Ramnarine projects mixed bag for TT energy sector

FORMER energy minister Kevin Ramnarine is predicting a combination of historic losses and opportunities in TT's energy sector in the period 2020 to 2023. Ramnarine made his predictions during a virtual meeting hosted by the Caribbean Corporate Governance Institute last Thursday.

Noting that the International Monetary Fund (IMF) has forecast negative growth of 4.5 per cent for TT this year, Ramnarine said, “That seems conservative.”

He also believed 2021 would be the same as or worse than 2020, as local energy companies carry forward losses as deferred tax assets.

Ramnarine said that would have consequences for tax revenue in 2021. He also said, “Government may not collect any Supplemental Petroleum Tax (SPT) from March 2020 into 2021.” Ramnarine said that was because oil prices should generally remain under US$50 per barrel and SPT is only payable if prices are above US$50 per barrel.

Ramnarine said TT's methanol and ammonia plants are among the highest cost producers in the world.

"They were among the first to shut down and, as prices go back up, they will be the last to start back."

He said the cost to produce a tonne of methanol in TT was around US$175 per tonne which made most methanol production at Point Lisas uneconomic in the current price environment.

While the short to medium term outlook appears gloomy, Ramnarine said: “I am an eternal optimist when it comes to TT.

"We will survive this. We’ve done it before in the 1980s after which we went on to 15 consecutive years of economic growth from 1993 to 2008."

Ramnarine saw enormous opportunities for TT in Suriname and Guyana, which do not have a deep-water harbours and are in the early stages of developing their deep-water hydrocarbon sectors.

“Our greatest asset is the Gulf of Paria, which is like a lake in the middle of the Atlantic Ocean.”

Ramnarine also said the ISCOTT dock at Pt Lisas is underutilised and could become a centre for maritime services. He opined these services could become a big job creator and revenue generator for the country