Linda Hutchinson-Jafar, Business Writer

Conrad Enill, Trinidad and Tobago's minister of energy. - File

The Trinidadian government has so far ignored demands from private sector interests to review the 2008-2009 budget, as oil prices plunge on the world market and concerns mount that the country's revenues would be eroded.

Both Energy Minister Conrad Enill and Mariano Browne, a junior minister in the finance ministry, says there is no valid reason to review fiscal numbers when the budget was tabled in Parliament only a month ago.

Trinidad is an oil- and gas-exporting country.

Its budget was based on an assumed oil price of US$70 per barrel, a gas price of U$4 per mmbtu and a projected GDP growth of 5.6 per cent.

World oil prices have hit US$147 this year but have now retreated to around US$70 per barrel last week.

Browne said the budget could not be recast on the basis of short-term data.

"In markets, things go up and they come down, so you need to have a considered position. It is not clear that the price is going to stay under US$80 and it is going to trend towards US$70, those are opinions, they are views," he told reporters last week.

Fluctuations in oil prices

Noting its current fluctuation, the junior finance minister said when international oil prices dropped to US$77.70 two Fridays ago, there was upward movement in prices by Monday.

Since then prices have dropped to US$67 per barrel but is back above US$70.

It's not clear the price at which Trinidad is currently exporting to its markets.

Enill argues that Trinidad is a "gas-based economy", and not entirely dependent on oil revenues.

The budget was cast on gas and oil prices, he said.

Still, the South Trinidad Chamber of Industry and Com-merce (STCIC), which monitors the domestic energy sector, said the fall in oil prices in response to the global financial turmoil requires close monitoring.

"Against this background, the Government would be well advised to take a cautious approach and, so, be ready to revise budgeted expenditure, if this becomes necessary, " said the chamber's president, Charles Percy.

Government revenue

"While our energy economy is now more diversified and natural gas plays a more important overall role in the economy than oil, government revenue from oil production is still extremely important to the country, as on a unit of production basis, oil is more profitable than natural gas," he said.

The chamber president also noted that there was significant risk that prices could fall further, if the financial crisis feeds through to the wider economy of the major industrialised nations, which consume the majority of energy and, therefore, fuel the demand and pricing of the resource.

Manufacturers, in a statement from their umbrella association, also point out that if oil prices continue to fall, it could constrain the Patrick Manning administration's US$8-billion spending plan.

But if spending were sustained at projected levels, it could exacerbate already high levels of inflation, the manufacturers said.

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