Home' Trinidad and Tobago Guardian : June 26th 2014 Contents Small oil economies
Hosein said transparency is particularly critical in small,
abundant petroleum exporting economies because of the prin-
"The principal agent problem is a familiar one in economics
and occurs when one entity has to make decisions on behalf
of another entity. The reason for the emergence of the
principal/agent dilemma is that sometimes the agent is moti-
vated to operate on his/her own interest, rather than serve
those of the principal. The typical principal/agent problem
occurs when information asymmetry exists and the principal
and the agent have different interests. With information asym-
metry benefiting the agent, it is not easy for the principal to
determine if the agent is optimally acting in its interest especially,
when to bridge the information gap is costly," he said.
He said the extractive industry sector has a variety of principal
and agent problems.
"The principals are the people of the economy, who own
the sovereign wealth and the agent is the government. The
Multinational Corporations (MNCs) that negotiate with the
government are also accountable to their shareholders and try
to represent their interests. There is room here for principal
agent problems, when deals are non-transparent and shaky,
as ministers can take bribes etc. from firms at a much higher
level than any random citizen can provide," he said.
He added that the Extractive Industries Transparency Initiative
(EITI) focuses in T&T on the amount of revenues collected
by the State from various extractive sector companies, and
whilst this is useful, the use of these resources is where trans-
parency issues arise.
"Indeed, it is felt in some quarters that there is a tendency
by the Government to reduce the amount of money going
into the Heritage and Stabilisation Fund (HSF) by pitching at
a high-budgeted price of oil. The Heritage and Stabilisation
Fund was setup in T&T with the passing of the H&SF Act
No 6 in March, 2007. The higher the budgeted price of oil
in relation to the actual price of oil, the lower the amount
that goes into the Fund," he said.
He echoed bpTT's president, Norman Christie, who had
said that civil society groups must be trained and educated
on how to interpret the EITI Report.
Christie, who also spoke at the same seminar, said: "UWI
identified a significant need to ensure more in society are
empowered with not only access to, but a deep understanding
of the report like those from the T&T EITI. That is why we
have partnered with UWI for this conference. Our goal is for
wider society to read and correctly interpret and understand
the data presented to them."
Hosein said a "vibrant civil society" is important.
"The EITI assumes the existence of a vibrant civil society
grouping that can look at the output of the EITI report and
make meaningful use of it. In this regard what is required to
complement the EITI report in T&T is to provide training
seminars for these various civil soci-
ety institutions with a strong block
of training so as to strengthen their
absorptive capacity for information
related to the energy sector."
He said the media can be useful
in this regard.
"There is also perhaps the need
for a training seminar for media rep-
resentation on the state of energy
sector in the T&T economy. This
will enhance their capacity to sci-
entifically comment on the facts in
a responsible manner. This in turn
will widen the block of information
that filters down to the average per-
son on the street, reduce information
asymmetry and help people in gen-
eral to make more informed judge-
ments and comments," he said.
Christie had called the EITI Report
a "paradigm shift."
"We at bpTT believe that a pub-
lication of T&T's first EITI Report
represents a most significant policy
and paradigm shift, as it relates to trans-
parency, accountability and good governance on the part of
the state. As a founding member of the EITI and an ultimate
member of the initiative board, bpTT works with governments
around the world, and also with NGOs and international agen-
cies on increasing the transparency of revenue flows," he said.
Christie also said bpTT has partnered with the EITI in
various workshops and has attempted to ensure a wide dis-
persion of knowledge on the reports to all stakeholders.
"BPTT is committed to transparency and publishes infor-
mation annually in our sustainability report which is available
online. A review of the report shows that our company echoes
the views of the local EITI chairman, Victor Hart. He expressed
the view that it would bring about a greater level of public
engagement and discussion on the management of this country's
natural resources. Like most multinationals bpTT lives on
principles of transparency," he said.
He added, in 2012, bpTT partnered with the Trade and Eco-
nomic Unit of the UWI in hosting the revenue management
"The discussions at the conference were timely as they were
held in advance of the release of T&T's first EITI Report which
shows billions of dollars paid in taxes to the Government from
the extractive industries each year. At the conference it was
known that the Report was in the pipeline and the papers
presented were shared with the Government," he said.
T&T's country's first ever EITI Report disclosed details
about all government revenues for 2011 and the report was
published Monday, September 30, 2013.
JUNE 2014 • WEEK FOUR www.guardian.co.tt BUSINESS GUARDIAN
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is most susceptible
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