Given the importance of energy to our standard of living, the need for all citizens to understand matters relating to this sector is critical. In the amended Standing Orders of the House of Representatives 2014, Section 104, it states, “The committee on Energy Affairs shall have the duty of considering, from time to time, and reporting whenever necessary, on all matters related to the expenditure, administration and policy in relation to Energy Affairs.”
This certainly is a step in the right direction and may change the position wherein energy becomes a truly national issue rather than a party issue subject to disruptive changes in policy and its unintended consequences.
In a consideration on the future of energy, one must consider the review by the credit rating agency Moody’s and the subsequent downgrade of the country’s sovereign debt rating and the implications of the country’s policy on energy.
Energy policy must also be developed within the context of the long-term economic planning of the society. An aggressive energy program as suggested by some individuals must be balanced with the current needs of society, because any concessions given to current players will have some impact on revenues to the government.
If the policy choice is that of deficit-spending, then the fiscal space to accommodate attraction of foreign investment through the fiscal regime would be limited or nonexistent, and must also be done in a high price environment. If this sort of fiscal indiscipline is ignored, then the sustainability of the current standards of living and the objectives of any government will not be achieved.
Unfortunately, the impact of the inappropriate policy positions would be communicated via action by international agencies, usually downgrades which generally signal to the international community a negative change in our country’s standing relative to others who are competing for the markets in which we currently operate. This changes the risk profile of the country and becomes a possible detriment in attracting investment.
The success of Trinidad and Tobago will only be achieved if as a society there is a coherent vision and an understanding of how energy and its peculiar characteristics fit into that plan.
Much of the discussion on diversification, if viewed through an understanding of the country’s resources, may reveal that our problem is not only about diversification but more importantly about the structure and use of expenditures for development.
An enabling environment and a renewed focus on productivity and return on investment compared to the other countries operating in our market is critical to our understanding of these new realities.
Only when we come to terms with these difficult but necessary issues will we progress from what appears to the uninformed observer as good policy to actual sound and sustainable policy.
Oil and the commercialisation of oil can create revenue for any country. Oil is traded globally at prices that reflect variable demand and supply. Its pricing is therefore volatile, and decisions taken in an oil-based economy has certain inherent risks relative to sustainability.
One mechanism to manage this volatility is a Heritage and Stabilisation Fund which is integrated into the national planning process. It may well be that the time has come to introduce an expenditure price as well as a revenue price in our national budgeting process.
This will certainly assist in the accountability and governance of the energy resources in a manner in which civil society can understand and participate in the development process.
Gas and the production of gas helps further develop a petrochemicals industry with the potential to place citizens in high-value jobs which are sustainable over the long term.
Trinidad and Tobago has achieved this, but global conditions have changed. Shale gas and shale oil are the new entrants into this marketplace, and competition has now increased in the markets that we have traditionally served.
In the current situation in which Trinidad and Tobago finds itself, attention must be given to alternative and renewable energy sources as a new source of revenue. As these new energy sources are pursued and aggressively supported by the government, it can engineer the rebirth of prosperity, a much wiser populace with more citizens involved and with a better understanding of the fragility of our environment.
In a sense, perhaps, we could begin the Green Revolution in which Trinidad and Tobago can create a model of development with traditional energy supplying the platform for growth and development as we transition to a nontraditional but more environmentally friendly energy supply, giving every citizen a role in the protection and development of Trinidad and Tobago.