T&T steps on the gas
Trinidad and Tobago is about to embark on a joint venture that will increase its ability to move into manufacturing
Trinidad and Tobago is set to take a major step in its economic development by signing a new contract to transform natural gas into petrochemicals that are vital ingredients for manufactured projects.
Bhoe Tewarie, minister of planning and sustainable development, told Emerging Markets that a contract was ready to sign with Japans Mitsubishi and the domestic Neal & Massy group for petrochemical production and related products using natural gas.
The aim it to use natural gas to make methanol and from there manufactured products, such as plastics. While specifics of the contract have not been made public, the estimated investment is likely to be north of $5 billion. The deal is expected to be made public next week.
Natural gas will continue to remain important, but we are developing strategies that will lead to higher value manufacturing to create wealth based on our natural resources. We are diversifying quite significantly, said Tewarie.
The petrochemical project is one of six new clusters that Prime Minister Kamla Persad-Bissessars government is pursuing to diversify the countrys economy.
Trinidad and Tobago is a vibrant, growing economy and it makes sense to diversify the economy to create a more stable structure and not be dependent on just one primary product, Hasan Tuluy, the World Banks vice president for Latin America and the Caribbean told Emerging Markets.
The government is focusing primarily on offering services related to the energy sector and boosting tourism, financial services and information technology services. The service sectors currently employ two thirds of the work force.
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The economy expanded by 1.2% last year and growth is expected to be double that this year. Inflation, which topped 10% in 2010, has dropped by nearly half and unemployment is now below 5%. We will be likely to see growth at 2.5% and we see it escalating from there, said Tewarie.
The governments fortunes are boosted by its international reserves and a heritage and stabilization fund. Reserves at the end of last year were $10.2 billion and the fund was $4.5 billion. The numbers are all the more important given that GDP is $22.5 billion and the fact that the government did not tap the fund, even when faced with negative growth in 2010.
Tewarie said the decision was made to leave the fund intact the IMF ranked it as the best-performing sovereign wealth fund in 2011, with a return over 9% because of other favourable market conditions.
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