From Government of the Republic of Trinidad & Tobago

The creation of a new energy fund, with the help of the Inter American Development Bank (IDB), could help save the sluggish Caribbean economies from collapse, says Planning Minister Dr Bhoe Tewarie. “It is about finding a home-grown solution to which the countries of the world can offer their resources to the Caribbean. If these Caribbean economies were to collapse, then it will not be Caribbean problem it will be a hemispheric and world problem. All countries have an interest in resolving this. We have insisted in discussions with the IDB that to assist the OECS countries, a key player must be the Caribbean Development Bank (CDB). This bank will play a key role in partnership with the IDB and T&T to ensure that the needs of every country customise solutions,” he told the Business Guardian on Monday.

President of the IDB, Luis Alberto Moreno, and Tewarie last Friday signed a Memorandum of Understanding (MOU) for the establishment of the Multi-Donor Energy Facility for Caribbean Sustainability. This facility has been under discussion between the Government and the IDB for the last 18 months, led by Tewarie. The signing took place at a meeting of Caribbean representatives of the IDB in the Bahamas. Some of the main objectives of the MOU include the promotion of energy diversification, energy efficiency and a reliable supply of alternative fuels at a reduced cost in the Caribbean, designing the governance, operational and administrative structure of the proposed facility, including fiduciary and financial mechanisms and instruments, co-ordinating resource mobilisation activities with donors, partners, bilateral donor agencies, multilateral institutions and other public and private investors and developing an adequate fund raising strategy.

The Multi-Donor Energy Facility for Caribbean Sustainability was first announced by Prime Minister Kamla Persad-Bissessar at a meeting in Washington hosted by the United States Vice President Joe Biden.“There needs to be an energy solution for the transformation of the Caribbean economies. The Prime Minister of T&T made a commitment when she went to the meeting hosted by the vice president of the United States, Joe Biden that T&T would initiate a process in collaboration with the IDB to build fund of about US$1 billion,” Tewarie said.

This fund, he said, would depend on the donation of international donors and the mobilisation for donors would be carried out by T&T and the IDB.“When Biden spoke about energy security in the region, he spoke about the World Bank becoming involved. The United States could be a donor too as they are a natural gas producer. China has expressed interest and so too has Japan, the EU and the Canada. There is world interest in ensuring the Caribbean transforms economically in a meaningful manner,” he said.

Tewarie said the Caribbean countries are in serious economic problems and the international community feels obliged to assist.“Part of the reason the Caribbean is stuck is because of the debt they are carrying. Part of the problem is that the state in these small countries cannot finance development. So it is necessary for the private sector to invest. Fossil fuel driving their economies apart from being not sustainable is too costly. The energy matrix of the Caribbean needs to be transformed,” he said.

He also said many of the Caribbean countries are now focusing on renewable energy solutions.“St Lucia and Dominica are looking at geo-thermal, Barbados is early advanced on solar power and Jamaica is looking at wind farms. Alternative energy including natural gas and CNG is a real option in which T&T has an interest in supplying the region,” he said.

At the end of March, the annual meeting of the IDB will take place in March in South Korea, where Tewarie will attend. “We will explain to all the major donors and countries that are interested, what we intend to do. We will try to mobilise as many interested countries as possible,” he said.

Tewarie spoke to the Business Guardian on Monday at his office, Ministry of Planning and Development, Eric Williams Complex, Port-of-Spain.

PetroCaribe:

Tewarie said the Venezuela-sponsored PetroCaribe is not sustainable and smaller Caribbean islands need to look at a sustainable alternative. “PetroCaribe provided a solution that was needed for many of the Caribbean countries at a time when they needed to have it. We are anticipating what could go wrong with PetroCaribe which could put these countries in a bad position. We want a solution. I do not think that Venezuela is capable of carrying that burden for an indefinite period. I do not think the countries can be funded by fossil fuel for an extended period of time given the change of the energy matrix,” he said.

He said this T&T-led energy fund would give “hard pressed” Caribbean countries an opportunity to develop their economies. “This fund would improve their competitiveness, reduce the cost of energy and make their economies capable of higher growth than they are now capable off. If they could cut the energy cost of most of the tourism plants, hotels and other tourist areas in the Caribbean by 50 per cent, imagine what it would do to tourism competitiveness in the region,” he said.

He said part of Tuesday’s discussions between T&T and Venezuela would have dealt with the cross-border natural gas fields that both countries share. “The question is how will we optimise that with T&T’s technology and the Venezuelans getting revenue out of it as well in keeping with their larger proportion of ownership. All of these factors are tied into the energy matrix of the region,” he said.

Tewarie said within the US$1 billion dollar Energy Fund, T&T’s contribution would be a financial one but T&T would not be “giving away the money.” “The proportion of T&T’s funding will depend on how much other donors put in. That financial contribution would have a return on investment and we have made that clear to the IDB. The money would be secure as it is in the custody of the IDB. Our job is to work with the IDB to mobilise other funders,” he said.

Private-sector investment:

Tewarie said this is more than a government-to-government initiative and the private sector has an important role to play in this energy fund. “We are working with the IDB to set up special funding for private sector development in the Caribbean. It may include initiatives in the area of energy but may include projects in other areas like tourism and finance. There will be foreign and local entrepreneurs. There will be 100 private sector investors who will be interested in selling gas to the region. T&T sees itself as being an important supplier of alternative energy to the region in the future,” he said.

He added that public private partnerships would also be a possibility for these investments.“This will create a new pool of private sector funds for development. These entrepreneurial activities will create new opportunities for small businesses and create jobs.” Caricom economies continue to remain strategic to T&T, he said.

“I do not want to speculate on the doom and gloom theories. I do not think that helps. I want solutions for Caribbean prosperity. T&T has not been selfish in looking at regional development. Our development depends to a large degree on the prosperity of the other islands. We have investments in those islands by T&T companies and we have markets there,” he said.

Story by: Raphael John-Lall

Published on: 26th February, 2015

http://www.ttonline.org/2015/02/26/transforming-caribbean-economies-with…