On the eve of a statement today from Prime Minister Kamla Persad-Bissessar about the impact of falling oil prices on the state of the economy, Energy Minister Kevin Ramnarine says he is certain the sector will withstand the period of falling oil prices.
Addressing major energy sector players at the opening of Phoenix Park Gas Processors Ltd’s (PPGL) administration building at Couva yesterday, Ramnarine said the outlook for the energy sector for 2015 remained very strong. He also expects 2015 to be a very strong year of investment in the energy sector. “We have faced these challenges before,” Ramnarine said, pointing out that he did not want to pre-empt what the PM will say on the subject today in the Parliament.
“Of course the revenue will be impacted and we are very concerned but our energy sector is strong and its strength will be tested by the low price environment,” he added. The revenue stream from the energy sector contributes to 50 per cent of Government’s overall revenue, with 16 per cent coming from PPGL, which, he said, was established during a very difficult economic period in this country in 1989.
PPGL has now become the largest gas processing facility in the western hemisphere and the axis of the gas industry in T&T, he said. Answering questions from the media, Ramnarine said so far low oil prices had not affected the capital investment programme for 2015. He said he spoke with the CEOs of all the major energy companies in T&T about that on Monday.
"I started off with bpTT and I spoke to BHP, BGTT, I spoke to Mr Indar Maharaj, who is our president of the NGC this morning (Wednesday). “The capital investment programme for 2015 from the energy sector is very significant and it has not been affected thus far by the downturn in international oil prices and gas prices," he said.
He assured: "The companies are constantly being looked at, their capital investment, but the feedback coming to the Ministry of Energy thus far is that the capital investment programme for 2015 will hold." As to whether Government will have to adjust its fiscal regime to attract investment in light of falling oil prices, Ramnarine said back in the late 1980s there was an adjustment to the tax rate. He said they have done a lot of work with the fiscal regime in the last four years.
"But we are now in a different world from where we were in 2011 and 2012. There is a Cabinet-appointed committee chaired by PS Vishnu Dhanpaul that looks, on a regular basis, at the fiscal regime and would recommend changes,” he noted. He also said Government may look at the tax regime governing the sector, as some people have recommended tax breaks as an incentive to keep the investment flowing.
"In the price environment that you have right now, you have to continue to attract investment. "Yes, we will look at the tax regime governing the sector. The Prime Minister has said that we will meet with all the sectors in the business community to hear what their views are but that is definitely a possibility," he said.