GIVING OIL PIONEER AID!

Why was it necessary on Friday for the House of Representatives to consider the exempting from import duties of “certain” equipment brought into the country for use in offshore petroleum exploration and petroleum operations, given the high profitability of the industry? It would be absurd to regard the oil industry in the same light as other less circumstanced industries seeking to qualify under the updated version of the 1950 Pioneer Aid to Industries Ordinance and the Income Tax (In Aid of Industry) Ordinance. It would be difficult for the Ministry of Energy to offer reasoned arguments to demonstrate that the petroleum industry, particularly at a time when the international price for sweet crude has reached as high as US$55 a barrel, needs to be treated as a concern requiring financial assistance by the Government of Trinidad and Tobago.

If the oil industry can be seen to be in desperate need of tacit financial assistance from Government, at a time when steadily increasing demand by China, Japan, the United States of America and the European Union for crude, has seen prices reaching an all time high and still rising, then there may indeed be a powerful case for the about-to-be displaced food vendors at the Breakfast Shed! It is especially troubling  that the Ministry of Energy, which has taken upward of two years and has not completed the job of drafting and introducing a new oil tax regime to replace the prevailing system under which oil companies are being under-taxed by billions of dollars, can still find the time for legislation which would place even more money into the coffers of the companies.

Had this motion which was scheduled for debate on Friday been introduced in 1982 or 1986 or even as late as 1993, it would have been more understandable, on the ground at least that there was a sense of urgency in seeking to formulate policies, not only to attract new oil majors to this country, but to encourage those already here to expand petroleum exploration and petroleum operations. The year, 2005, with its escalating prices for crude on the international market and the industry’s high profit margins, even taking into account the decline in the value of the United States dollar, has borne witness to investors in oil racing with unprecedented dividends all the way to the bank. Yet the Energy Ministry insists on tacitly according oil companies operating here, the equivalent of Pioneer Aid status.

When the Pioneer Aid to Industries Ordinance was enacted in 1950, the sharp economic slump following on the 1939-1945 Great War had demanded an entirely new approach, if then badly needed capital was to be attracted to Trinidad and Tobago.  The Ordinance and its virtual twin, the Income Tax (In Aid of Industry) Ordinance incorporated several measures including a five to ten-year tax holiday, a depreciation allowance and the exempting by the Customs Department of all equipment necessary for the setting up of plants. Although the two Ordinances failed to achieve what they set out to do as a mere 7,000 largely low-paying jobs were created at the end of 15 years, and many companies left at the end of the tax-free period, what does Government hope to achieve this time around by its 2005 version of Pioneer Aid?