Home' Trinidad and Tobago Guardian : September 12th 2013 Contents SEPTEMBER 2013 • WEEK TWO www.guardian.co.tt BUSINESS GUARDIAN
ENERGY | BG9
Petrotrin president Khalid Hassanali has said
the fiscal incentives announced in the budget
for mature field development, improved
capital allowances for exploration, devel-
opment and work overs will lead to an
increase in production at the state owned
In a telephone interview on Tuesday, Hassanali said,
"The measures are welcomed because it will mean that
some of the fields that were not economic for Petrotrin
to produce will now become viable, and it will also lead
to an increase in partnerships with Petrotrin and other
companies as we try to first of all arrest the decline and
then increase production."
Asked if this meant that the State owned company will
be farming and leasing out more
acreage to the private sector, Hassanali
said, "That is a sensitive topic, but I
will say that we will have more part-
In his 2013/2014 budget presentation, Finance Minister
Larry Howai said Government was proposing a tax incentive
to ensure idle wells could be brought back into produc-
"I propose to allow 100 per cent of the total costs of
work-overs and qualifying side-tracks in the year incurred.
This will have an impact of attracting investment in already
producing and idle wells" the Finance Minister told the
Hassanali said Petrotrin had already made some progress
in increasing production in its Trinmar operations, but
insisted the increase in production would have been more
pronounced had it not been for the challenges of poor
Energy Chamber's response:
The Energy Chamber said it welcomed the extension of
fiscal incentives on mature field development, improved
capital allowances for exploration, development and work-
overs as well as wear and tear allowances for gas compression
According to a release from the chamber, the improved
exploration and development capital allowances will ensure
that a number of crucial oil and gas development projects,
that previously did not give oil and gas companies the
needed rates of return to sanction investment decisions,
are now economic. This should enable the necessary massive
injections of capital to be made available for the develop-
ments to go ahead.
It said, "The decision to allow the carry forward of the
20 per cent tax credit against the Supplemental Petroleum
Tax for mature field development is an encouraging move,
especially for small oil companies with
lower overall tax bills."
"The chamber is also hopeful spe-
cific tax allowances on work overs and
qualifying side tracks will also help
maintain the levels of oil and gas production, especially
from smaller independent lease and farm out operators."
Helena Inniss-King, energy consultant and former director
of resource management at the Ministry of Energy, said
the measure was more likely to halt the decline rather than
increase crude production.
In an interview from Columbia where she is attending
a conference as president of the Geological Society of T&T,
Inniss King said, "I can t speak to Petrotrin, but with
respect to a real increase in crude oil production, we need
to find new reserves."
Inniss-King said Repsol s aggressive exploration pro-
gramme, if successful, was also likely to bring some relief
to the constant decline in reserves, but added these were
not short-term goals.
The Government should not expect maxi-taxi operators to convert
from diesel fuel to compressed natural gas (CNG) unless it is prepared
to pay up front for the conversion.
Linus Phillip, president of the Route Two Maxi-Taxi Association,
told the Business Guardian in a telephone interview on Tuesday
that maxi-taxi operators did not trust the Government and would
not be taking up the offer to convert and then claim the cost back
as a tax credit.
"Our position has been and it remains that if the Government
wants us to convert to CNG, they will have to buy the kits for us
and pay for the conversion. We do not trust the Government when
they say we will be able to get the money back after we convert.
We have been down that road already and we are not going there
again," Phillip said.
In his 2013/2014 budget presentation on Monday, Finance Minister
Larry Howai announced the Government was extending the tax
credit for converting to CNG to individuals and companies.
"I propose to replace the existing incentives of tax credit of 25.0
per cent and wear and tear allowance for fleet operators with a
simple tax allowance of 100.0 per cent on the cost of converting
motor vehicles of either individuals or companies to use CNG up
to a maximum expenditure of $40,000 per vehicle. This would
allow a benefit identical to the tax credit incentive, which would
now extend to both individuals and companies who file annual
income tax returns."
Phillip, who heads the largest maxi-taxi body in the country,
argued that the Government had broken promises to maxi-taxi
operators and was still owing them money and that operators would
not be caught putting out money in support of a government
measure in the promise of it being returned.
He said, "In 2005, the Government came to us and said it wanted
to improve the efficiency of transportation along the East/West
Corridor and to do this, it wanted maxi-taxi owners to convert
from small to large maxi-taxis. They tell us we will get the VAT
and purchase tax off and, to date, we have not gotten our money
back. If you have been fooled once, do you expect us to be fooled?
We do not trust the Government. Not just this government, any
Phillip said the Minister of Finance had promised to address the
issue during the supplemental budget of 2013 and that did not
happen. He said the maxi-taxi drivers are simply not prepared to
go down that route again.
He said if the members are forced to put the money out and
reclaim it as a tax credit, there will be increases in fares because
they will have to pass on the cost of the initial outlay of capital
to the travelling public.
He also questioned the seriousness of the Government efforts
to encourage conversion. Phillip said the necessary infrastructure
of CNG filling stations had not been addressed and that the supply
side of CNG conversion needs to be addressed if the plan is to suc-
But the Finance Minister promised $2 billion will be spent be
a newly-created state enterprise in an effort to ensure that the CNG
infrastructure is in place for wide-scale conversion.
He told the Parliament, "The technical work for accelerating the
use of compressed natural gas as a major alternative fuel in the
country is now ready to commence, with the recent decision by
the National Gas Company to undertake a phased investment over
a five-year period at a cost of $2.07 billion through the establishment
of a new company."
Howai said Phase 1 would involve an expenditure of $500 million
over a two-year period which would result in the construction of
22 new CNG stations and for the conversion of 17,500 vehicles.
Phase 2 would involve an expenditure of $1.57 billion with the con-
struction of the remaining stations and the continuing conversion
The Finance Minister said the country could save close to $4
billion annually and also make additional revenue from export of
Maxi-taxi body to
Pay us upfront
to convert to CNG
Fiscal incentives will
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