Trinidad and Tobago, faced with the third straight year of declining revenues, has announced the sale of major stakes in some key state-owned assets. That’s one of the headlines emerging from the finance minister’s budget speech on September 30.
T&T’s revenue from taxes hit an all-time high three years ago, when TT$58.4 billion flowed into the Treasury during fiscal 2013-14 (year end in September 30, not March 31, like Barbados). That’s about US$8.72 billion. Barbados’ best tax revenue year in recent history was 2008-09 (although this past year was within a $30 million range) when almost $2.6 billion went to the Treasury. That’s roughly US$1.3 billion.
This past year for T&T tax revenue was terrible, however: revenue was down 35 per cent on that bumper year, reaching “only” TT$41 billion, or about US$6.1 billion, compared to Barbados’ $2.57 billion, which was still almost US$1.3 billion.
Now, I don’t know what portion of that revenue three years ago was from oil royalties, but last year it was TT$8 billion (about US$1.2 billion) and this past year, just TT$1.7 billion (a quarter of a billion US dollars). Luckily for T&T, oil revenue is expected to increase to TT$2.6 billion (or about US$400 million) this fiscal year – but that’s still well below previous years.
This fiscal year, revenue is budgeted to fall to TT$37.8 billion (US$5.65 billion). But T&T, like most countries, and households, of that matter, can’t cut spending fast enough to keep pace. Although it did cut actual spending in the just ended fiscal year from the budgeted TT$63 billion, to TT$52.2 billion – which seems quite a feat – for the year just started expenditure is projected to reach TT$53.5 billion, up 2.4 per cent from the previous fiscal year.
So what to do? Well, after announcing a lot of cuts in spending, including an overall seven per cent reduction in transfers to each ministry apart from social programmes, and a lower diesel subsidy, Finance Minister Colm Imbert said the government still had to raise another TT$17 billion to make ends meet this year. That’s about US$2.5 billion.
That shortfall would be partially made up with an estimated TT$1.35 billion (US$200 million) from new taxes and better collection of old ones, and close to TT$10 billion (about US$1.5 billion) from what he termed one-off revenues, including selling of stakes in successful state-owned enterprises.
Here’s a quick summary of some of the major deals the TT government is looking to do this year:
• TT$1.5 billion would be raised from selling government’s remaining 51 per cent stake in the national gas company, TTNGL.
• Another TT$1.5 billion would be raised from selling 20 per cent of its shareholding in First Citizens Holdings Limited, the majority owner of First Citizens bank.
• Half a billion T&T dollars would come from selling a 50 per cent stake in the industrial estates operated by eTecK, and another TT$600 million from the sale of 20 per cent of its power generation plant, Trinidad Generation Unlimited (TGU), to institutional investors.
The government was also looking for an international partner to buy a stake in the Lake Asphalt company, which is responsible for the commercial development of the country’s famous pitch lake.
With the exception of whatever it gets from the last one, my arithmetic only takes me to TT$4 billion from these asset sales. Still, they are doing more than we are here in Barbados with regard to selling off state-owned assets in order to reduce borrowing from at home or abroad.
This past week, Nation Editor-in-Chief Roy Morris got a scoop about what (in my interpretation) might be responsible for the Dolittle administration’s dithering over selling off the Barbados National Terminal Company Limited (BNTCL). As you know, Minister of Finance Chris Sinckler confidently announced the impending sale of BNTCL in June 2015.
As I reported in this space recently, Rubis Caribbean Ltd., which was one of the bidders, was told that they had not made the final list. With only one other player on the local market, and with Morris’ quoting of a source as saying that the Government will sell the terminal to a local entity “with a proven track record in the oil industry”, that could only mean Simpson Oil Ltd. Yes, I said it. SOL.
But now, with Rubis having made it quite clear that selling the terminal to its sole local competitor – which already has two-thirds of the market share in Barbados – would leave it perched in such a shaky position that it would have to completely review its operations here, it appears the Government is desperately trying to find a way to head off such a self-imposed wound.
In other words, to not shoot itself in the foot by selling to Simpson alone, when Rubis has said they would be happy to be in a joint venture, it is trying to implement a “golden share” agreement, which would give it veto power on any moves (my interpretation) by the sole owner which it thinks might hurt Rubis or other entrants into the oil marketing sector.
Why not just sell to both companies, or put it up for sale to other investors? And what about those GEMS properties “which are at an advanced stage of divestment”? Is Bernie Weatherhead going to buy the Savannah Hotel?
And now we are suddenly hearing of a wonderful sweetheart deal for six months only (sure) to contract private waste haulers to do garbage collection in four parishes, at the modest fee of $411 per hour. Presumably, they will be using limos.
It’s just a whole lot of private behind-closed-doors negotiating on public assets. What we need is a clearly outlined public policy and framework which is actually implemented over a given period. Not just promises, promises.
Perhaps we can learn from our neighbours and archrivals, the Trinis.
They, although much richer than we are still despite recent setbacks, have started to sell off their family silver. We are still polishing ours, thinking about the good old days.
The good old days which have long since fled into the night, leaving the Dolittle administration in the bright sunlight without a policy or a plan they can actually implement.