Trinidad and Tobago’s 2014 and 2015 Report show declining revenues and highlight the need for improved revenue collection systems
The Trinidad and Tobago’s EITI (TTEITI) latest report reveals that in 2015 the country received USD 3.3 billion in revenues from the extractive sector. This is a 27% decline from 2014. Despite depressed gas prices, the government avoided an even more drastic reduction in revenues. This was mainly due to an increase in dividends paid by the national gas company NGC. The USD 913 million paid in dividends from NGC in 2015 represented 27% of total fiscal extractive revenues.
The report adds: “in a year in which the company’s profits were the lowest in over 15 years, NGC made its highest ever dividend payment to the government”. The government took other steps to address falling revenues. It has cut expenditures, including a reduction of the fuel subsidy. The government also made the first withdrawal from the Heritage and Stabilisation Fund, the report says.
With falling revenue a major concern, the report’s recommendations on revenue collection systems are timely.
“as government explores options for boosting revenue, audit reports have highlighted the need for reform and efficiency in tax administration in order to plug loopholes and minimize revenue loss in the minerals sector, LNG contracts and in the Production Sharing Contracts (PSC) agreements”.
The report notes that the Inland Revenue Division in the Ministry of Finance did not provide complete information for the EITI reconciliation exercise. In addition, the Report points out that the Auditor General has been unable to attest to the reliability of internal audit assurances and records in the Ministry of Energy. TTEITI multi-stakeholder group MSG will need to consider these findings, consider making recommendations for reform, and take these issues into account for the 2016 Report.
Transparency: the new normal
At the launching of the 2014-2015 EITI Report on 21 October 2016, Minister of Energy Nicole Olivierre pledged support for introducing legislation to enshrine the EITI into T&T regular procedures. Minister Olivierre said “The EITI dogma of disclosing revenue payments is already accepted as the norm. In this vein, our Government is progressive and is willing to enact changes to existing legislation to allow for greater disclosure by extractives companies”. In addition, she wrote to the Attorney General to ask for the inclusion of the EITI in the Income Tax Act reform to ensure greater access to the information needed in EITI Reports.
The 2014-2015 EITI Report also contains a number of recommendations to continue improving EITI reporting. These include: access to the sales agreement of the government share of gas; reconciliation of the amounts paid by the Ministry of Energy to the Inland Revenue division to settle taxes on behalf of extractive operators and the profit share due to the government; auditing of the PSCs; earlier exchange of information with Inland Revenue to ensure material payments are promptly identified; and better records of the sector information held by the Ministry of Energy including oil and gas production and other financial information.
Extending EITI implementation to the mining sector
TTEITI’s 2014-2015 EITI Report includes, for the first time, information and revenue disclosure from the mining sector. As a pilot for the 2015 fiscal year, four quarry operators disclosed USD 158 million of payments to the Board of Inland Revenue. This represented a major increase compared to 2014, where payments totalled USD 5.8 million.
The report recognises there is significant room for improvement in the regulation and enforcement of regulations relating to the mining sector. This includes: improved transparency in the licensing process, the need for monitoring production, and providing resources to the Ministry of Energy to better implementation of these reforms.
Social expenditures and environmental information for the first time
The EITI Report also includes information on social expenditures by the national gas company NGC and Petrotrin, the state-owned oil company. In the years covered in the report, NGC made social contributions of USD 11.3 and 12.5 million in 2014 and 2015 respectively. Major contributions went to education and training, sport sponsorship, community development, cultural events and environmental activities such as reforestation and rubbish cleaning. The report also discloses voluntary contributions made by eight oil and gas private companies. These totalled USD 5.8 million in 2014 and USD 5.4 million in 2015.
The report also contains a brief description of the environmental legal framework. In particular, it describes the process to obtain the certificate of environmental clearance (CEC). It reveals that for the period from 2011 to 2015 530 CEC applications were made from within the oil and gas industry with only 3 of them being denied by the Environmental Management Authority. The report acknowledges concerns from civil society about the amount of clearances granted.
“Certificate of Environmental Clearance (CEC) are being granted for marine seismic surveys without any Environmental Impact Assessment (EIA). CSOs are calling for routine EIA data gathering and better monitoring of the oil and gas sector by the regulatory agency. Seismic methods are based on extremely loud blasts, similar to bombing, which results in negative long term impacts on marine ecosystems and fisheries”. - Gary Aboud, General Secretary, Fisherman and Friends of the Sea