Trinidad has doubt over loans for mega-projects

Nov 02, 2008 01:00 AM

International financial institutions crippled by the global financial turmoil and who syndicated loans to Trinidad and Tobago to finance mega-projects may very well be unable to honour their loan arrangements with Trinidad and Tobago, Minister in the Ministry of Finance Mariano Browne revealed.
Though unlikely, the minister maintained, such borrowing that had already been finalised could not be withdrawn.

Browne was speaking in the aftermath of warnings issued by Congress of the People's Carolyn Seepersad-Bachan -- during her party's council meeting at the Belmont Community Centre -- that international financial institutions and banks would not have the finance for government projects as a result of the global credit crunch. Referring to the aggressive oil and gas exploration programme by the Government, Seepersad-Bachan said financial institutions may not want to loan companies capital for exploration projects.
"Capital that was probably available a couple years ago from the international financial markets may no longer flow to those projects," Seepersad-Bachan said.

As it related to arrangements that had not yet been finalised, borrowing might be harder to do, Browne said, adding, "It could happen-it might happen."
On the issue of oil and gas exploration, Browne said if the commodities did not meet an economic price, there would be no exploration. He said the situation had less to do with the price of debt than it did with economic prices. If oil or gas fell below a certain price, Browne explained, people would not drill for oil and gas as it would become "uneconomic" to undertake that exploration.

Another loan for a major Government project may also come in to question.
In June, chief executive officer of Alutrint Phillip Julien said the investment figure for the proposed Alutrint aluminium smelter plant was between $ 600 and $ 700 mm where financing for the project was coming from Exim Bank of China under a government-to-government loan arrangement. The loan for this initiative may not be withdrawn, as Browne said an offer was currently on the table and that the project was not being financed at open-market rates.

It was only earlier this year that the channels of credit, the arteries of the global financial system, as the New York Times put it, had been "constricted", cutting off crucial finds to consumers and businesses. The New York Times added that as the prospect of a global recession becoming more evident, gains achieved on October 13 in the worldwide stock rally became impossible to sustain.
Two days later, the New York Times reported, after Ben S. Bernanke-the US Federal Reserve chairman-said there would be no quick economic turnaround even with the US government's intervention, the Dow plunged 733 points.

Oil-producing countries were hit by a sudden reversal of fortune, as the record oil prices reached earlier this year were cut in half by October because of the global economic outlook, the report added.
Even an agreement on a production cut bythe Organisation of Petroleum Exporting Countries on October 24 failed to stem the price decline.

Source: not available
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