The trinidad Guardian / Minister of Energy and Energy Industries Franklin Khan believes that more needs to be done to ensure that the government earns its fair share of revenue from the exploitation of T&T’s hydrocarbon resources.
“Oil and Gas are non-renewable assets and therefore there is a premium to be paid for their exploitation. Accordingly, the State, Trinidad and Tobago has a sovereign right to extract appropriate economic rents for the exploitation of its hydrocarbon resources on behalf of the people who are the owners of the resource.” Khan said, as he delivered the feature address at the opening ceremony of the 2018 Energy Conference at Hyatt hotel in Port-of-Spain yesterday.
According to the Energy Minister, the concept of “value maximization” has been at the expense of the state for far too long.
To underscore his position, Khan pointed to the drastic decline in fiscal revenues from the energy sector during the period 2014 to 2017, which he ascribed to ” generous concessions”
He said: “The returns to Government over the period 2014 to 2017 vividly illustrates this situation. In 2014, energy revenue was TT$20.9Bn or 35.7% of total Government revenue of TT$58.4Bn. In 2015, energy revenue fell to TT$12.9Bn or 22.6% of total Government revenue. The downward spiral continued in 2016 with energy revenue
falling to TT$3.0Bn or 6.6 % of total Government revenue. In 2017, the situation was practically unchanged with oil revenue amounting to TT$3.7 Bn or 10.1% of total Government revenue.”
He added that it was “unacceptable and untenable” that with production levels of appromixately 624,000 barrels of oil equivalent per day, the country should be receiving tax contributions in the order of $3.7 billion per year.
“When benchmarked with other energy producing countries, this is amongst the lowest in the world. This situation cannot be allowed to continue unabated.” Khan said.
Khan stated that on the basis of this circumstance, the government took the decision to set the royalty rate at 12.5 per cent and “has been reviewing the taxation system and the suite of allowances available to oil and gas companies”
Touching on the issue of transfer pricing , the Energy Minister said that the government had sought the advice of an international consultant to treat with the issue, pointing out that this practice had led to significant revenue leakage in the sector.
Also speaking at the opening ceremony was regional president of BPTT, Norman Christie who commented on the company’s 2017 successes with Juniper and TROC, while also sharing his “reflections” on the local energy sector.
“My first reflection is that collaboration is often hard work but it pays huge dividends. My second reflection is that a lot more collaboration is needed. Notwithstanding BPTT’s successes in 2017, we will be the first to say there is still a lot more to be done.” Christie said.
Energy Minister: State deserves just due from energy sector
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