$800 billion later, where are we? – Part 2

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Eighteen years into the 21st century, and almost $800 billion spent in annual budgeting, Trinidad and Tobago still finds itself at the mercy of global economic shocks and price fluctuations in oil and gas.

The economy is not diversified and issues such as employment and foreign exchange continue to strangle our nation’s progress.

A great deal of debate exists today about the economy, but centres on who spent money, corruption allegations and wastage.

Since the year 2000, the PNM has governed for over 11 years, and the UNC has governed for six years; yet the debate from the PNM side places Trinidad and Tobago’s underdevelopment squarely on the shoulders of political opponents.

The TTWhistleblower today continues a multi-part analysis of how almost $800 billion came and went, leaving Trinidad and Tobago facing serious economic challenges in 2018.

Strangling the golden goose

As if the sins of the 2001 to 2010 period already covered were not enough, the wastage and corruption that brought us to our current circumstances run even deeper.

Huge budgetary increases were afforded to the Manning.

Administration by the substantial increases in global energy prices, but as we have established, the energy sector began a slide because of poor policy and management, which failed to inspire new exploration and production programmes.

One of the major failures was in the Manning Administration’s 2006 Deep Water Bid Round which, because of the prevailing uncompetitive fiscal regime attracted few bidders, the last of which eventually withdrew because of a failure to advance negotiations.

But that was not the only reason the energy sector was declining, in spite of the central role it played to economic stability; Petrotrin took centre-stage becoming the strangled goose that was laying the golden eggs.

The scandals at Petrotrin which involved World GTL was initiated by Ken Julien at a time when Dr Lenny Saith was the Minister of Energy in the Manning Administration. Dr Saith is the husband of Radhica Saith (nee Seukeran) who is the elder sister of Faris Al-Rawi’s mother, Diane Seukeran.

Petrotrin would eventually suffer TT$15.3 Billion in losses as a result of expenditure and investment deals that failed to benefit the nation’s largest oil producer, a sin for which the company is still paying.

Ken Julien met and brought World GTL to Trinidad and Tobago in March 2004, with a proposal for a Gas to Liquids Plant; the agreement brought by Julien and WGTL promised patented, new technology; project management, and financing to complete a GTL plant in 18 months.

By 2006, when a cash crisis faced WGTL threatening insolvency, Malcolm Jones wrote to Credit Suisse in New York, promising that Petrotrin would approve a loan of US$125M (so cash rich was Petrotrin before its PNM-instigated collapse). This decision was NOT taken by a formal Board meeting, but by a ‘round robin’ or call-around to key Directors.

In 2009, WGTL was put into receivership and Petrotrin was called upon to pay over $3B back to Credit Suisse – left holding the bag of a failed project. On 16 February 2016, a meeting was held with Al-Rawi and the legal team advising on the issue of legal proceedings, and the Petrotrin Board met within 48 hours to take a decision to withdraw court action against Malcolm Jones.

Gas based economy

Despite the claims of higher oil prices giving Trinidad and Tobago the capacity for increased budgeting, the economy had already long been classified as a gas-based economy with its natural gas production and exports gaining a higher part of the ratio in revenue generation.

But even in natural gas, the Manning Administration’s energy policy appeared to fail to create energy sustainability which could have footed the bill for a strong move into economic diversification.

Warnings about implementing the LNG Train IV project, which would have overstretched the nation’s ability to produce and provide natural gas to industry, were ignored.

Talks and agreements on the cross border gas field, Loran Manatee, were ongoing for years. The gas field contains approximately 10 trillion cubic feet (TCF) of natural gas which, when split by territorial borders would have put almost three TCF of gas into the hands of Trinidad and Tobago.

Despite numerous attempts over a number of years, the Manning Administration seemed incapable of pushing the agreement to the point of production. It was the Persad-Bissessar Administration of 2010 to 2015 that finally took the negotiations forward into final agreement.

More than just that, however, was the industrialization policy of the Manning Administration that seemed to overstep this country’s ability to produce natural gas for industrial use.

It was in October 2006 that former President of the National Gas Company (NGC), Frank Lok Kin, warned about the bringing to fruition of the Liquefied Natural Gas (LNG) Train IV.

Lok Kin told a Natural Gas Conference hosted by the Energy Chamber at that time: “The size of the gas-using plants we are looking at today is considerably bigger than before. We are therefore committing significant portions of our reserve base to support these industries, and have to be very careful how we do that.”

The NGC president noted that the proposed Atlantic Liquefied National Gas Train 4, with a gas demand of 800 million cubic feet per day, will need 5 TCF of gas over 20 years. He pointed out that: “One LNG train is going to equal the gas demand of all the plants at the Pt Lisas estate today.”

At the same conference, Helena Inniss-King, then a Senior Geologist Ministry of Energy and Energy Industries, projected that with the advent of Train 4 in 2005, the proven reserves to production ratio (RP ratio) could fall below 15 years.

But this was not all, as the TTWhistleblower dealt extensively with how the Manning Administration’s failure to prudently manage the gas sector created a protracted decline in gas production and availability. You can see these analyses, entitled “Economic double whammy: Declines in Energy and Non-energy sectors” in Part 1, Part 2 and Part 3.

Readers will note that it was the Persad-Bissessar Administration, by policy and negotiation, that managed to halt and reverse declining gas production. The benefits of these policies are now being reaped with an anticipated rise in gas production and increased availability to industry in 2018.

Criminals everywhere

The long and winding road of economics was not the only factor that hurt Trinidad and Tobago’s economy. The impact of rising crime and violence had a particularly damaging effect on the corporate sector and foreign direct investment.

This is not just the word of the TTWhistleblower; CNC3 was very clear on the genesis and effect of crime in its special report on Patrick Manning:

The number of murders increased sharply from 93 in 1999 to 509 in 2009. Additionally, 2008 saw the country’s highest number of murders with 550. The Prime Minister’s explanation was that the crime problem was a result of the illegal drug and arms trade.”

“His speech at the 5th summit of the Americas points to the fact that the Caribbean is situated between the narcotic producing South American continent and the narcotic consuming North American continent. Some of his crime detection and prevention methods included the introduction of the Special Anti-Crime Unit of Trinidad and Tobago (SAUTT), two surveillance airships (commonly referred to as blimps), and the inclusion of six high speed off-shore patrol vessels for better control of the country’s maritime borders and coastlines on 15 February 2010. Manning was quoted as saying that the country could expect to see a 50% decrease in crime because of this effort.”

By the time a new Government succeeded Manning, most would remember the facts that emerged on how special units of the protective services were used – for spying.

Spying was a fixture for members of the Opposition, journalists and even the then President, despite the fact that crime and violence increased on a daily basis into the 2010 general election.

$400 billion later…

By the time Manning demitted office in 2010 following a landslide victory by Kamla Persad-Bissessar, Trinidad and Tobago had spent approximately $400 billion which left the new Prime Minister with a dubious inheritance:

  • Approximately $4 billion in outstanding wage agreement settlements that were stalled and stifled by the PNM;
  • Almost $4 billion in VAT refunds owed to businesses;
  • A budget deficit already in place of TT$6.8 billion;
  • Debts amounting to TT$7 billion to contractors on projects that were already over-budget, delayed and incomplete. All the money spent, but projects incomplete and contractors weren’t paid;
  • Debts totaling TT$4 billion at WASA, at a time when only 17 percent of this country received a reliable water supply;
  • Corruption, losses and failed investments amounting to a $15 billion ball and chain around the ankles of Petrotrin;
  • And, counting only 11 of their mega-projects, combined cost overruns of over TT$4.6 billion.

In part three of this series, we look at the rise of the Kamla Persad-Bissessar Administration and how economic decline was halted and reversed to make way for a new hope.

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