When the Trinidad & Tobago Minister of Finance presented his national budget statement for fiscal 2022, much of the general public focused primarily on his promises to remove VAT on a range of food items, with social media attention somehow focusing on pigtail. For the country’s energy industry, however, the most important item was his promise that the government would shortly embark on a comprehensive reform of all elements of the oil and gas taxation. In subsequent public engagements he made it clear that this would be fast tracked and completed expeditiously.
That news was generally welcomed by the energy sector (see Energy Chamber Editorial) though there have been concerns expressed about how quickly the review and subsequent changes could take place. The promise from the Minister of Energy, reiterated by the Minister of Finance in the budget speech, that there would be three bid rounds in 2022 (covering onshore, shallow water and deep-water acreage) has heightened concerns that the reviews are fast-tracked.
While the Minister of Finance did highlight the issues of the energy transition and the implications for Trinidad & Tobago, there were few specific measures to address climate change or the energy transition directly. The removal of electricity and transport fuel subsidies are clearly part of that overall shift, though they were more tackled from a fiscal management perspective rather than an energy efficiency and environmental point of view.
The budget statement suggested that the Regulated Industries Commission would soon be completing its rate review and recommending a new tariff structure for both water and electricity. Subsequent media statements from the Minister of Public Utilities suggested that the T&T Electricity Commission and the National Gas Company had agreed to a new gas sales contract, which had been the outstanding issue that had delayed the electricity rate review process. The Minister of Finance made it clear that most fuel subsidies would be removed and that instead of general price subsidies, targeted relief would be provided to the neediest households. The suggestion was that electricity usage (that tends to equate with wealth) would be used to target this relief to the individual households.
One specific energy transition-related measure that has received a lot of attention was the removal of all import and other taxes on full electric vehicles less than two years old. This is a measure that the Energy Chamber and other e-mobility advocates had lobbied for, though the call had been to address this as part of a wider sustainable transport policy. With the Minister of Energy and Minister of Planning reportedly jointly working on an overall e-mobility policy, further details might be expected during the budget debates in Parliament. This reform, coupled with the recent opening of the solar power fast-charging station in Preysal, has placed a strong spotlight on EVs.
The other greenhouse gas reduction measure that was outlined in the budget speech was a specific new tax allowance for investments in enhanced oil recovery and carbon capture and sequestration. This measure has received no real media coverage. It has been welcomed as a step in the right direction by people in the oil and gas industry, but the consensus view seems to be that the threshold for the credit is simply too low for the measure to have much of an impact. The expectation would be that this issue, would also be addressed in the comprehensive reform programme.
While most of the tax benefits and other support measures were targeted either at manufacturing or the digital space, there were also some of the general business support measures that were of interest to the energy services sector. The statements on the moves to widen the scope of skills certificates and to enhance the free movement of people, were items that the energy services sector would monitor closely. There was also support from the energy services sector for the announcement of plans to open various trade facilitation offices, with an obvious particular interest in the proposed office in Guyana (that would also cover Suriname). This is an initiative that would be welcomed by the many Trinidadian service companies that have set-up in Guyana and those planning to enter the market soon. As with many items announced in the budget, people in the energy services sector will be waiting to see how quickly these plans can be implemented.