The transparency challenge

What the new Extractive Industries Transparency Initiative means for Trinidad and Tobago’s economy

©EITI/The EITI Standard

In a country where allegations of corruption are made almost every week, the Trinidad and Tobago Extractive Industries Transparency Initiative (TTEITI) stands as a beacon of hope in the fight-back against white-collar criminals. T&T, the largest oil and natural gas producer in the Caribbean, has been involved in the petroleum sector for over a hundred years, and total receipts from these sectors accounted for TT$21 billion (US$3 billion) — about forty per cent of GDP and eighty per cent of exports — in 2012, according to the TTEITI.

Oil and gas power T&T’s economy in more ways than one — the country’s natural gas is used to fuel eleven ammonia plants and seven methanol plants — and their annual output makes the twin-island republic the world’s largest exporter of ammonia and the second largest exporter of methanol. The Point Lisas Industrial Complex in Couva, central Trinidad, houses one of the largest natural gas–processing facilities in the Western Hemisphere, Phoenix Park Gas Processors Limited (PPGPL), as well as a subsidiary of PCS Nitrogen, the world’s largest fertiliser company.

The EITI is a global venture that asks companies involved in extracting a country’s natural resources to voluntarily disclose the payments they have made to the government — which, in turn, declares how much it has received from the companies. An independent auditor then reconciles these receipts and the verified data is published in an annual report.

Forty-eight countries now belong to the EITI, and T&T, which has been a candidate since 2011, finally met the set standards and was given country-compliant status last January — the first country in the Caribbean. The importance of the TTEITI was thrown into sharp focus within a month of T&T attaining country-compliant status, when allegations of financial impropriety and mismanagement hit the oil company Petrotrin and the National Gas Company simultaneously.

The first the world heard of the EITI was from Tony Blair, former prime minister of the United Kingdom, when he announced its intended formation at a 2002 conference on sustainable development in South Africa. A formal launch was planned at the first EITI Plenary Conference in London, the following year, where T&T publicly announced its commitment to the initiative. However, when the first fifteen countries were admitted to EITI membership in November 2007, T&T was not among them. It was not until September 2010 that the country set up a tripartite steering committee, comprising eighteen representatives of the state, the private sector, and civil society (six each).

In March 2011, T&T became a member of EITI, but it took the country four years of intensive work to gain compliant country status. The TTEITI secretariat, which is housed at the headquarters of the Ministry of Energy and Energy Affairs, came in for high praise from Clare Short, chair of EITI, when she made the announcement at the Energy Chamber’s Trinidad and Tobago Energy Conference in January 2015. “The EITI puts information about the energy sector in the public domain so that analysts, academics, the media, and the public are more informed,” she said. “Trinidad and Tobago is now a regional leader and is expected to carry the mantle. However, you must maintain the standards you have now set.”

Solomon Ioannou, the European Union’s programme officer in the Sector Policy Support Programme to the environment sector in T&T (the EU is a donor to the TTEITI), is impressed by how quickly the country achieved compliant status, and praised the steering committee for their hard work and commitment. “Future possible enlargement of this initiative,” he said, “could include the mining sector, among others.”

The EU aims at “greening” the EITI in T&T by incorporating environmental aspects into its scope. As it is, illegal quarrying of soil aggregates in the Northern Range of Trinidad has had a devastating effect on the landscape and ecology of the sites. Dr Mark Thomas, CEO of the Cropper Foundation, one of the civil society representatives on the steering committee of the TTEITI, warns that “Trinidad and Tobago is second in the world in terms of per capita greenhouse gas emissions, meaning that the country and its energy sector make an unusually high contribution to global climate change. This will come back to bite us, because, as small islands, we are really vulnerable to the effects of climate change, like sea level rise and more intense dry seasons.

“The poorly regulated mining sector also creates huge environmental problems by removing forests, silting rivers, and so on. So, while financial transparency in our extractive industries is good, it cannot be the only thing. We can only solve the environmental problems caused by our extractive industries if we know the sizes of those problems, and this will be achieved only when there is environmental transparency as well.”