Home' Trinidad and Tobago Guardian : March 4th 2016 Contents A17
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Energy assets in T&T are
reported to be part of a Royal
Dutch Shell plc plan to extend
its US$30 billion asset di-
vestiture programme glob-
According to a Bloomberg
report, which cites people fa-
miliar with the matter, the
asset offloading plan has not
been finalised as yet but the
energy giant is expected to
divest assets in the US, India,
and T&T to improve its liq-
uidity position and
strengthen its balance sheet.
The company s assets in
this country include stakes in
the Atlantic liquefied natural
gas (LNG) project, as well as a
and a gas field acquired
through the recent merger
with BG Group.
Through offloading these
assets, Shell expects to gener-
ate US$30 billion between
2016 and 2018. The energy
giant divested US$20 billion
worth of assets during the
24-month period ended De-
cember 31, 2015.
Since the Shell-BG Group
merger, the Anglo-Dutch oil
company s liquidity position
has deteriorated as it has paid
more than US$10 billion in
cash to BG Group s share-
T&T s debt situation could worsen,
small and medium businesses will suffer
and there will be more job losses if the
country s currency is devalued, economist
Dr Vaalmikki Arjoon warned yesterday.
He said Government needs to be very
mindful that a continued depreciation of
the TT dollar will erode investor confi-
dence and the country s credit ratings.
"It will in fact signal to the international
sector that the economy s financial stress
is worsening and therefore many will over-
look us as an investment destination," he
"Naturally, this will dampen our diver-
sification potential and obstruct economic
growth. It will also worsen our national
"Since the US dollar is more expensive,
it will be even more costly to repay our
external debt and meet interest payments.
"As such, our creditworthiness in the
international economy can be put into
question by credit rating agencies, espe-
cially since our revenues from the energy
sector are on the decline.
"It will also worsen the balance sheet
position of many firms locally.
"These firms will have liabilities denom-
inated in US dollars, as they engage in
Dr Arjoon s comments came against the
backgroup of the worsening the foreign
currency situation, with Western Union
this week announcing that it is limiting
transactions to US$200 a customer per
day. The current exchange rate is TT$6.40
Arjoon said a depreciated TT dollar will
make it more expensive to purchase US
dollars to import foreign commodities.
"This will do more harm than good,
especially in the short and medium term.
"We must understand that we live in a
very import intensive economy where most
businesses in each sector rely heavily on
importing goods for resale, and interme-
diate goods such as raw materials for the
production process and their daily oper-
"This is clearly more evident for the
retail, automobile and manufacturing sec-
tors," he said.
He said until there is a serious attempt
at diversification this reliance will con-
Arjoon said consumers are already facing
increased costs because of value added
tax, higher utilities costs, increased taxes
and levies, and a reduced fuel subsidy.
"A depreciated currency will only exac-
erbate this, resulting in prices increasing
even further, because of a higher cost of
imports. We will essentially be importing
inflation, and as such, there will be an
overall hike in the cost of living," he said.
"It is not likely that our exports will
increase sizably even though it s cheaper
to attain the TT dollar, as many of our
trading partners are experiencing economic
slowdowns as well.
"They may not be inclined to purchase
more of our commodities, despite them
despite them being cheaper due to the
depreciated TT currency.
"Since we will now be paying more for
imports, our international trade accounts
are likely to deteriorate."
In the medium term, Arjoon said, if the
depreciation worsens, some companies
might be forced to downsize operations
significantly or close down, deepening the
He also foresees reductions in savings
"To meet the higher cost of US dollars,
both firms and consumers will tap into
their savings and save less in the future,
since much of their buying habits involve
importing," he said.
Kelvin Mahabir, CEO of National Flour Mills
(NFM) says the company has set its sights on
Cuban and other Latin American markets to
boost its foreign exchange earnings.
"The Cuban market has been of interest to
us for some time," he said during a media con-
ference yesterday at the NFM s head office,
Wrightson Road, Port-of-Spain, following a
tour of the plant by Cuban Ambassador to T&T
He said Cuba is the first of the Spanish speak-
ing markets NFM will enter this year but there
are others to follow.
In recent months the company has been
affected by worsening foreign exchange situation
and has had extreme difficulty in obtaining US
currency to purchase raw materials.
As a result, NFM is accelerating its export
drive to include new market penetration, as well
development of new products to satisfy regional
In a statement ahead of yesterday s tour, NFM
said by 2017 it plans to increase export sales as
a percentage of total sales to 20 per cent---up
from the 2015 position of 12 per cent.
The company also plans to grow its existing
markets in Jamaica, Barbados, Guyana, Antigua,
Suriname, Grenada, St Vincent, St Kitts and St
Lucia, while entering new markets in Cuba,
Dominican Republic, Panama and Haiti.
NFM said specific branding will allow the
company to make entry at appropriate price
points into Spanish-speaking countries like Cuba
where there appears to be many opportunities
for products such as flour and feed for farmed
fish and for pets.
"NFM will explore partnership opportunities
with Cuban companies in the tourism industry
such as hotels as well as with Government agen-
cies and tilapia farms. NFM will also explore
opportunities to import raw materials from Cuba
such as rice bran. NFM will be visiting Cuba
in the next month to pursue the avenues iden-
tified and agreed and to meet with relevant par-
ties to enable business partnering," the company
NFM chairman Michael Bazie said since most
of the company s raw material purchases are
paid for in US dollars, there is need to "engage
in this thrust of market penetration regionally
to begin to address that imbalance."
Vazquez said Cuban officials will hold talks
with NFM to develop a specific agenda, deter-
mine what the company can sell to Cuba and
explore other ventures.
He said a T&T Manufacturers Association
(TTMA) delegation is going to Cuba next week
to explore opportunities in that country.
"There are opportunities in different sectors
for companies wishing to invest in Cuba," said
As forex situation worsens, economist warns of...
Mills (NFM) CEO
right, how flour
of the NFM plant
With them is
Dr Arjoon's comments came
against the backgroup of the
worsening the foreign currency
situation, with Western Union
this week announcing that it is
limiting transactions to US$200
a customer per day. The current
exchange rate is TT$6.40 to
US$1. Arjoon said a depreciated
TT dollar will make it more
expensive to purchase US dollars
to import foreign commodities.
Royal Dutch Shell likely to sell T&T assets
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