Between 2004 and 2019 the Government should have received TT$222 million from quarry operators, but operators’ payments amounted to only TT$29 million, according to the 2022 TTEIT report, for the period October 1, 2018 to September 30, 2022.
It also cited data from the Energy Ministry that showed quarry operators owe the Government TT$193 million in royalty payments, as at the end of 2019.
In this vein, the report emphasised that accurately recording mineral volumes is necessary to determine the amount of royalties owed to the Government.
However, it noted the MEEI does not independently verify production volumes but relies on reports from operators.
In examining the energy sector, the report emphasised that T&T must look beyond short-term measures.
The eighth annual report took into consideration the fears over a global recession, the war in Ukraine, lingering supply chain challenges and the COVID-19 pandemic.
“For T&T these events have had significant bearing on our economy’s performance. In the early stages of the pandemic, depressed oil, gas and petrochemical prices contributed to the country’s deep economic recession. In 2022, global energy commodity prices have been buoyed by the global demand-supply imbalance caused by the war in Ukraine,” the report said.
It also noted that Brent crude oil and Henry Hub gas prices have averaged US$104 per barrel and US$6 per mmBtu in 2022, saying this temporary boost in energy commodity prices for 2022 has improved revenue collections.
Royalties and production sharing contracts’ share of profit are both expected to reach nine-year highs, the report said.
“These energy commodity price increases will likely be fleeting and analysts from the IEA and US EIA predict a dampening in demand for energy due to inflationary pressures,” the report said.
It also noted that Government has already indicated any windfall from the rise in energy prices will be used to settle debts and arrears, finance VAT refunds, reduce the budget deficit and make a deposit into the Heritage and Stabilisation Fund.
But the TTEIT maintained despite this fillip in revenue, the local energy sector is currently facing several short, medium and long-term adjustments that will change the country’s energy landscape.
These include the results of the deep water, shallow water and onshore bid rounds, the development of the Caribbean’s largest solar project, changes to the fiscal regime to incentivise more production, the restructuring of Atlantic LNG and a move towards liberalisation of retail fuel prices and reduction of the fuel subsidy.
Given these policy shifts and the changing nature of the global energy market, sharing up-to-date information on oil, gas and mining revenue and the future outlook for these sectors is key, the report advised.
Between 2016 to 2021, there were 836 oil spills in T&T, amounting to Net (after deducting recovered barrels) TT$2.1 million and Gross (without deduction of recovered barrels) was TT$31.3 million, the report revealed.
During this period 75 per cent of all spills occurred on land, it disclosed.
Forest Reserve/Fyzabad (191), Los Bajos/Palo Seco/ Santa Flora (167) and Grand Ravine/Guapo/Pt Fortin/Cedros/Icacos (125) were the areas with most incidents.
The Ministry of Energy’s volume threshold for reporting a spill is one gallon.
One barrel of oil is 42 gallons.
According to the report, between 2016 to 2021, 88,568 barrels spilled with 82,640 recovered.
This equated to 3.7 million gallons spilled and 3.4 million gallons recovered.
According to the report, approximately 30 quarries submitted bonds valued at TT$17.2 million from 2008 to present.
However, none of these bonds have been used by the State for rehabilitation.
The report said performance bonds are currently valued at TT$6.6 million and similarly have not been used for payment of unpaid royalties.
The rehabilitation and performance bonds are mandated for any licensed company based on the Minerals (General) Regulations 2015.
The purpose of the Green Fund is to finance civil society and community group projects that focus on remediation, reforestation, environmental education and public awareness of environmental issues and conservation of the environment.
The fund is bankrolled by contributions to the Green Fund Levy.
This levy/tax is paid by companies to the Board of Inland Revenue at a rate of 0.3 per cent on their gross revenue, sales or receipts.
The report said at the end of fiscal 2020, the balance in the Green Fund was TT$7,632,357,483.81.
The fund grew by 9.88 per cent year-on-year between 2019 and 2020, adding that Green Fund disbursements for projects in 2020 and 2019 was TT$2,381,186 and TT$13,649,273, respectively.
Based on EITI reports, between fiscal 2010 to 2020, upstream companies contributed TT$908,526,969 to the fund, roughly 12 per cent of the total value to date.
There are strict rules for disbursements/withdrawal from the Fund.
And, according to the Miscellaneous Taxes Act Chapter 77:01 and the Green Fund regulations, the Government cannot withdraw from the fund for non-environmental or social projects.
The subsidy regime old
In the new fuel subsidy model, Paria Fuel Trading Company would continue to purchase fuels at current international prices and then add its margin, terminalling fees, distribution and other costs to determine its wholesale price to marketing companies (Unipet and NP).
These marketing companies would then purchase fuel from Paria and the wholesale price plus value added tax and therefore, retail prices at the gas stations would be the sum of the wholesale price and a margin.
These key features are highlighted in clauses nine and ten of Finance Bill 2021 which further states that only marketing companies that purchase fuel from refineries or traders will be allowed to sell to gas stations.
According to the report there are several differences between the old and the new model.
Firstly, due to the removal of a fixed retail margin, gas stations will now be allowed to price competitively and prices at the pump will fluctuate in line with international prices.
The wholesale price and international prices will be published by the Ministry of Energy to allow comparisons to be made between these and prices at the pump by the public.
The Government will also be able to retain some flexibility to maintain the subsidy on certain fuels as well as fix the wholesale price which would enable a measure of control over prices.
The report said the introduction of the fuel levy in the proposed model which kicks in once oil prices are below US$65 per barrel, is another key difference.
This levy is to be paid monthly by any marketing company selling fuels wholesale to gas stations, adding the proposed model also brings T&T’s fuel market in line with what prevails in other countries including, Caricom neighbours, Barbados and Jamaica.