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posted 27 Oct 2020, 18:25 by Gerry Kangalee   [ updated 27 Oct 2020, 18:28 ]
On the sugar estates of 19th and early 20th century Trinidad, there was an…  | Trinidad, Caribbean carnival, TobagoIn his presentation of the 2021 budget, in reference to the energy sector, the Minister of Finance, Colm Imbert, gives the impression that so much has been achieved since the assumption into office of the PNM in 2015.

Imbert boasts of restructuring Petrotrin; focusing on exploration and production by creating Heritage Petroleum Company; establishing Paria Fuel trading Company, which is responsible for importing and distributing all categories of fuel required for our domestic and sub-regional markets; the creation of a refining company into which were placed the assets of the closed Petrotrin refinery – Guaracara Refining Company Ltd.

Development economists are certainly not impressed with this restructuring. In the first place it represents a significant step backwards to the status of a neo-colonial economy which specialises in the production of raw materials (i.e. Heritage engaged solely in the production of crude oil) and the importation of and distribution of high valued products made externally (i.e. Paria Fuel Trading Company).

What this means, essentially, is that part of the energy sector of Trinidad and Tobago (Petrotrin Refinery) which engaged in the production of high value added products like liquefied petroleum gas, unleaded motor gasoline, Jet fuel, kerosene, diesel, fuel oil, sulphur, bitumen and base lubricants has been downgraded to import/trading status.

It is this production platform which allowed Petrotrin to enjoy market advantage and customer confidence in the Caribbean, Latin American region and the eastern Seaboard of the United States and earn $250 million annually for a number of years, making it the largest earner of foreign exchange in the local company category!

Development economists from the school of Plantation Economics are of the view that Imbert and his cohorts have taken us back to the 17th century when the plantation type economy emerged with sugar being the dominant commodity.

In this case, what we have is essentially a state plantation economy exhibiting some of the defining characteristics of the pure plantation economy model. Firstly, there is a muscovado bias. This simply refers to the heavy focus on raw material production for export as the main form of economic activity. In the old plantation economies this was reflected in the manufacture of raw sugar (muscovado) for export to the metropolitan economies.

In the present context, the Rowley administration has established the Heritage Company to produce raw materials, crude oil, for export as the main form of economic activity while closing down Petrotrin, the main producer of high value added products and the leading local earner of foreign exchange.

Secondly, there is a heavy dependence on high value added products processed from the main raw material – a processing that takes place abroad. In the old plantation economies raw sugar was processed or refined in the metropolitan economies. This is one factor which contributed to the perpetual underdevelopment and the persistent poverty which characterised their existence.

It is in this context that we can view the Paria Fuel Company which is the sole supplier of all the fuels used in the local market – fuels which used to be produced by the Petrotrin refinery at Pointe-a- Pierre. Paria is involved in the importation of these fuels from abroad. Suppliers include, BP International Trading, a subsidiary of BP, the dominant energy transnational corporation in Trinidad and Tobago. What needs to be emphasised is that in the context of the energy sector, Trinidad and Tobago has been downgraded from the status of fuel producer to the vulnerable status of fuel importer.

As the producer of products like unleaded motor gasoline, jet fuel, kerosene, diesel, fuel oil, bitumen and base lubricants, Trinidad and Tobago enjoyed a kind of energy security known as fuel security! All of that has been changed. We are now dependent on our suppliers and remain in a position of high risk and vulnerability.

Development economists also point out that the creation and operation of the Paria Fuel Company have contributed to the leakage of the scarce foreign exchange. It needs to be pointed out that satisfying the local fuel market necessitates the expenditure of US$250 million annually by the Paria Fuel Company. There is deep concern because foreign exchange is the most precious commodity in an open economy like Trinidad and Tobago’s.

It is used to pay for imports inclusive of food, medicine, machinery and equipment, spare parts and consultancy services. It is critical for the settlement of international transactions, inclusive of the servicing of international debt. It contributes to the boosting of our foreign exchange reserves which enables us to remain out of the stranglehold of the International Monetary Fund.

Summarising their comments in their initial analysis of the 2021 budget, development economists have concluded:

1. The Minister of Finance’s restructuring of the energy sector takes us back to the old plantation economy of the 17th century – a classic case of re-colonisation.

2. The restructuring of the energy sector has jeopardised the energy security which we enjoyed as a result of local fuel production and distribution.

3. The restructuring of the energy sector has contributed significantly to the leakage of foreign exchange – the most precious commodity in an open economy like Trinidad and Tobago.

4. Is it a coincidence that the amount of foreign exchange spent on imported fuel ($US250 million) by Paria fuel annually is the exact amount earned by Petrotrin annually during the better years of its operation?

(Economic Analysis unit of the Labour Advisory Bureau)