With the holidays behind us, the economy is now front and centre of the national agenda.
First off the mark today is OPEC with its first meeting of 2021 which may give some indication of the global outlook for oil prices in the coming months. With prices hovering close to US$50 a barrel, the market has shown a relatively steady recovery since its dramatic fall in the early weeks of the pandemic although it is yet to hit last January’s high of US$61.
If the vaccine roll-out goes according to plan and the global economy begins to emerge from the pandemic, oil prices could hold, if not rise. However, the number of factors beyond T&T’s control which could affect oil prices should caution against planning based on optimistic assumptions.
Global conditions are not the only source of challenge for the T&T economy. The new year opens with upheaval in the domestic gas market with the potential to hit at the heart of the energy sector and the national economy. Among these is the fate of Atlantic LNG’s Train 1 which has been in doubt since BPTT announced it could not supply gas for the plant. Despite the assertion by Energy Minister Franklin Khan that Train 1 will not be shutting down this month but kept in an “operations-ready mode” for 2021 into 2022, there is still no indication that the challenge of keeping it in operation as opposed to “operations-ready” has been resolved.
Information suggesting that State-owned National Gas Company (NGC) is to rescue Train 1 by financing its turnaround to the tune of $300 million and sourcing the gas needed to keep it in operation raises the question whether such an investment would be in the financial interest of cash-strapped NGC. Having now turned from a highly profitable to a loss-making State enterprise, 2021 promises to be rough for NGC. On its agenda today is the future of the Tringen 1 which announced a one-month closure until December 31 due to a shortage of gas. If this ammonia plant does not resume operations, it will be the ninth plant to be closed on the Point Lisas Industrial Estate, further impacting NGC’s revenue base.
Outside the energy sector economic conditions are bleak and unrelieved by the highly underestimated Carnival economy which, by now, would already have stirred to life. With the Covid-19 vaccine unlikely to arrive before the second quarter, and even then only partially, T&T could be looking at a long, dry season of economic pain which could impact the job market, commercial and retail sectors, the rental and real estate market and small businesses.
Initial calculations for Covid-19 grant relief had not anticipated such a prolonged disruption of the economy and it would be interesting to have the Finance Minister’s report on how the basket of drawdowns from the Heritage and Stabilisation Fund, loans and grants have been utilised to date and his projections for the rest of the fiscal year.
Given current extraordinary conditions, the public should not have to wait for the mid-year review to get a comprehensive status report on the economy.