Retain fuel subsidy

Many lower income Trinidadians and Tobagonians either do not buy the now zero rated items or hardly ever do so. In turn, average middle or upper middle income households, which purchase the items, will “save” anything between an estimated $75 and $80 a month! But while the People’s Partnership Government trumpeted the savings, following on the public declaration at a pre-Budget rally at Mid Centre Mall last weekend, the nation was bracing itself for massive increases in the nation’s cost of living, with the news that the fuel subsidy, introduced on petroleum products in 1974, may shortly be history.

Already, premium gasolene, one of the major components of the fuel subsidy, has been, unceremoniously, pushed off the list and as from yesterday was sold at service stations at $5.75 a litre. Other fuel subsidy products waiting to be pushed aside are regular gasolene, domestic kerosene, industrial kerosene, marine diesel and gas oil.

While the fuel subsidy is estimated to cost the State $4 billion annually, it not only saves taxpayers, individual or corporate, billions of dollars annually but makes the nation’s products more competitive in the international market place.

Next to the Common External Tariff (CET), it allowed Trinidad and Tobago produced goods and services that more favourable entry into the markets of Member States of the Caribbean Community of Nations (Caricom), and has been a major contributory factor in Caricom being this country’s second largest export market. The United States is the largest.

In addition to the above pluses, the fuel subsidy, the brain child of the nation’s first Prime Minister, Dr Eric Williams, ranks with the Caribbean Basin Initiative (CBI) as one of the keys to export market share in the US.

Going yet further, it was one of the key factors which contributed toward making Port-of-Spain, the preferred candidate in the memorable race to be the headquarters of the now abandoned, or is it temporarily sidelined, Free Trade Area of the Americas (FTAA). Yet, oddly enough, as Trinidad and Tobago gears itself to increase its market share in the unsettling challenges posed by the international financial crisis, its fight to tap, increasingly, into the emerging Latin American market is being made, however unintentionally, that much more difficult by the embarrassingly clear lack of foresight by the People’s Partnership Administration. Yet it is not too late for the Government to rethink the issue.

Meanwhile, TT’s United States petroleum market as well as its refined petroleum products market in the Commonwealth Caribbean is under siege. The US, because it is bent on fully developing its shale oil and gas fields will import considerably less of our energy supplies.

Additionally, our energy market in Caricom has been affected, adversely, by Venezuela’s Petro Caribe strategy to increase its (Venezuela’s) crude oil markets in the Commonwealth Caribbean at the expense of Trinidad and Tobago.

And even as TT turns to expand its energy markets in South America, Brazil which for decades has been a major producer of cocoa beans and coffee seeks to become a not insubstantial producer of crude. Added to this is the reality that TT’s crude oil and natural gas reserves are dwindling and are expected to run out in a matter of decades.

The need to develop the non-energy sector is crucial, and an important part of this strategy is the fuel subsidy, which has made and continues to make Trinidad and Tobago’s non-energy sector products more competitive regionally and internationally as well as in the domestic market.

The formation, several years ago, of the Association of Caribbean States (ACS), embracing Caribbean countries and South and Central States washed by the Caribbean Sea, and headquartered in Port-of-Spain, provides Trinidad and Tobago with easier access to these countries’ markets. But the need to be competitive which was always there remains there. And with nations, such as India and China, turning out cheaply produced goods the need for TT goods to be competitive in the ACS market, as well as in all other markets, is critical.

Factors which have led within recent years to an expansion of non-energy trade between this country and the ACS and other areas of Latin America have been our bankable work force, fuel subsidy, strategic location and with these the cost of our products. Abolishing the fuel subsidy will erode our competitiveness.