The introduction of new government players and policy actors into the energy sector usually requires a period of relationship building for the main energy companies. It is not only appropriate for the multi-nationals,but the local players as well, to seek to connect, explain their business strategy and drivers and to (diplomatically) suggest policy areas that might need to be considered for reform, improvement, or removal, based on the experience of the company.
It is therefore timely to revisit the sometimes-thorny issues of managing the relationship between government and our main energy players (mainly multi-nationals), which I referred to in a previous article as the "dark art" of government relations. However, at a time of change or "reset" as we have had over the last two months, I thought it useful to revisit this topic but from a different perspective - specifically to consider "what does good look like for the energy players in the matter of a relationship system with the government and regulatory agencies". There is no prescriptive frame to this since every government has different priorities, personalities and energy business issues to address over the course of its term.
However, my assumption is that efficiency in the relationship between government and energy majors and MNC's is in the interest of both the country and the energy players, since it reduces the "transaction cost" of decision-making to both parties and ultimately leads to more informed and considered policy and commercial solutions.
The energy agenda for the current government includes the re-negotiation of the Atlantic Train 1 supply and processing arrangement, the finalisation of a new supply contract between BPTT and NGC (the major upstream supply contract to the Pt. Lisas plants) while managing the ongoing gas shortfall, which was recently estimated to continue through to 2017. These will all require extensive and intensive interactions between the government and the main energy players. It is within this context that I believe a well thought through relationship management system between government and the energy players will be an important enabler to success in managing these issues.
In considering energy sector relationships, there are two characteristics that are of relevance; firstly, decisions related to policy or commercial issues are complex, requiring multiple points of decisions by multiple players within the government, and secondly, there is a low level of understanding amongst the public, the media and the non-energy business sector about the industry.
I shall consider each of these in turn as it relates to an "ideal" state for energy players and MNC's with regards to its relationship with the government.
On the first point - the complex and multi-faceted nature of the energy related policy - it is essential for clarity of accountability over the process for decision- making. In this regard, it is heartening to see that one of the first actions of the current administration was the announcement of the revitalisation of the Standing Committee (SC) on Energy, chaired by the Prime Minister and comprised of a range of ministers and technical advisors whose remit has been the consideration and deliberation of major energy issues. While its size has previously made decision- making a bit unwieldy, it does serve the essential purpose of providing a very clear focus for energy companies with regard to decision-making mechanisms, lobbying and influencing strategies. Once the SC is maintained as the main energy decision-making entity, then this “clarity of process” benefits the entire industry.
But beyond the process with such complex issues, there is also the “person” empowered to interact. It should be made very clear who is empowered to receive or provide information on behalf of the Government on specific issues as it relates to interactions with the industry. Issues such as the re-negotiations of the Atlantic Train 1 contract will involve a multiplicity of public entities and persons. Multiple conversations will be necessary as the parties try to reach closure on the commercial negotiations. This makes it imperative that the energy players have a clear direction on the main government player empowered to provide information, instruct on current thinking and to whom information can be channelled back into the government. That person should be clearly identified to the energy players as the main “owner” of the issues – for example T1 negotiations – allowing the individual to serve as a gatekeeper or main point of access between the companies and the government.
The second issue relates to the assumption that an effective relationship identifies areas of mutual benefit and the area of public education is one where such mutuality exists.
I am making the case here for joint or coordinated communication on specific areas. I will use the example of T1 re-negotiations to illustrate this point. While there have been efforts by Atlantic to raise the awareness of the role of LNG in the economy, the general level of understanding is still low – even amongst media. It is likely that the LNG re-negotiations will raise some public interest as it proceeds and it is in the interest of both sides to make sure that the main issues are well articulated and understood as widely as possible. If there is a base level understanding of the issues, then it means that the debate about “what is fair” and the “best deal” will happen in a more informed way and limit unfair criticism that might be aimed at the project.
If the Government and industry were able to agree toa basic set of information that should be shared with the public and the key opinion formers ahead of the negotiations, then it would help to de-mystify the subject. This can take the form of a joint public awareness campaign, where government and industry act as partners to raise the issues that will be under consideration during such negotiations. This will not limit the “hand” of either side in the ensuring negotiations, but rather, this will help make sure that the questions raised publicly are based on a higher level of understanding of the basic issues.
This is by no means an exhaustive view on an effective relationship system from the perspective of the companies and I acknowledge that the companies are expected to make much more of an effort to get this right, they after all have much to lose if they don’t. However, without being critical or passing judgement on government structures and frames, past and present, I think that a deliberate and considered approach from the Government of Trinidad and Tobago to their interactions with the energy players is an essential piece that will lead to the effective management of our precious national energy resource.