Thursday 20 September, 2018

Imbert: Energy Ministry gave wrong figures to S&P

A downward revision by Standard and Poor’s Global (S&P) to a negative outlook was as a result of incorrect figures provided to the global credit ratings agency by the Energy Ministry.

The international ratings agency affirmed and maintained the country’s long term sovereign rating as BBB+ which is investment grade, but revised its outlook for Trinidad and Tobago from stable to negative as it expects macroeconomic and external imbalances to persist over the next two years.

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In determining its outlook, S&P pointed to persistent gas supply shortages stating that it does not expect crude oil production to increase over the next two years, due to natural decline and uncertainty surrounding new sources of production.

Seeking to explain the negative outlook revision by S&P, Finance Minister Colm Imbert said inaccurate forecasts on oil and gas production from the Energy Ministry factored in to the negative outlook.

“The Ministry of Finance was faced with the challenge of overcoming inaccurate forecasts of oil and gas production given by the Ministry of Energy and Energy Industries to S&P. These inaccurate forecasts were based on 2017 estimates which bore no relationship to the actual production of gas in 2018.”

“Indeed, whereas the average production of natural gas in Trinidad and Tobago in 2017 was 3.37 billion standard cubic feet per day, by January 2018, gas production had improved to 3.91 billion standard cubic feet per day, an increase of 16% over the 2017 average.”

Crude oil production, together with oil exploration represents 17 percent of the energy sector.

“However, S&P was unfortunately given lower forecasts of gas production by the Ministry of Energy and Energy Industries than the actual 2018 production, as well as inaccurate forecasts of oil production,” Imbert explained.   

S&P’s BBB+ (investment grade) credit rating for 2018 is based on the fiscal consolidation programme of the Government and sizable government assets which continue to support creditworthiness. 

Imbert noted that despite the unfortunate revision this is the first time in three years that Trinidad and Tobago’s credit rating has not been downgraded by S&P, which he said is welcome news.

“The Ministry of Finance considers it a significant achievement that despite all of the economic challenges that our country still faces, our credit rating has been affirmed for the first time in 3 years, and we have not been downgraded in this year 2018.” 

 

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