Oil production in Trinidad and Tobago came down to the lowest point since the 1950s during the month of February this year as the Caribbean energy producing country continues to face challenges in its economy.
Former energy minister Kevin Ramnarine says the economy contracted in 2016, 2017 and 2018 and while there are no official GDP figures from the Central Statistical Office for 2019, it is likely there was no growth in that year, a view supported by the IMF and Standard & Poor’s (S&P).
“We last had four consecutive years of economic contraction from 1986 to 1989. Before COVID-19, the outlook for 2020 was marked by falling natural gas production and low natural gas prices.,” he said. “As a result of COVID-19, the IMF has revised its forecast for 2020 to -4.5 per cent. If realised the cumulative decline in real GDP for the period 2016 to 2020 would be an estimated -13 per cent. To make matters worse, the IMF’s -4.5 per cent may be conservative.”
In an op-ed in Newsday, Ramnarine said the sharp decline in energy prices in 2014-2016 led to the lowest government revenue in the last ten years of $36.2 billion (2017) compared to the highest, $58.4 billion (2014). “On March 26, the Minister of Finance suggested the fall in revenue in 2020 would be around $7 billion. On April 27, he said it would be $9.2 billion, with a deficit of around $15.5 billion. I suggest that the shortfall in revenue will be in excess of $12 billion, with the deficit approaching $19 billion.”
He said if realised, the minister may be headed back to the Heritage and Stabilisation Fund or to the debt market soon. The Government could also access the IMF’s Rapid Financing Instrument, as is being done by Jamaica.
Ramnarine said the outlook remained gloomy In the wider energy sector considering that four plants in Point Lisas are closed at present and the refinery has now been closed for the last 16 months. Each day that it stays closed he said it becomes more expensive to restart.
“In February, oil production was 55,685 barrels per day, the lowest production since the early 1950s,” he stated, adding that in the current circumstances, about 70-80 per cent of energy revenue comes from natural gas, inclusive of the National Gas Company’s contribution to the treasury.
However, the former energy minister asserts that the twin island republic “is not beyond redemption” and must navigate the fog of uncertainty. “Victory requires unity of purpose and leadership on a Rooseveltian scale,” he stated.