Ramnarine: Imbert budget gas price not based in reality

FORMER energy minister Kevin Ramnarine said the gas price which Finance Minister Colm Imbert predicated the $53 billion national budget is not based in reality.

Speaking with Newsday in a telephone interview, Ramnarine said the gas price is the most important metric of the budget, and Imbert's price of $3 per unit was not a reflection of global reality. He said, in the last year natural gas prices had fallen 65 per cent in Asia, 40 per cent in Europe and about 27 per cent in the US.

"So I can't see how in that global environment we are predicating our global budget in 2020 on a higher gas price than in 2019 (when it was $2.75 per unit)."

He said Imbert was attempting to paint an optimistic picture of the energy sector for 2019 and 2020 but it was not a reflection of reality, and brushed aside the issue of falling oil production when he said production had stabilised. Ramnarine said production had stabilised at 59,000 per day which is the lowest rate since the 1950s, and oil production had fallen 27 per cent in the last four years.

On the increased tax credit for energy companies from 20 per cent to 25 per cent, Ramnarine said it would have no effect nor would it make much of a difference in the supplementary petroleum tax. He said instead there needed to to be a complete overhaul of the supplementary petroleum tax to stimulate exploration, and a complete overhaul of the fiscal regime of gas to keep production levels stable and to increase in the future. He added that Imbert was making exploration less attractive with a reversion of the capital allowance structure back to what obtained before 2014.

UNC shadow energy minister David Lee told Newsday what Imbert announced in the energy sector was nothing of significance and was really a rehash of what he had said before.

On the tax credit increase, Lee said: "That extra five per cent is not going to do anything."

He also said the oil price of $60 per barrel and gas price of $3 on which the budget is based showed a high estimated revenue for energy without which the deficit would have been much higher. He said, in reality oil was $52 barrel and gas at about $2.38.

"The actual prices are way below his estimated figures. He would be hard-pressed to see those prices maintained."