Energy chamber advocates for fair returns

YVONNE WEBB

THE Energy Chamber has thrown its support behind government’s stated position that the people must receive a fair economic rent for the extraction of TT’s natural resources.

In the same breath, however, the Chamber is cautioning Prime Minister Dr Keith Rowley to tread carefully with plans he spelled out in terms of renegotiating contracts that are not yet up for renewal. It also reminded Rowley of TT’s reputation as respecting commercial contracts, a reputation the chamber argued, must be maintained.

The Chamber’s remarks followed statements made by Rowley last Wednesday at the Spotlight on Energy conference about the possibility of renewing LNG contracts, long before they are due to expire. This in order to afford citizens an opportunity to benefit from TT’s oil and gas wealth.

“There is a willingness not to treat contracts as cast in stone. While contracts bind us to terms and conditions, if the conditions in the global energy market have changed dramatically, then the reopening and renegotiation is a reasonable demand on the people of TT,” Rowley said on Wednesday at the conference.

The first 20-year contract for LNG Train 1 is scheduled to expire later this year.

The contracts for the other trains, which are also for a period of 20 years are not due for renewal in between four and seven years time.

The PM’s statement has garnered criticisms from players in the industry including former Minister in the Ministry of Finance Mariano Browne, former Energy Minister Kevin Ramnarine and former Prime Minister Kamla Persad-Bissessar who all see the approach as combative to potential investors.

In a statement issued on Friday, the Chamber said its understands the challenge for any government in a resource-rich country is to put in place the legislation, systems, policies, procedures and contractual provisions to ensure citizens get a fair return from investors, for what is extracted.

Over the years there have been criticisms that the arrangement LNG enjoyed was not mutually beneficial to this country.

The Chamber submitted, that to create value from its natural resources, governments often needs to attract very significant levels of investment from companies who possess the capital, the right technical know-how and the experience to safely and effectively monetize these resources.

Given the current revenue situation facing the country, the chamber argued, it is reasonable for government to want to revisit some of the contractual arrangements where there is an opportunity to receive higher economic rents.

The chamber also welcomed government’s renewed focus on local content, defined as the local value added to goods, works and services measured as the amount of money or percentage of each dollar of expenditure remaining in T&t after the production of the good or performance of the work or service.