Is 17.5B TTD a Planned Leakage?

Despite persistent warnings by our Auditor General and several independent international agencies, the extractive industry hemorrhage of the public purse continues with Cabinet’s blessings.

In two single years, Trinidad and Tobago lost $17.5Billion TTD in Royalties 2010 and 2018 in “price transfers” according to the reputable Economic Commission for Latin America and the Caribbean (ECLAC). Subsidiary companies were caught selling our goods and services below market value amongst themselves, thereby causing a shift in profit and Billions in tax leakages. Against a background of economic recession one would expect the price transfer crisis to have been addressed decades ago when it was first exposed.

There are other types of leakages which were not mentioned by ECLAC, such as in 2019 it was reported that despite a 64% price increase in natural gas, the State owned National Gas Company (NGC), are selling gas to the downstream sector at an exorbitant loss.

Similarly, another Billion-dollar tax leakage highlighted in three consecutive Auditor General Reports (2015/6/7) refers to an “honour system” allowing extractors in the oil, gas and quarry sectors to self-declare the volumes extracted with no independent third party verification. This creates an institutionalized deficiency whereby any extractor can under report volumes extracted, and therefore pay less Royalties/taxes. It means there is no accountable and verifiable “value for volume” which our vandalized Treasury obtains. Shouldn’t the public have a right to know what volume of our assets is being extracted and what is being paid for it?

In March 2011, this Republic along with several other countries joined the Extractive Industries Transparency Initiative (EITI). This global initiative borne out of the Civil Society led “Publish What You Pay” campaign sought a standard for promoting open and accountable management of the extractive sector.  FFOS have served as a Civil Society Representative on our TTEITI Steering Committee since 2013 and regrettably, in spite of commitments by successive Governments we have not yet achieved “Contract Transparency” and a fair or comparable “Value for Volume.” Without legislation the ultimate purpose of this honourable institution fails in ensuring that our Treasury obtains a fair comparative value for volume. FFOS condemn the lack of political will in the passage of the EITI Bill, the absence of which continues to promote this Billion-dollar annual leakage.

For 60+ years, politicians have facilitated the plundering of our country’s wealth, unbothered by the detrimental impacts on our future generations. Yearly Billions are siphoned out of our extractive sector and yet in 2021, neutered Procurement Legislation, poorly negotiated ALNG/NGC transfer pricing clauses, and a shelved EITI Bill fail to stop the clandestine buying and selling of our assets by wolves in sheep’s clothing. Can the Chairmen of the ALNG/NGC shareholders please come forward and explain this reported transfer pricing fiasco?

After over a century of mineral extraction why are we still unable to protect Royalties from ‘planned and orchestrated leakages’? Why is PM Rowley silent?

Sincerely, 

Gary Aboud

Corporate Secretary

Fishermen and Friends of the Sea