic inflationary impulses have been very muted in the context of sluggish demand.

The bank’s decision to raise interest rates in June to mitigate widening negative differentials between TT and US-denominated treasury bonds appears to have not had the desired effect, as the gap is increasing.

The interest rate differential in June was -74 basis points but that has increased to -89 to -112 basis points (one basis point is equal to 0.01 per cent), meaning the rate of return for TT treasury bonds is even less attractive compared to US treasury bonds. The widening gap could lead to local investors preferring to invest in the foreign bond market. The US Federal Reserve raised interest rates, from a range of 2.0 to 2.25 per cent to 2.25 to 2.5 per cent. The Central Bank raised the repo rate in June in a bid to narrow the differential and make TT treasury bonds more attractive, but prevailing “sluggish” economic conditions have led them to hold rates steady despite rising US interest rates.

Since the repo rate is effectively the interest rate commercial banks pay the Central Bank for storing excess funds overnight, any repo rate increase almost always results in commercial lending rates going up. Less than a month after the repo rate announcement, commercial banks started increasing lending rates. Information to September 2018 showed a slight narrowing in commercial bank interest spreads (difference between lending and borrowing rates) since the repo rate increase. Consumer lending did increase 7.1 per cent year-on-year in October, but lending to businesses contracted by 1.3 per cent, reversing a trend from the start of the year.

The Monetary Policy Committee (MPC) considered the implications of international financial developments and prospects for external balances. It noted that the domestic growth momentum appeared to have slackened in the third quarter while inflation remained very low. The next monetary policy announcement is expected at the end of March next year.

The monetary policy announcement indicates that the economy continues to be in a troubled state and raises much more questions, said head of the UWI Department of Economics, Dr Roger Hosein. “When will we learn that volatility in the energy sector slows down the economy as a whole? We need to establish a block of interventions that promotes the non-energy export sector in particular to benefit from sustainable long term economic growth.” While the inflation rate may be low, other aspects of the economy require attention- rising unemployment, rising external debt, the murder rate and worsening trends in ease of doing business and other rankings. The high proportion of government expenditure towards transfers and subsidies has to be more prudently managed.

While 2018 was not the best year in post-independence growth performance, it was important because the economy returned to real gross domestic product growth after several years of negative. The economy is dragging along and the state must find novel ways to revitalise it since old strategies are failing. Experts encourage the state to eschew a narrow focus on gas-led growth for a broader based, sounder platform that is more sustainable. There are flashes of such efforts and removal of the fuel subsidy is a sign of a government willing and able to make changes.

OBITUARY

Dr. Nor­bert Joseph Mas­son.   1934 – 2019

A graduate of Loughborough University, Royal School of Mines Imperial College London and Leeds University, he worked at Shell Trinidad.  He was a Regional Technical Trainee, United British Oilfields of Trinidad and Tobago,

Shell Scholar (UBOT). Exploitation Engineer, Shell Trinidad, Principal John S. Donaldson Technical Institute.  Director, Metrication Board, Ministry of Industry and Commerce,  Permanent Secretary, Ministry of Education, Culture, Sports, Community Development and Youth Affairs and Director, Institute of Marine Affairs