Work before pay — Errol McLeod

Talk of an energy boom is creating the “pay without work” syndrome, Errol McLeod  told those who had stayed back to hear him speak at the last session of the energy conference at the Hilton Trinidad last week. “Indiscipline and excesses are given license by those whom the old country folk would have described as ‘never see come see,’” said the OWTU trade union leader who warned against talking about an economic boom because of the indiscipline  it brought. In addition, he said massive sums of money were being invested in the oil and gas sectors but few jobs were being created. “The people want energy, services and sustainable development,” he told those at the conference organised by the South Chamber of Commerce. “But most of all they need decent jobs and income and I put them in that order — jobs and income because in periods of boom, as some have suggested we are going through right now,” he continued.

He said he made himself unpopular sometimes when he pointed out to workers that “as far as I am aware it is only in the dictionary that you find pay coming before work.” “Even as we map and manipulate high unemployment figures, there is a shortage of skilled labour and therefore unable to meet industry demand,” he said. For labour, he said the path of energy sector development over the past 15-20 years has been hard. The oil and gas industries are now employing fewer and fewer people. “That is a fact,” he said. “There is investment and production without jobs, there is wealth creation without fair distribution,” he added, noting that from 2000 the country hinged its development on energy more than ever before. In an interview after, McLeod said that unless the poverty gap was reduced there could be “an explosion where people see a small, elite group in the society enriching themselves from the spoils and growth of the energy sector, and nothing for them.”

“They are going to rebel against that,” he warned, noting that TT needed to take growth and transform it into development. There was, he stressed, a distinction between growth and development With all the talk of a boom, McLeod said  there was still little to show for it. He said while it was true that there was high employment during the construction of these plants -— LNG Trains, aluminium smelters, ethylene complexes and  power generation units, their impact on the generating employment after was negligible. Describing the energy companies as transnationals that have gotten better at cutting costs and providing cheap fuels and energy, McLeod said that this was not all that was required or needed. “There is  industry growth but there is little employment growth,” he said. “The forces of industry restructuring that have devastated manufacturing employment in many places are having the same impact in energy production,” he said.

He said like the labour crisis in manufacturing some years ago, “the uncertainties for labour in energy production has profound implications for other sections of the community because they do not require people in much the same way as the service industry does.” This, he said, when combined with the capitalist’s drive to make money resulted in a rapid contraction of employment levels. “Employment numbers across the globe are falling even as production increases in the energy industry,” he added. On the energy sector virtually ceasing to create employment, he said, “Whatever contribution they are making, it is not one that includes employing people.” He added that the quest for profits was what was driving the energy companies.

“Big business,” he said, “makes money out of energy production by selling more and more while paying less and less per unit of production — and that is business, and I don’t know that I am quarrelling about that now.” He said he recognised that one business will survive over another where it can achieve lower production costs, thereby enabling lower prices and an ability to win market share. He bemoaned the fact that energy had removed itself not only from most of the community but even from areas where it was once a major contributor. He recalled the students’ apprenticeship programme which paid the trainees a stipend and who, in turn, learnt the ropes which benefitted not only the industry but it also kept the technical vocational schools alive. These, he said, have been replaced by “dysfunctional training schemes whose candidates are now made to pay to enter.”

Give us 15 percent of energy projects - RBTT CEO

RBTT CEO Jerome Sooklal says while local financial institutions must find mechanisms to participate in the energy sector, government should offer at least 15 percent ownership in future projects. Speaking at the energy conference last week, Sooklal said the government should consider giving  “qualified” nationals the right of first of refusal to own at least 15 percent of energy projects in  the sector but  without compromising existing contracts and agreements. In addition, it must enhance the investment climate, which he said, was critical to minimising capital flight and migration of educated and high net worth individuals in the country. government, he said should divest a portion of its strategic state enterprises and encourage large entities like bpTT and  BG to be quoted on the local stock exchange, thereby providing locals with the mechanism to invest directly in the sector.

He said financial institutions should partner with each other on various large deals and  increase the syndicated loan market in the local industry.  Institutional investors, he said,  should be proactive in approaching the regulators to alter existing legislation, thereby making it easier for them to invest in this sector He also suggested altering the existing legislation to allow institutional investors to easily invest in this sector, noting that banking regulations limit the amount of money banks can lend. “If you take the RBTT bank, Trust and Merchant Bank, the total amount that we can put in one one project is $US 95-100m This, he said, was “not very much when you consider the size of the projects.” Locating such large amounts of  long-term low cost financing is extremely difficult for banks, if not impossible, he said. He proposed loosening these regulations in order to allow more participation  in the sector, noting that institutional investors are the best mechanism for wider public ownership.

He also said that taxation for companies should be lowered : “If people invest they will like to keep a larger portion for those returns for themselves.” Sooklal said government should divest the holdings that they own in the energy sector. “One of the key things that the government can do is to divest part of its shareholdings and have them listed on the local stock market so that local investor can participate,” he said. Most investors would invest in profitable companies with a profitable track record and quite a few companies meet this criteria, he said.  “The industry has matured and I think it is time for the wider community to get piece of the action.” He said partnering with overseas banks is an option for the local ones, he said, noting that this   will allow them  to place debt outside TT and the ability to learn how to do project financing and for such massive projects. Local banks need to be more innovative to get around funding, he said. “Put your money where your mouth is.

If we want to stimulate growth, we have to invest ourselves and demonstrate to our clients that we are also willing to take the risk,” he told those attending the conference. “Take a lead role in educating your clients on the energy industry from an investment perspective,” he urged. He noted that size of the investments required can be prohibitive to local investors and that financing for such projects is significantly cheaper if it is sourced outside of the country. Multi-nationals have a significant advantage in this regard over potential local investors, he added. Sooklal said it was difficult to provide traditional debt finance to the energy industry using local capital. In order to do so and to reduce the current gap between rich and poor  greater number of energy companies must list locally; He said with increased activity on the local stock exchange, more energy companies need to go public and suggested that the stock exchange needed to start trading on a daily basis. This facilitates an easy flow of capital, he argued.