While the en­er­gy sec­tor—which is crit­i­cal to T&T’s econ­o­my —ex­pe­ri­enced a sharp fall in rev­enue in 2020, a promis­ing pipeline of up­com­ing projects will see its con­tri­bu­tion to eco­nom­ic ac­tiv­i­ty re­cov­er in 2021 and 2022, says the Ox­ford Busi­ness Group in its re­port ti­tled, What is the post-pan­dem­ic out­look for T&T?

The re­port, writ­ten by re­gion­al ed­i­tor Har­ry van Schaick and com­piled in col­lab­o­ra­tion with in­vesTT, was re­leased on May 20.

It not­ed that glob­al oil prices plum­met­ed to around US$18 per bar­rel in April 2020, which sig­nif­i­cant­ly im­pact­ed com­mod­i­ty-pro­duc­ing economies such as T&T.

The re­port said while crude oil pro­duc­tion con­tin­ued its down­wards tra­jec­to­ry, it fell at a slow­er rate in 2020, adding that dur­ing the first 10 months of the year out­put de­clined by two per cent to around 57,500 bar­rels per day (bpd), com­pared to a 13.9 per cent fall to 58,600 bpd in the cor­re­spond­ing pe­ri­od 2019.

“For T&T’s en­er­gy sec­tor, the re­cov­ery in both in­ter­na­tion­al de­mand and prices has been promis­ing, es­pe­cial­ly giv­en the an­tic­i­pat­ed drilling of a new oil well, Saf­fron #2, which is sched­uled for the first half of 2021.

Once on-line, the well is fore­cast to pro­duce 200-300 bpd, and pro­vide Caribbean and At­lantic fo­cused oil and gas com­pa­ny BPC an ad­di­tion­al US$1.8 mil­lion to US$2.61 mil­lion per an­num in hy­dro­car­bons-based rev­enue, the re­port said.

It said in the nat­ur­al gas seg­ment, how­ev­er, the coun­try’s out­put is ex­pect­ed to fall fur­ther in 2021, as a re­sult of the in­def­i­nite turn­around of the four-train, 14.8m-tonne-per-an­num At­lantic liq­ue­fied nat­ur­al gas plant in south-west­ern Trinidad.

Al­though this could lead to greater ca­pac­i­ty and ef­fi­cien­cy at the plant in the fu­ture.

It not­ed that a re­bound in the down­stream sec­tor will al­so de­pend on broad­er re­cov­ery in the up­stream sec­tor, par­tic­u­lar­ly in terms of gas feed­stock avail­abil­i­ty, which has been falling grad­u­al­ly over the pre­vi­ous decade.

And on en­er­gy ef­fi­cien­cy, the re­port said for T&T to fos­ter growth in the re­new­able en­er­gy sub­sec­tor, a com­pre­hen­sive frame­work and leg­is­la­tion is need­ed.

There have been calls from econ­o­mists for an out­line of re­new­able en­er­gy goals as well as bud­getary tar­gets, it not­ed.

How­ev­er, it said in the mean­time, the Min­istry of En­er­gy is de­vel­op­ing re­new­able util­i­ty-scale projects with help from pri­vate sec­tor en­ti­ties.

In late June 2020 the min­istry an­nounced a con­sor­tium formed by BP Al­ter­na­tive En­er­gy T&T, Shell T&T and Light­source BP won the ten­der to de­vel­op a 92.2-MW so­lar pho­to­volta­ic (PV) plant at Cou­va and a 20-MW so­lar PV fa­cil­i­ty at Trinci­ty.

In look­ing at fac­tors that un­der­scored T&T’s vul­ner­a­bil­i­ties, the re­port said T&T’s econ­o­my had been grad­u­al­ly re­cov­er­ing from the drop in com­mod­i­ty prices in 2014 to 2016 thanks to a num­ber of new en­er­gy projects that came on­line in the lat­ter half of the pre­vi­ous decade.

How­ev­er, world­wide lock­downs to con­tain the spread of the virus had a di­rect im­pact on the de­mand for and price of oil and gas.

En­er­gy prod­ucts ac­count for around 80 per cent of the coun­try’s ex­ports and more than 40 per cent of do­mes­tic eco­nom­ic ac­tiv­i­ty, the re­port not­ed.

As a con­se­quence, it said, the drop in oil prices from a month­ly av­er­age of US$64 per bar­rel in Jan­u­ary 2020 to US$18 in April 2020 was a sig­nif­i­cant ex­ter­nal shock to T&T’s econ­o­my.

Al­though the first few months of 2021 saw oil de­mand re­cov­er glob­al­ly, the pan­dem­ic has led to sig­nif­i­cant loss­es in hy­dro­car­bons rev­enue.

Ac­cord­ing to the CBTT, en­er­gy rev­enue de­clined by ap­prox­i­mate­ly 50 per cent in the 12 months to Sep­tem­ber 2020, to $7.9 bil­lion.

As a re­sult, the in­creased scarci­ty of for­eign cur­ren­cies has put a strain on small busi­ness­es and in­di­vid­u­als try­ing to make a pur­chase out­side T&T.

In April 2020 un­em­ploy­ment lev­els in T&T were pro­ject­ed to reach 5.04 per cent by the end of the year and 5.12 per cent in 2021, com­pared to 4.96 per cent in 2019.

How­ev­er, job mar­ket analy­ses by the IDB re­leased the pre­vi­ous month pre­dict­ed that the coun­try could ex­pe­ri­ence more job loss­es de­pend­ing on the pace of its eco­nom­ic re­cov­ery, the re­port cit­ed.

It said as with many de­vel­op­ing coun­tries, the rel­a­tive­ly high pro­por­tion of eco­nom­ic ac­tiv­i­ties oc­cur­ring out­side con­ven­tion­al chan­nels in­creas­es so­cio-eco­nom­ic vul­ner­a­bil­i­ties.

“With high lev­els of in­for­mal em­ploy­ment in T&T, many in­di­vid­u­als ig­nored stay-at-home or­ders and con­tin­ued to work in pub­lic, in­creas­ing the like­li­hood of com­mu­ni­ty trans­mis­sion,” the re­port added.

The in­for­mal econ­o­my ac­counts for an es­ti­mat­ed 26 to 33 per cent of GDP, ac­cord­ing to a re­search pa­per pub­lished by the IDB in Au­gust 2017.

Tourism and val­ued-added agri­cul­ture

The re­port al­so ex­am­ined a num­ber of oth­er sec­tors.

Re­gard­ing tourism it ad­vised that for T&T to pre­pare for vis­i­tors, the Gov­ern­ment should ex­tend the Tourism Ac­com­mo­da­tion Up­grade Project to 2023.

The pro­gramme is to in­cen­tivise tourism in­fra­struc­ture de­vel­op­ment by re­im­burs­ing costs for up­grade work car­ried out on ap­proved ac­com­mo­da­tion projects in T&T.

The re­port laud­ed the fact that the Gov­ern­ment is fo­cused on pro­mot­ing T&T as a green tourism des­ti­na­tion, in line with the first pil­lar of the Roadmap to Re­cov­ery, which seeks to lever­age dig­i­tal­i­sa­tion and di­ver­si­fy the econ­o­my.

And in­vest­ing in the coun­try’s agri­cul­ture sec­tor is key to di­ver­si­fy­ing the econ­o­my, the re­port said, adding that this has be­come even more im­por­tant as the out­break of COVID-19 high­light­ed the threat of food in­se­cu­ri­ty in T&T.

In this light, the re­port said the first phase of the Roadmap to Re­cov­ery sug­gest­ed the im­ple­men­ta­tion of poli­cies aimed at mod­ernising the agri­cul­tur­al sys­tem and in­creas­ing agri­cul­tur­al pro­duc­tion to re­duce the im­port bill.

The sec­ond phase of the roadmap, pil­lar two, ti­tled “Mak­ing food se­cu­ri­ty a re­al­i­ty in T&T”, fo­cus­es on the use of mod­ern tech­nol­o­gy to im­prove the man­u­fac­tur­ing and qual­i­ty of agri­cul­tur­al prod­ucts, with the broad­er ob­jec­tive of at­tract­ing young en­tre­pre­neurs to the sec­tor.

“Look­ing for­ward, co­coa from T&T has the po­ten­tial to be­come a re­gion­al brand, es­pe­cial­ly as the flavour pro­file of T&T co­coa is high­ly re­gard­ed in the culi­nary in­dus­try,” the re­port said, adding that as part of at­tempts to en­hance the in­dus­try, ef­forts in part­ner­ship with the World In­tel­lec­tu­al Prop­er­ty Or­gan­i­sa­tion are un­der way to help es­tab­lish and pro­tect co­coa farm­ers.

• Con­tin­ues on BG 7

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The or­gan­i­sa­tion sug­gest­ed so­lu­tions such as trade­mark­ing and patent­ing T&T co­coa prod­ucts and de­signs, us­ing so­cial me­dia to build brand aware­ness, and de­vel­op­ing new tech­niques and process­es that dis­tin­guish their busi­ness.

In­creas­ing the avail­abil­i­ty of loan in­stru­ments is al­so vi­tal to fur­ther growth in the in­dus­try, the re­port said.

“While tax­es on agri­cul­tur­al prod­ucts have been re­laxed, ac­cess to fi­nan­cial cap­i­tal from the Agri­cul­tur­al De­vel­op­ment Bank re­mains con­strained. How­ev­er, the Min­istry of Agri­cul­ture, Land and Fish­eries’ move to­wards digi­ti­sa­tion is ex­pect­ed to speed up bu­reau­crat­ic process­es re­lat­ed to land own­er­ship, which will in turn en­able landown­ers to ac­cess cred­it more quick­ly,” the re­port added.

Dig­i­tal Fu­ture

Around the world, and in T&T in par­tic­u­lar, the pan­dem­ic has not on­ly sped up the adop­tion of dig­i­tal tools, but al­so em­pha­sised the im­por­tance of dig­i­tal­i­sa­tion to eco­nom­ic de­vel­op­ment and re­silience.

The re­port said Gov­ern­ment in­fra­struc­ture and wide-scale adop­tion of dig­i­tal ca­pa­bil­i­ties are cru­cial for the growth of T&T.

It not­ed that T&T ranks rel­a­tive­ly low on the ease of do­ing busi­ness in­dex with­in the World Bank’s “Do­ing Busi­ness 2020” re­port, in 105th place out of 190 economies – though many ar­eas could be im­proved with dig­i­tal in­no­va­tion.

The re­port said the Roadmap to Re­cov­ery high­lights the im­por­tance of dig­i­tal­i­sa­tion to achiev­ing its ob­jec­tives and out­lines eight jumpin­goff points, which are pri­mar­i­ly fo­cused on fi­nan­cial ser­vices.

Cen­tral to this is Gov­ern­ment’s plan to roll out e-iden­ti­ty cards, which would ease ac­cess to bank­ing as well as fa­cil­i­tate ac­cess to pub­lic ser­vices.

An­oth­er im­por­tant com­po­nent of T&T’s dig­i­tal trans­for­ma­tion is es­tab­lish­ing a fi­nan­cial tech­nol­o­gy (fin­tech) ecosys­tem across the two is­lands.

“How­ev­er, giv­en that take-up is cur­rent­ly low, a com­bi­na­tion of clear­ly out­lined reg­u­la­to­ry re­quire­ments and a pub­lic ed­u­ca­tion cam­paign should be rolled out to broad­en aware­ness of fin­tech. This would help to en­gage the pop­u­la­tion and show­case the as­so­ci­at­ed ben­e­fits of fin­tech.

“The in­cor­po­ra­tion of dig­i­tal­i­sa­tion is vi­tal to boost­ing fi­nan­cial in­clu­sion,” the re­port said.

It al­so ref­er­enced, RBC Roy­al Bank, for in­stance, which re­designed 80 per cent of its branch­es to in­clude a dig­i­tal cen­tre at the front of the store.

“Since the pan­dem­ic start­ed, RBC Roy­al Bank has dou­bled its on­line bank­ing reg­is­tra­tions. With plans to cre­ate dig­i­tal iden­ti­fi­ca­tion for all cit­i­zens, banks could re­duce strin­gent mea­sures such as mul­ti­ple forms of ID and proof of in­come, which would help in­crease ac­cess to un­der­banked and un­banked in­di­vid­u­als,” the re­port added.