Interconnection, rising food prices, energy deals...

BUSINESS carved out its own niche in 2005 with interconnection, rising food prices and complaints against the port hugging the headlines.

TSTT’s 26-year-monopoly of the sector ended on June 23 with the award of mobile phone licences by the Telecommunications Authority of TT (TATT) to Irish telecom company Digicel (US$16 million) and local telecom company Laqtel (US$9 million).

Hopes that this would soon mean greater consumer choice in mobile phone services quickly turned to frustration as TSTT and Digicel engaged in a virtual telecom war over whether interconnection would be achieved by the November 30 deadline set by the TATT. Digicel (TT) CEO Stephen Brewer accused TSTT of dragging its feet on purchasing the necessary interconnection equipment while TSTT countered that interconnection would not be possible until April 2006.

Brewer called on Public Administration and Information Minister Dr Lenny Saith to intervene but Saith held his ground, saying that Government would not get involved in the interconnection squabble between TSTT and Digicel, despite its 51 percent shareholding in the company.

Christian Mouttet was subsequently replaced as TSTT chairman by Sam Martin as part of a wide-ranging restructuring of state boards. Saith and Sahadeo dismissed suggestions that Mouttet’s replacement had anything to do with his criticisms about Government’s handling of TT’s crime problems or that Government was planning to divest TSTT any time soon.

In the midst of all this brouhaha, TSTT launched its new B-Mobile phone service on November 26 and this caused a mad rush for phones at B-Mobile stores in Port-of-Spain and San Fernando.

Cabinet approved mobile phone concession documents for Digicel and Laqtel in October but both companies declined to sign the documents in December, saying that their lawyers needed time to review the documents.

As the year drew to a close, Laqtel signed a tower-sharing agreement with TSTT on December 12 and its CEO Michael Barrow hinted that the company would soon be ready to sign its concession documents.

Against the background of high international oil prices which held steady throughout the year, Govern-ment unveiled an ambitious $34 billion 2005/2006 budget.

Prime Minister and Finance Minister Patrick Manning said TT’s economic prospects were "particularly encouraging" as global oil prices were not expected to fall below the US$45 to $50 per barrel and global natural gas and petrochemical prices would remain buoyant over the short to medium term.

Despite the rosy economic outlook for TT painted by the Budget, questions remained as to whether the nation’s financial planners had done their arithmetic right. Irregularities in the supplies of US currency in the latter part of 2005, Central Bank raising the repo rate in March, July and September, a slight depreciation in the foreign exchange rate in November and headline inflation hovering in the five to seven percent range due to increases in food prices, provided grounds for many to believe UNC political leader Winston Dookeran’s assessment that Government was creating an economic bubble that would eventually burst.

In presenting the Central Bank’s final monetary policy report for the year on November 14, Central Bank Governor Ewart Williams conceded that the Bank was not satisfied with the levels of headline inflation or the amount of liquidity in the financial system. However Williams assured the population that the situation was under control and the Bank would take whatever steps were necessary to keep things on an even keel.

THAT IMF SHADOW

Allegations of Government engaging in financial squandermania broke in August, after the contents of an alleged draft International Monetary Fund (IMF) Article IV report was leaked to the press. Minister in the Ministry of Finance Conrad Enill said the alleged document contained no evidence about financial squandermania and the final Article IV report would be released by the IMF in November. The IMF announced the conclusion of its Article IV consultations with TT and said it had found no evidence of financial mismanagement by the Government.

The IMF gave Government good marks for ensuring that TT’s economic growth remained robust and said significant progress could be made towards securing "sustainable high living standards" for the population once it exercises a prudent mix of fiscal, monetary and structural policies to ensure that energy sector revenues are maximised.

The IMF also praised Government for moving to establish a permanent energy fund and simplifying the non-energy tax regime. However the IMF cautioned Government about TT’s non-energy deficit which the Budget envisaged would expand in the new fiscal year.

Government was advised by the IMF that its plans for expenditure needed to be assessed against institutional limitations and the ability of the economy to absorb higher levels of expenditure.

Beset by perennial problems of delivering key public sector projects to the public on time, Cabinet met on February 28 at the Chancellor Hotel in St Ann’s and decided to create limited liability companies to assist government ministries to execute Public Sector Investment Programme (PSIP) projects that fell within their portfolios. Among the companies formed to date are the National Infrastructure Development Company, Education Facilities Company and the Rural Development Corporation of TT.

ENERGY: MAIN DRIVER

Energy continued to play its traditional role as the main driver of the national economy. For 2005, the Energy Ministry signed at least six production sharing contracts with foreign and local oil companies to conduct exploration and production activities in TT’s marine acreages. With the ministry planning two bid rounds for onshore and offshore acreages next year, more of these signing ceremonies could be in the offing.

The commissioning of Atlantic LNG (ALNG) Train Four, the establishment of an iron and steel complex by the Essar Group of Companies and the establishment of two aluminum smelters were identified in the 2005/2006 Budget as some of Government’s main priorities to encouraging further development in the energy sector. By year’s end, most of these objectives were well advanced towards completion.

Business man Arthur Lok Jack defined himself as the lead personality in business. In an unprecedented display of philanthropy in September, Lok Jack pledged an endowment of $20 million to UWI’s Institute of Business (IOB) for the development of the IOB’s new Mt Hope campus and to raise an additional $10 million through the private sector. The IOB honoured Lok Jack by renaming its Mt Hope campus as the Arthur Lok Jack Graduate School of Business. On the other side of the coin, allegations of insider trading were made against the business magnate over his purchase of RBTT shares in Guardian Life Holdings, of which he is the chairman.

CRIME

Crime remained a constant concern for the business community throughout 2005 and in May, a dozen leading business organisations came together to form the Organisations Representative of the Private Sector of TT in order to collectively lobby Government, the Opposition and local law enforcement agencies to deal with the nation’s crime problems. Business leaders even threw out the option of a possible shutdown of business in TT if the authorities failed to deal with the problem. Following the November 17 agreement between Government and Opposition in the House of Representatives on several key pieces of anti-crime legislation, the business community claimed their share of the credit for the agreement.

This year was also one defined by shortages of essential commodities such as sugar and cement. In the former case, several businesses were forced in July to curtail their operations or temporarily close operations because of insufficient sugar stocks to manufacture their products. Valley went to Cabinet to approve the importation of an additional 10,000 of sugar and by August the situation was resolved and the affected businesses were back up to full production. Upgrading of Trinidad Cement Ltd’s (TCL) Claxton Bay plant in mid-November resulted in shortages of bag and bulk cement to local suppliers.

Coosal’s managing director, Sieunarine Persad Coosal, led the call from a group of affected suppliers for Government to end TCL’s monopoly of the market and open it up to cement imports. Coosal claimed that 80 percent of the major state construction projects being undertaken in fiscal 2006 would be crippled if there was an unreliable supply of cement in TT.

Still in construction, the Joint Consultative Council (JCC) of the construction industry crossed swords with the Urban Development Corporation of TT (Udecott) over an alleged $700 million owed to local consultants and contractors by the latter. The JCC demanded the resignation of Calder Hart as Udecott chairman and a forensic audit of the company’s books.