Ramnarine predicts revenue challenges

Former energy minister Kevin Ramnarine is predicting a "major challenge" to Government's 2019 forecast $47 billion revenue target because of falling commodity prices. "(We have) falling oil production (the lowest since 1952), falling oil prices, falling methanol prices and major companies carrying losses forward from previous years and thus paying less tax," Ramnarine told Newsday. He suggested the government address the supplemental petroleum tax (SPT), as it is a hindrance to investment in oil production when prices range from $US40 to $US60 per barrel. The SPT kicks in when oil prices cross US$50 per barrel, and instead of taxing profits, taxes revenue, so puts additional strain on small operators.

Oil accounts for about five per cent of TT's gross domestic product. West Texas Intermediate crude oil prices are currently just over US$45 a barrel, compared to the US$65 per barrel upon which the 2019 budget is predicated. Gas prices are faring better, with the Henry Hub benchmark trending about US$4.38 per mmbtu this week, versus the budgeted US$2.75 per mmbtu. Ramnarine did, however, express concern about the "questionable" value that the country gets from liquefied natural gas cargoes exported to South America, particularly Chile, something he noted was flagged in the 2015 Gas Master Plan.

"Overall collecting $47 billion in revenue in 2019 will be a tough ask. It's likely the Minister of Finance will have to borrow or dip into the Heritage and Stabilisation Fund," Ramnarine said.