Hamid Ghany

The re­cent de­ci­sion by Arcelor­Mit­tal to close its op­er­a­tions at Point Lisas rep­re­sent­ed a ma­jor blow to the vi­sion that was so proud­ly pur­sued by Dr Er­ic Williams in the 1970s.

In de­liv­er­ing the 19th Er­ic Williams Memo­r­i­al Lec­ture or­gan­ised by the Cen­tral Bank on June 10, 2005, Prof Ken­neth Julien quot­ed sev­er­al ex­cerpts from speech­es by Dr Er­ic Williams re­lat­ed to the de­vel­op­ment of the na­tion­al en­er­gy sec­tor and the pol­i­cy of heavy in­dus­tri­al­i­sa­tion that the Williams gov­ern­ment pur­sued.

Ac­cord­ing to Julien, on Jan­u­ary 17, 1976, un­der what he called in his lec­ture Defin­ing Mo­ment No. 7, De­ci­sion to In­vest in Is­cott, Williams said the fol­low­ing:

"Point Lisas is the sym­bol of this fun­da­men­tal re­ori­en­ta­tion of the in­ter­na­tion­al econ­o­my. Sug­ar cane gives way to wire rods. Sug­ar has sep­a­rat­ed us as wire rods will weld us back to­geth­er...There have been at­tempts to per­suade us that the sim­plest and eas­i­est thing to do would be to sit back, ex­port our oil, ex­port our gas, do noth­ing else and just re­ceive the rev­enues de­rived from such ex­ports and as it were, lead a life of lux­u­ry–at least for some lim­it­ed pe­ri­od. This, the Gov­ern­ment has com­plete­ly re­ject­ed, for it amounts to putting the en­tire na­tion on the dole. In­stead, we have tak­en what may be the more dif­fi­cult road and that is, ac­cept­ing the chal­lenge of en­ter­ing the world of steel, alu­mini­um, methanol, fer­tilis­er, petro­chem­i­cals. We have ac­cept­ed the chal­lenge of us­ing our hy­dro­car­bon re­sources in a very def­i­nite in­dus­tri­al­i­sa­tion process."

Up un­til a few weeks ago, that vi­sion had re­mained in­tact even though there was a mid-course cor­rec­tion af­ter the in­ter­ven­tion of the IMF in the 1988-90 pe­ri­od. Is­cott would soon give way to Is­pat and then to Arcelor­Mit­tal.

In his lec­ture, Julien went fur­ther to quote from the na­tion­al bud­get pre­sent­ed by Dr Williams on De­cem­ber 5, 1980, as fol­lows:

"The de­ci­sion of the Gov­ern­ment to move bold­ly in­to the field of in­dus­try based on the use of our en­er­gy re­sources has been the sub­ject of dis­cus­sion, de­bate, crit­i­cisms, and at times out­right hos­til­i­ty gen­er­at­ed both in­ter­nal­ly and ex­ter­nal­ly. Those de­ci­sions have been trans­lat­ed in­to one pro­duc­ing unit, Is­cott, and by the mid­dle of 1981, an­oth­er ad­di­tion to the pro­duc­tive sec­tor of our econ­o­my, Fer­trin.

"In par­al­lel with these de­vel­op­ments and in sup­port of them have been the es­tab­lish­ment of a mod­ern in­dus­tri­al es­tate, 1,500 acres in ex­tent at Point Lisas, a mod­ern port and har­bour fa­cil­i­ty to ac­com­mo­date ves­sels of 50,000 tonnes dead weight, and a pow­er plant to meet the de­mand of pro­posed in­dus­tries at Point Lisas and the coun­try as a whole."

That vi­sion was chal­lenged when the State got out of the iron and steel busi­ness. On No­vem­ber 16, 1988, the Gov­ern­ment of T&T ap­plied to the IMF for a 14-month stand-by arrange­ment in the amount of SDR 99 mil­lion and a com­pen­sato­ry and con­tin­gency fi­nanc­ing fa­cil­i­ty up to a max­i­mum amount of SDR 42.5 mil­lion.

On March 14, 1990, the Gov­ern­ment went to the IMF again and ap­plied for a 12-month stand-by arrange­ment worth SDR 85 mil­lion and ac­cess to a con­tin­gency fi­nanc­ing arrange­ment for up to SDR 42.5 mil­lion.

Ac­cord­ing to para­graph 15 of the 1988 let­ter, the Gov­ern­ment told the IMF the fol­low­ing:

"In 1987, Is­cott (the state-owned steel com­pa­ny) en­tered in­to a man­age­ment con­tract with a for­eign firm. As a re­sult of some re­struc­tur­ing of the com­pa­ny and new man­age­ment arrange­ments, the com­pa­ny's op­er­at­ing loss­es were re­duced from an av­er­age of about TT$210 mil­lion a year in 1984-86 to an es­ti­mat­ed TT$80 mil­lion in 1988."

Ac­cord­ing to David Ren­wick writ­ing in the Caribbean Beat mag­a­zine, Is­sue 14 Sum­mer 1995:

"Is­cott was leased to the Is­pat steel­mak­ing group from In­dia in 1989, af­ter the gov­ern­ment de­cid­ed it could no longer re­main a pub­lic sec­tor re­spon­si­bil­i­ty. Is­pat has now bought the com­pa­ny out­right for US$70.5 mil­lion. En­er­gy from nat­ur­al gas is vi­tal to the plant's suc­cess­ful op­er­a­tion–it us­es about 35 mil­lion cu­bic feet per day."

To­day, Arcelor­Mit­tal has ground to a halt at Point Lisas and the Williams dream has been se­vere­ly com­pro­mised. There are calls for Arcelor­Mit­tal to be na­tion­alised by the Gov­ern­ment there­by re­turn­ing the State to the iron and steel busi­ness once more.

The Row­ley ad­min­is­tra­tion is not in­tend­ing to do that and so a de­ci­sion must now be made with re­gard to the gi­ant iron and steel plant and fa­cil­i­ties at Point Lisas. Once the proud lega­cy of the de­ci­sion by the Williams ad­min­is­tra­tion in the late 1970s as part of a wider in­dus­tri­al­i­sa­tion pro­gramme for the de­vel­op­ment of the coun­try, its twists and turns through its role in putting the coun­try in­to the hands of the IMF in the late 1980s has now seen its pri­vati­sa­tion stage come to a sud­den flop.

Last Wednes­day's an­nounce­ment that Tata Steel is to close its steel busi­ness in the Unit­ed King­dom is just an­oth­er saga in the glob­al steel down­turn. Did any­one ad­vis­ing the Gov­ern­ment see this com­ing or are they start­ing from scratch?