28th March 2024

Barbados Prime Minister Mia Mottley has tabled what is largely being hailed as a pro-business budget for 2024/2025.

The budget followed estimates detailing an accrual-based total outlay of US$2.33bn, including US$1.71bn allocated for current expenditure and US$622.4mn earmarked for investments in capital projects and debt repayment.

While budgetary allocations to line ministries and other entities are usually the focus of budget speeches, Mottley spent a lot of time detailing changes to fiscal policy and investment strategy.

“There will be no new taxes… I am telling you up front that I will warn you that there will be some adjustments during the course of this year of a few rates that we will need the public to be able to bear,” began Mottley, as she focused on reviewing tax structures and improving financing access for both private and public sectors.

The Prime Minister announced a sweeping reform of corporate taxes, introducing multiple tiers of tax rates to bolster economic growth and innovation. Small businesses registered under the Small Business Act will benefit from a reduced tax rate of 5.5%, while a general 9% rate will apply to most other resident entities.

Additionally, resident entities that are part of multinational enterprises (MNEs) falling within a defined scope will face a 15% top-up tax. To further stimulate job creation and innovation, the reforms include refundable tax credits for employment and research and development activities. A new 4.5% tax regime has been created to govern intellectual property, designed to incentivise investment in intangible assets.

Mottley also revealed plans to establish “Business Barbados,” a state-owned enterprise designed to offer comprehensive support to local businesses from inception through their entire operational lifecycle. This initiative is poised to streamline business processes, with the Corporate Affairs and Intellectual Property Office (CAIPO) being integrated into the new entity.

Business Barbados will house two separate divisions within its structure: the Corporate Registry, to handle business registrations, and the Intellectual Property Division, to manage IP-related matters, enhancing the ease of doing business in Barbados.

The Prime Minister’s newly proposed tax incentives, effective from 1 April 2024, include a 25% non-refundable tax credit to enhance research in marine studies and the green economy; a 50% refundable credit for projects achieving net zero emissions; 50% refundable credit for local art purchases up to US$0.5mn; and a 50% tax credit for the development of entertainment and sports venues, and the construction of laboratories.

Notably, a significant 100% tax credit is introduced for local companies that invest in digitising, reengineering their business processes, and system upgrades, applicable within the same income year upon completion, from 1 April 2024 to 30 June 2025.

Mottley also unveiled financial assistance to enhance food production, including increasing the rebate on cow purchases to 80%, and providing significant rebates on hay, pastureland establishment, harvesting equipment, infrastructure repair and upgrades. Crop farmers are also in line to benefit from the US$2.6mn investment in irrigation infrastructure.

She also announced that the government will be significantly accelerating the drive to address renewable energy battery storage capacity in the country through direct negotiation amidst a backlog of applications totalling 323MW, with the current grid only able to absorb 100MW.

In his budget response, recently appointed Opposition Leader, Ralph Thorne criticised the government’s optimistic portrayal of the economy, urging them to disclose the real economic situation and address the impact of inflation on citizens.

“We are in an environment where this government is now employing the largest number of consultants ever in the history of political administration,” said Thorne as he ripped the spending of the Mottley Administration and identified areas of wastage and alleged corruption in government projects.

However, the budget has been positively received by the private sector by entities such as the Barbados Private Sector Association (BPSA) and members of the Barbados Chamber of Commerce and Industry (BCCI).

“We are extremely happy with the majority of the content of the budget. We’ve been asking for several years, if not longer, for ease of doing business, business facilitation, regulatory transparency, and the like,” said BPSA Chairman, Tricia Tannis. BCCI President, James Clarke said that the budget will “provide incentives in a more navigable regulatory environment to create simpler paths to unlocking private sector capital in the country”.

However, University of the West Indies professor, Justin Robinson criticised the budget as lacking detailed fiscal analysis and questioned the effectiveness of creating Business Barbados, another state-owned enterprise to improve the country’s business environment.

Robinson also focused on the use of additional tax credits and rebates, voicing scepticism of their ability to achieve intended outcomes, given the already low corporation tax rate. He also called for more clarity on initiatives such as renewable energy investment.

This is a lead article from Caribbean Insight, The Caribbean Council’s flagship fortnightly publication. From The Bahamas to French Guiana, each edition consists of country-by-country analysis of the leading news stories of consequence, distilling business and political developments across the Caribbean into a single must-read publication. Please follow the links on the right-hand side of this page to subscribe, or access a free trial.

Photo: caribbeannationalweekly.com

15th March 2024

Prime Minister Ariel Henry has announced his resignation following a meeting of CARICOM leaders and other international allies.

“The government that I am leading will resign immediately after the installation of (a transition) council,” Henry said on Monday in a video address from Puerto Rico, as he thanked the Haitian people for the opportunity he had been granted.

“I’m asking all Haitians to remain calm and do everything they can for peace and stability to come back as fast as possible,” said Henry.

His resignation comes after the government extended a state of emergency in the Ouest Department, home to the capital, Port-au-Prince, to 3 April 2024, following a surge in gang violence.

The state of emergency saw attempts to introduce curfews and protest bans with little effect as gangs ramped up violence, including attacking prisons, freeing an estimated 3,500 prisoners. 

Prime Minister Henry, seen as lacking legitimacy, had faced pressure to resign amid threats of civil war from gang leaders.

“If Ariel Henry does not resign … we’ll be heading straight for a civil war that will lead to genocide,” said the country’s most well-known gang leader, Jimmy “Barbeque” Chérizier, himself a former police officer.

“We ask the Haitian National Police and the military to take responsibility and arrest Ariel Henry. Once again, the population is not our enemy; the armed groups are not your enemy. You arrest Ariel Henry for the country’s liberation,” said Chérizier.

Despite growing pressure, Henry had so far refused to resign. According to reports, the embattled Prime Minister has been unable to return to his country following a trip to Nairobi, Kenya where he signed an agreement with President William Ruto for the deployment of police officers in the UN-backed mission to Haiti.

However, Henry’s plane was forced to land in Puerto Rico as the main airport in Port-au-Prince remains under siege by gangs. Sheila Angleró Mojica, spokesperson for Puerto Rico’s Governor, confirmed Henry’s arrival in San Juan, while Haiti’s closest neighbour, the Dominican Republic confirmed that requests by the US and Henry for permission for his plane to make an “indefinite layover in Dominican territory” were denied.

The US, as well as other countries and institutions, have evacuated non-essential embassy staff from Haiti amidst escalating gang violence. The Pentagon has also confirmed that it has deployed additional personnel to “augment the security” at its Port-au-Prince Embassy.

The escalating violence in the country has caused the international community to step up efforts to intervene. On Monday 11 March 2024, a meeting chaired by current Chairman, Guyanese President Irfaan Ali was convened in Jamaica by CARICOM and international partners including US Secretary of State Antony Blinken in an effort to eke out a way forward for the troubled Caribbean nation.

The “will seek to advance discussions on support for Haiti as well as the way forward for Haitian governance pursuant to Haitian-led and Haitian-owned solutions which have been facilitated under the guidance of the Caricom Eminent Persons Group (EPG),” said a press release from the office of Prime Minister Andrew Holness.

The meeting saw participation from leaders of The Bahamas, Barbados, Dominica, Grenada, Guyana, Jamaica, and St Vincent and the Grenadines, as well as eight international partner countries and the UN invited by the CARICOM Heads of Government.

Of note however was the physical absence of embattled Prime Minister Ariel Henry, who participated virtually. The Jamaica Observer reported that efforts to get Henry a flight from Puerto Rico were eventually “abandoned “as calls intensified for him to resign”.

“We acknowledge the resignation of Prime Minister Ariel Henry upon the establishment of a transitional presidential council and the naming of an interim Prime Minister,” announced President Ali at the post-meeting press conference.

Barbadian Prime Minister Mia Mottley conveyed that key Haitian figures have reached a broad consensus on the immediate formation of a presidential council. This council would play a pivotal role in appointing a Prime Minister, who, in collaboration with the council, would facilitate the formation of a government. Moreover, Mottley emphasised the necessity of establishing a provisional electoral council to move the country closer toward democratic elections.

President Ali said that the presidential council will comprise two observers and seven voting members including political stakeholders, the private sector, civil society and one religious leader. Members of the council will be ineligible to participate in the next election in the country.

Speaking at the press conference, Secretary of State Blinken announced that the US would increase its support for a UN-endorsed multinational security force aimed at assisting Haitian law enforcement in combating gangs, providing a further US$100mn. Additionally, US$33mn in humanitarian aid will be allocated, raising the total proposed US contribution to the force to US$300mn. However, according to a spokesperson for the UN, as of Monday, only less than US$11mn had been deposited into the UN’s dedicated trust fund.

This is a lead article from Caribbean Insight, The Caribbean Council’s flagship fortnightly publication. From The Bahamas to French Guiana, each edition consists of country-by-country analysis of the leading news stories of consequence, distilling business and political developments across the Caribbean into a single must-read publication. Please follow the links on the right-hand side of this page to subscribe, or access a free trial.

Photo: /FILE/Haiti Premature

1st March 2024

Weeks after rejecting an IMF call to implement a personal income tax on its citizens, The Bahamas has announced plans for the introduction of a corporate top-up income tax.

Speaking in his midterm budget communication to the nation, Prime Minister Philip Davis said that the country is moving towards implementing the Qualified Domestic Minimum Top-Up Tax (QDMTT).

The tax will target only multinational companies earning over €750mn (US$812.23mn) annually, aiming to generate US$140mn yearly.

“We are talking about very, very big companies. The QDMTT is a way to make sure these very big companies pay at least a minimum amount in taxes on their profits in every country where they do business,” said Davis.

The 15% tax is one of the controversial recommendations from the Organisation for Economic Cooperation and Development’s (OECD) ‘Pillar Two tax framework’ which calls for a common global approach to taxing large multinational companies.

“We have two interrelated goals, to make sure The Bahamas captures the tax revenues of these very large multinationals doing business here, and to use the fiscal space created by the new revenue to, among other things, provide substantial relief for Bahamian taxpayers,” explained the Prime Minister.

He made the argument that if The Bahamas opts not to levy the tax, other jurisdictions would do so.

“May I add here, Madam Speaker, that if we do not implement this Pillar Two tax on that multinational entity that is doing business in The Bahamas; if we don’t collect it here, they’ll have to pay that same tax in their home jurisdiction, and many of the multinationals doing business here prefer to pay us,” asserted the Prime Minister.

“We ought not to allow that opportunity to pas because they have to pay it anyhow. Why should they not pay it in the jurisdiction in which they are operating?” he asked.

Davis insisted that his government would not implement an income tax for domestic companies whose revenues exceed a particular threshold, at least in the near term. He however added that if such a tax were to be introduced, they would follow a “more equitable approach for Bahamian businesses”.

In an interview with the Tribune, Financial Secretary, Simon Wilson admitted that the government does not currently have precise data on the number of Bahamas-based firms affected by the tax, but said that it is expected to be a relatively small figure.

Probable candidates include major hotels and resorts like Atlantis (Brookfield), Baha Mar (Chow Tai Fook Enterprises), Sandals, RIU, and Warwick, all part of international chains. Additionally, Canadian-owned banks such as Royal Bank of Canada, CIBC, and Scotiabank, along with several operators in the international financial services sector, are also speculated to qualify.

The Tribune noted that entities like the Bahamas Telecommunications Company (BTC), affiliated with Cable & Wireless Communications (CWC) and Liberty Latin America, as well as Commonwealth Brewery, primarily owned by Heineken, and major oil companies like Rubis and Esso (Sol Petroleum), might also fall under the tax’s purview.

Some were surprised when the Prime Minister revealed that significant work has already been done to advance the plan of introducing the tax in a relatively short period of time.

“We have issued a consultative green paper on corporate income tax strategies for The Bahamas, and engaged in extensive bilateral discussions with various in-scope companies for Pillar Two in our jurisdiction,” said Davis on local sensitisation efforts.

He also said that the local tax authorities have engaged with international institutions such as the IMF to help guide what will likely be a relatively complicated implementation exercise.

“During the first two weeks of February, policymakers and our technical teams participated in a workshop facilitated by the IMF, in order to discuss policy design elements that would inform the legislative drafting exercise,” revealed Davis.

The government is aiming to have a draft of the new income tax legislation completed by May 2024 ahead of the 2024/2025 budget presentation. In the meantime, the Davis Administration has been exploring ways to have the tax accrue until the required law is passed.

“We have been advised that the retroactive implementation of taxes is not that uncommon in the developed world, and that these large companies who will be impacted would also be aware of it, and there are certain benefits to that approach,” said Financial Secretary Wilson, even as he conceded that work on designing the accrual mechanism remains “a work in progress”.

This is a lead article from Caribbean Insight, The Caribbean Council’s flagship fortnightly publication. From The Bahamas to French Guiana, each edition consists of country-by-country analysis of the leading news stories of consequence, distilling business and political developments across the Caribbean into a single must-read publication. Please follow the links on the right-hand side of this page to subscribe, or access a free trial.

Photo: Dante Carrer

16th February 2024

The Government of Guyana has revealed that satellite imagery provided by western allies are showing Venezuelan troop movements along the border in the disputed Essequibo region.

Guyanese authorities including Foreign Minister, Hugh Todd, and Foreign Secretary Robert Persaud have argued that the Venezuelan government under President Nicolás Maduro is violating the Argyle peace accord signed in St Vincent in December 2023.

“We are not surprised at the bad faith of Venezuela. We are disappointed, not surprised. Guyana has a history of entering bilateral discussions in good faith. Unfortunately, we cannot say the same thing about our neighbour to the west,” said Persaud in an Associated Press interview.

This latest escalation comes as ExxonMobil has announced plans to drill and appraise seven new wells within the Stabroek Block in 2024.

“The Liza field, the last time I looked, takes you pretty close to that (equidistant) line. We plan to drill two exploration wells west of Liza and Payara. The Trumpet Fish and Redmoth exploration wells are planned more in the middle of the Stabroek Block during the course of this year so it’s not inhibiting that activity in our plans,” said President of ExxonMobil Guyana, Alistair Routledge.

He revealed that the company intended to allocate approximately US$60mn to US$70mn for each exploration well. However, this expenditure might increase if additional data collection and stem drill tests become necessary.

Days later in a statement, Venezuela accused Guyana of granting illegal oil exploration rights and concessions in “a maritime area that is indisputably Venezuelan,” reserving the right to take any diplomatic action necessary.

“We believe that the contract that we have with the country is valid under the local law…also under international law, we have valid rights to the blocks in which we’re participating,” said Exxon’s Routledge even as he acknowledged that the escalation of tensions in Q4 of 2023 “made a lot of people nervous”.

The statement by Venezuela did not refute the military build-up but asserted its right to strengthen border defences. Vice President, Delcy Rodriguez had earlier asserted that Exxon’s plans are tantamount to a breach of the Argyle Declaration.

The country’s Defence Minister, Vladimir Padrino was more forceful in his response to the drilling plans.

“If ExxonMobil has a private security company represented by the Southern Command, and a unit of the Government of Guyana in the maritime space, that by right belongs to Venezuela, they will receive a proportional, forceful and legal response,” he wrote on X, formerly Twitter.

This reaction from Venezuela represents a departure from less aggressive rhetoric in response to earlier drilling by ExxonMobil in the disputed region.

According to a report by Demerara Waves, the company had previously “drilled Ranger, Tarpon and Tanager wells that are west of the Essequibo River with no response by the Nicolas Maduro Administration”.

However, in 2018, Venezuela’s navy intercepted two seismic research vessels, which were collecting data for American companies Anadarko Petroleum and ExxonMobil in the Essequibo Region after Maduro’s unilateral expansion of the country’s maritime border in 2015 when Guyana discovered oil.

Meanwhile, Guyanese President, Irfaan Ali has spoken about his government’s growing investment in the Guyana Defence Force (GDF).

The government has significantly increased funding for the army, doubling the allocation to GY$42.2bn (US$202.18mn). President Ali reiterated his dedication to non-aggression while enhancing vigilance against potential threats through military investments which aim to bolster both human and material resources, strengthen defence cooperation, and intensify surveillance of borders and the Exclusive Economic Zone (EEZ).

Guyana has also been enhancing its defence capabilities by engaging with global partners, notably the US. There have been several high-profile visits by US Defence officials including the Southern Command (SOUTHCOM) Air Force Commander.

“We always need partnership, and partnership has been the foundation for collective security across this Region. We’ve not only had the US, we’ve had the UK, we have the Netherlands, we have forces [in the Region like] French Guiana, and they have been doing their work as part of this collective security,” said GDF Chief Brigadier Omar Khan.

Presidents Ali and Maduro are expected to meet in March for a second summit on the border issue.

This is a lead article from Caribbean Insight, The Caribbean Council’s flagship fortnightly publication. From The Bahamas to French Guiana, each edition consists of country-by-country analysis of the leading news stories of consequence, distilling business and political developments across the Caribbean into a single must-read publication. Please follow the links on the right-hand side of this page to subscribe, or access a free trial.

Photo Credit: MARCELO GARCIA/AGENCE FRANCE-PRESSE/GETTY IMAGES

2nd February 2024

The Irfaan Ali Administration has tabled a record US$5.496bn (GY$1.146tn) 2024 National Budget, some 47% higher than the US$3.75bn (GY$781.9bn) passed in 2023.

The massive increase in spending is being funded largely by revenue from the oil and gas sector, which is projected to cover 29% of the budgeted expenditure.

Delivered under the theme “Staying the course: Building prosperity for all,’ Finance Minister Ashni Singh in his fifth budget presentation, said that this latest package was a reflection of the Ali Administration’s commitment to building on the socio-economic advancements since taking office after the 2020 elections.

Singh highlighted the government’s vision for ensuring every Guyanese family has access to essential services and opportunities for economic empowerment.

“Budget 2024 is a budget for all Guyanese, not only public servants who will benefit from salary increases and cash grants… but we cast the budget in a particular frame (wherein) no other time in our country’s history, entrepreneurial opportunities are so abound,” said the finance minister during his presentation.

The budget reiterated Guyana’s robust economic performance, with a 33% real GDP growth last year, primarily fuelled by the expanding oil and gas sector, which along with the support services industry, notably outpaced the declines in gold and bauxite mining.

In 2023, the Natural Resource Fund (NRF) saw deposits amounting to US$1.6bn from petroleum revenue, culminating in a year-end balance of US$1.97bn, including interest earnings. The fund garnered US$1.39bn in profit oil contributions, with US$576.6mn coming from Liza Destiny and US$822.3mn from Liza Unity. Some US$218.1mn also came from royalty payments to the NRF by the Stabroek Block operator, ExxonMobil.

Key allocations in the budget include GY$95.7bn (US$457.67mn) to the energy sector to meet short-term needs, double generating capacity, transition to cleaner energy, and improve the transmission and distribution network. The flagship 300 MW gas to energy project is allocated GY$80bn (US$382.59mn), aiming to halve electricity costs upon completion.

The agricultural sector is allocated nearly GY$97.6bn (US$466.77mn), focusing on drainage, irrigation, and flood management, with significant investments in various sub-sectors to enhance production and support agro-processing.

The budget also addresses infrastructure with GY$204.1bn (US$976.1mn) for roads and bridges, and GY$73.2bn (US$350.13mn) for community roadworks; figures which some have called excessive.

“A nation must invest in ending poverty and its working poor must get a better deal… I feel that that has not happened with the budget, it is important then that we feel that these monies should have been more spread across rather than being given largely to what I regard as 1,000 contractor cronies capitalists,” said Opposition MP Khemraj Ramjattan as he slammed the budget’s large allocations to infrastructure projects.

The health sector allocation stands at GY$129.8bn (US$620.86mn), as the country moves to aggressively address health standards and resources, while the housing sector sees an increase to GY$78bn (US$373.05mn), continuing the construction of affordable homes across income categories. The Finance Minister revealed that some 1,165 homes had been completed, while construction continues on another 1,134.

Education receives GY$135.2bn (US$646.91mn), with GY$4.1bn (US$19.62mn) supporting the University of Guyana as the government moves to increase access by reducing tuition payments. Sports infrastructure is allocated GY$4.6bn (US$22.02mn) in furtherance of the government’s commitment to invest in world-class facilities for citizens.

The government also announced a host of new fiscal measures in the budget, including an increase in the income tax threshold to GY$100,000 (≈US$480) effectively raising the annual Personal Allowance to GY$1.2mn (≈US$5,750) from GY$1.02mn (≈US$4,888).

To encourage individuals to secure life and medical insurance, the allowance for Life and Medical Insurance which permits taxpayers to deduct the premiums paid for life and medical insurance from their taxable income will be increased to 10% of their earnings or GY$50,000 (≈US$240) each month, depending on which is less.

Additionally, duties and Value-added Tax (VAT) will be removed from sport equipment, certain technological items such as cell phone accessories, and firefighting equipment.

Addressing the economic burden of elevated fuel prices, the government plans to maintain a 0% excise tax on petroleum products, while also containing rising freight charges by extending the directive for computing import taxes using pre-pandemic freight costs for another year.

This is a lead article from Caribbean Insight, The Caribbean Council’s flagship fortnightly publication. From The Bahamas to French Guiana, each edition consists of country-by-country analysis of the leading news stories of consequence, distilling business and political developments across the Caribbean into a single must-read publication. Please follow the links on the right-hand side of this page to subscribe, or access a free trial.

Photo Credit: News Room Guyana

19th January 2024

The International Cricket Council (ICC) 2024 Men’s T20 World Cup is projected to bring in over US$300mn for the Caribbean in the coming months.

Scheduled for 1 to 29 June 2024 across the Caribbean and the US, the ninth edition of the tournament will see several Caribbean countries hosting matches for the highly anticipated event.

“This tournament is projected to yield over US$300mn in direct economic impact for the Caribbean. Moreover, it is anticipated to captivate more than a billion viewers worldwide through television broadcasts, further elevating the global stature of the Caribbean as a sporting and tourist destination,” said Cricket West Indies (CWI) President, Kishore Shallow.

Antigua and Barbuda, Barbados, Guyana, St Lucia, St Vincent and the Grenadines, and Trinidad and Tobago are the six Caribbean countries chosen to host the 55 matches, along with New York City, Dallas, Texas, and Florida in the US.

Dominica had initially been shortlisted to host matches but subsequently pulled out after assessments showed that renovations to the cricket stadium could not be completed in time.

Grand Prairie Cricket Stadium in Dallas is set to host the tournament opener between the USA and Canada on 1 June, while the Kensington Oval in Barbados will host the final on 29 June.

“The ICC Men’s T20 World Cup 2024 marks an exciting expansion of our sport with more teams than ever before set to compete in this event. It’s going to be an incredible spectacle bringing together 20 international teams from Africa, the Americas, Asia, East-Asia Pacific and Europe,” said ICC Chief Executive, Geoff Allardice.

A study of the 2007 Cricket World Cup hosted in the Caribbean, reported that attendance for the tournament averaged 11,176  persons per match. In Guyana, attendees typically formed groups of three individuals and stayed for an average of 7.65 nights. Visitors spent an average of US$1,902 on lodging and US$934 on food and beverages, while total daily visitor spending was estimated at US$191.

Regional organisers are hoping that this year’s tournament can attract similar levels of visitors and spending to provide Caribbean countries with a needed economic boost as they shake of the lingering effects of the COVID-19 pandemic.

“This influx of visitors, heightened tourism, and burgeoning business prospects will create a ripple effect,” predicted Shallow of the upcoming tournament, adding that “the impact on jobs, revenue streams, and the overall quality of life for our citizens will be substantial”.

Additionally, in preparation for the tournament, Caribbean governments are set to inject significant sums into local economies by spending millions to renovate and upgrade stadia in order to meet ICC standards for hosting World Cup matches.

For example, St Vincent and the Grenadines, which will host two Group Matches and two Super-8 Matches, has allocated some US$4.44mn to renovate the Arnos Vale Sporting Complex ahead of the tournament, while Antigua and Barbuda are looking to spend at least US$2.6mn to prepare the Sir Vivian Richards Stadium.

In late 2023, Barbados Prime Minister Mia Mottley signed a US$25mn loan with the African Export-Import Bank (Afreximbank) to renovate and upgrade the Kensington Oval ahead of the cricket World Cup and to help with its future maintenance.

“This region must give our cricketers the best available coaching and technology if they are to be able to resume their global position in cricket,” said Mottley.

The 2024 event will be the third time a men’s World Cup will be held in the West Indies, and the first in 14 years. The Caribbean previously hosted the 2007 ODI World Cup and the 2010 World T20.

“It will also be great to have an ICC event back in the West Indies, which has such a rich history of the game. It has hosted World Cups with great success in the past and this tournament will certainly provide a boost to the game there, especially with the final being played in Barbados,” said ICC’s Allardice.

This is a lead article from Caribbean Insight, The Caribbean Council’s flagship fortnightly publication. From The Bahamas to French Guiana, each edition consists of country-by-country analysis of the leading news stories of consequence, distilling business and political developments across the Caribbean into a single must-read publication. Please follow the links on the right-hand side of this page to subscribe, or access a free trial.

Photo Credit: GETTY IMAGES

5th January 2024

Trinidad and Tobago has officially been granted a license for the exploration, production, and export of natural gas from the Dragon Gas Field in Venezuela.

Making the announcement about the deal, which was signed in late December 2023, Trinidadian Prime Minister Keith Rowley said that it marks a historic development in the partnership between the two nations, allowing Trinidad and Tobago to access and process Venezuela’s vast natural gas reserves.

“To have entered into this agreement in 2023, to open this door to allow us with the infrastructure on the ground in Trinidad, to access and process the raw material from below the ground in Venezuela, puts the two nations in a position to play a bigger and beneficial role in the world’s economy and for the benefit of the people of Venezuela and Trinidad and Tobago,” said Rowley.

In a statement, the Government of Venezuela announced that its state oil company PDVSA has issued a 30-year license to the Trinidad and Tobago’s state-owned National Gas Company (NGC) to develop the gas field with Royal Dutch Shell as the operator.

“The Dragon Field is set to become one of the most important gas production hubs in the region… With this license, we are consolidating the operational settings for its definitive development, harnessing its full potential for the benefit of our country and the world,” said Venezuelan Oil Minister Pedro Tellechea.

The agreement comes after protracted negotiations which stalled on multiple occasions because of US sanctions on Venezuela.

In January 2023, a two-year Office of Foreign Assets Control (OFAC) waiver was secured by Port of Spain from the US Treasury Department for exploitation of the Dragon oil field with the proviso that Venezuela received no cash payments.

Later in October 2023, some US sanctions were lifted against Venezuela after President Nicholas Maduro signed an electoral deal with the country’s main opposition party.

This led to an amendment to the Treasury waiver which now allows Trinidad and Venezuela to agree their own payment terms.

Trinidad’s Energy Minister Stuart Young noted that the full commercial terms agreed is the culmination of seven years of negotiations which began in 2016 with a government-to-government agreement, followed by a commercial term sheet which was set out in 2018.

In recent months, the Rowley Administration has faced criticism over the apparent inability to close a deal on Dragon following little implementation of these agreements.

“We must recall there was another deal signed in 2018 when Dr Rowley went to Caracas and since then there has not been much movement on the Dragon gas deal which is arguably the centre piece of this Governments energy policy,” said Former Energy Minister Kevin Ramnarine.

“In terms of a next move, it would be useful to know what is the role of the NGC, the role of Shell and PDVSA and who will pay for the development which will run into hundreds of millions of US dollars or more. What will be the exposure of the NGC?” questioned Ramnarine.

The government has moved to clarify some of these concerns following the issuance of the license and the latest agreement on commercial terms.

“We were able to move PDVSA out of the formula which is even better for us now. And the producers will be Shell and NGC,” said Energy Minister Young, announcing some of the changes contained in the new agreement.

“We managed to negotiate that NGC will be in the full value chain and that we’re going to be an equity player in the production and the exportation of this gas to Trinidad and Tobago, at a very competitive price that will benefit both the people of Venezuela and us here in Trinidad and Tobago,” added Young.

During the first phase of the project, it is anticipated that some 185mn cubic feet of natural gas will be generated daily which will be transported through the construction of a 17-kilometre pipeline connecting Venezuela’s Dragon field to Shell’s Hibiscus field in Trinidadian waters, where liquefied natural gas (LNG) and petrochemicals will be produced.

Reuters reported that first output from Dragon could be achieved in two years if positive investment decisions are made in the coming months.

In the earlier stages of negotiations, Venezuela had advocated for a second pipeline linking the Dragon field to Venezuela’s coast to address domestic demand. Although specific details about the gas line were not mentioned in the recent statement, subsequent project phases might encompass this aspect.

The Dragon Gas field is estimated to house approximately 4.2tn cubic feet of deposits. It was discovered by PDVSA over 10 years ago, but infrastructural development came to a halt shortly thereafter when US sanctions began to affect Venezuela’s oil and gas sector.

The deal has largely been welcomed by analysts and the general population as Trinidad and Tobago moves to increase its slowing oil and gas production on which the economy so heavily depends.

This is a lead article from Caribbean Insight, The Caribbean Council’s flagship fortnightly publication. From The Bahamas to French Guiana, each edition consists of country-by-country analysis of the leading news stories of consequence, distilling business and political developments across the Caribbean into a single must-read publication. Please follow the links on the right-hand side of this page to subscribe, or access a free trial.

Photo: Venezuelaanalysis.com

15 December 2023

Despite the last-minute controversies surrounding the latest iteration of a global climate change deal, Caribbean countries may still consider COP28 one of progress. 

Staged in in Dubai over 1 to 12 December 2023, the Conference of Parties to the UN Framework Convention on Climate Change (UNFCCC) known as COP, saw an early breakthrough with an agreement to operationalise the much talked about Loss and Damage Fund which is mean help to shoulder climate change adaption costs, reduce its future impact, and pay for ongoing loss and damage. 

“Today’s news on loss and damage gives this UN climate conference a running start. All governments and negotiators must use this momentum to deliver ambitious outcomes here in Dubai,” said UN Climate Chief and former Dominican Government Minister, Simon Stiell. 

Wealthy countries have so far pledged over US$700mn to the fund, with the United Arab Emirates (UAE) announcing US$100mn on the opening day of the conference. Germany announced US$100mn, France and Italy pledged US$108mn each, while the US and Japan, the world’s third largest economy received significant criticism for their pledges of just US$17.5mn and US$10mn, respectively. 

“This has probably been the most progress we’ve seen in the last 12 months on finance… but we’re not where we need to be yet,” said Barbados Prime Minister Mia Mottley at the conference, which was attended by several CARICOM leaders, adding that the total pledged was a far cry from the US$420bn which is needed. 

She argued that a global 0.1% tax on financial services could raise US$420bn. “If we took 5% of oil and gas profits last year — oil and gas profits were US$4tn — that would give us US$200bn… If we had a 1% tax on the value of shipping — that, last year, the value of that was US$7tn — that would give us US$70bn,” said Mottley. 

Several CARICOM countries used COP as an opportunity to launch their own climate change initiatives as the focus on long-term sustainability deepens. 

At a side-event, St Kitts and Nevis launched its plan to become a sustainable island state. Themed “Moving Toward Sustainability with SISA2040,” the plan will see the country focusing on green energy, including a significant solar and battery energy storage project, and exploring geothermal energy on Nevis. 

Meanwhile, The Bahamas launched the Bahamas Sustainable Investment Programme (BSIP) with a target of establishing a US$500mn funding mechanism to enhance Bahamian infrastructure to withstand climate change and transition to clean energy. It will also support conservation of coastal zones, reduce biodiversity loss, promote regenerative agriculture, carbon sequestration, and participation in natural asset-backed carbon credit programmes. 

At COP, Barbados announced that it will partner with the World Bank Group’s International Finance Corporation (IFC) to develop the country’s first utility-scale onshore wind farm, known as the Lamberts project. IFC will serve as the lead transaction advisor to structure the 30-to-50-megawatt (MW) project as a public-private partnership (PPP) which supports Barbados’ goal to transition to 95% renewable energy by 2030. The US$80mn project, to be mostly owned by a private sector sponsor selected through a competitive tender process, signifies a shift towards involving private enterprise in Caribbean renewable energy infrastructure development. 

Jamaica also signed a financial advisory services agreement 

with the IFC for the development and structuring of the National Broadband Project to allow private investors to build a modern broadband network in the country. 

The Government of Dominica and Dominica Electricity Services (DOMLEC) also used the conference to sign an agreement with Ormat Technologies Inc. and its subsidiaries to develop a 10MW geothermal power plant in Laudat by the end of 2025. Under the deal, Ormat will finance the construction, operate, and maintain the plant and geothermal wells for 25 years, while Dominica will maintain ownership of the wells, lands, and other assets it has invested in. 

The Caribbean Development Bank (CDB) also announced at COP28 that it is leading the development of a regional online monitoring, reporting, and verification (MRV) system for tracking climate finance. This system will help Caribbean countries track and report finance flows for climate-related actions more effectively, reducing duplication among donors, and facilitating efficient use of resources.