Identifier
Created
Classification
Origin
06PORTOFSPAIN1358
2006-11-28 14:22:00
UNCLASSIFIED
Embassy Port Of Spain
Cable title:  

TRINIDAD ECONOMIC HIGHLIGHTS - NOVEMBER PT 1

Tags:  EAIR ECON ECPS EFIN EINV ELNT ETRD KIRP TD 
pdf how-to read a cable
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UNCLAS SECTION 01 OF 03 PORT OF SPAIN 001358 

SIPDIS


SIPDIS

E.O. 12958: N/A
TAGS: EAIR ECON ECPS EFIN EINV ELNT ETRD KIRP TD
SUBJECT: TRINIDAD ECONOMIC HIGHLIGHTS - NOVEMBER PT 1

Ref: (A) Port of Spain 1294, (B) Port of Spain 568

The following were notable economic issues in Trinidad & Tobago
during the first half of November:

UNCLAS SECTION 01 OF 03 PORT OF SPAIN 001358

SIPDIS


SIPDIS

E.O. 12958: N/A
TAGS: EAIR ECON ECPS EFIN EINV ELNT ETRD KIRP TD
SUBJECT: TRINIDAD ECONOMIC HIGHLIGHTS - NOVEMBER PT 1

Ref: (A) Port of Spain 1294, (B) Port of Spain 568

The following were notable economic issues in Trinidad & Tobago
during the first half of November:


1. Farewell BWIA, welcome Caribbean Airlines

2. Inflation - who's to blame?

3. Crushing blow to music pirates

4. Telecom - Digicel goes to court; Paltel drops out

5. HBO to plug Flow

6. T&T/India to sign BIT

7. U.S. consultants derailed

8. GOTT convenes smelter symposium, but...

9. Smelter number three?

10. EMA Sends Alutrint Smelter Back to Drawing Board 11. More
smelter matters

--------------

1. Farewell BWIA, Welcome Caribbean Airlines
--------------

Effective January 1, 2007, the 66-year old airline BWIA will cease
to exist and will be replaced by new entity, Caribbean Airlines
(CA). CA's CEO Peter Davies said that his mandate is to position CA
as a competitive carrier, and he insists that the transition from
one company to the other will be seamless. CA will continue to fly
BWIA routes to the United Kingdom, United States, Canada and the
Caribbean. CA plans to extend its engineering capability beyond its
jet fleet to include the ability to undertake heavy maintenance and
repair checks on its turboprop aircraft and for other carriers. CA
is also interested in providing regional air transport within the
Caribbean and to major international cities, but the impending
alliance between Liat and Caribbean Star Airlines may offer stiff
competition. (See reftel A for more details on the BWIA-to-CA
transition.)

On November 20, Davies announced that CA will trade its Heathrow
slots to British Airways in exchange for a code-share arrangement
with BA between Port of Spain and Gatwick beginning March 28. CA
will continue its scheduled service between Port of Spain and
Heathrow until March 27. Under the agreement:
- Caribbean Airlines' flight code will be placed on BA's service
from Port of Spain, Barbados and Antigua.
- The Port of Spain to Gatwick flights will be offered every

Wednesday, Thursday and Saturday.
- On all other days, CA and BA will code-share on connecting service
between Port of Spain and London via Barbados.

--------------

2. Inflation - who's to blame?
--------------

Rising inflation has led to mutual finger-pointing between
government ministers, opposition politicians, farmers and food
distributors. Following the announcement that retail prices had
risen 9.6% year-on-year as of September, Central Bank Governor Ewart
Williams warned on October 30 that inflationary expectations would
be difficult to rein in if inflation goes to double digits. Prime
Minister Patrick countered with reassurances on November 2 that
double digit inflation would "not be the end of the world." Junior
Finance Minister Conrad Enill, having previously defended the
government's 2007 budget as "restrained," acknowledged on November
11 that GOTT's ambitious development expenditure has contributed to
inflation. Enill indicated the GOTT is looking at intervention in
food production and a reprioritization of expenditure to bring
inflation down to seven percent by the end of the current fiscal
year, as announced by Prime Minister Manning during the 2007 budget
presentation. Then on November 16 Enill announced plans for a
TT$2.5 billion GOTT bond issue to support Central Bank efforts to
absorb excess liquidity. Enill said that a first tranche, expected
by year-end, would be issued in a variety of denominations targeting
both individual and institutional investors.

--------------

3. Crushing Blow the Music Pirates
--------------

In an effort to send the strongest possible signal to music pirates,
the Copyright Music Organisation of T&T (COTT) destroyed more than
3,000 unlawfully manufactured CDs and several pieces of electronic
equipment worth approx. US$13,000 by crushing them with a
steamroller and burning the rubble in an incinerator on November 10.
Local print and broadcast media featured images of COTT President
Lutalo Masimba, a calypso artist, driving the steamroller. Masimba
told press that his organization is committed to eradicating music
piracy and is going after the 'big fish,' the mass manufacturers of
these illegal products, in order the stop music piracy at the
source.

-------------- --------------

4. Telecom - Digicel goes to court, Paltel drops out
-------------- --------------

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Negotiations toward and interconnection agreement between Irish
mobile telecom carrier Digicel and dominant carrier TSTT suffered
new setbacks as Digicel went to court to overturn an arbitration
panel report intended to form the basis of an agreement and also
filed a lawsuit against TSTT for dropping calls originated by
Digicel customers. TSTT officials blamed new entrant Digicel for
the failure to conclude an interconnection agreement, with the
result that the carriers continue to operate on a "sender gets all"
basis, to Digicel's advantage. Digicel, which launched in April, is
loath to the accept arbitration panel recommendations on reciprocity
of rates, which reportedly would be less favorable for Digicel in
T&T than in other markets where Digicel competes with Cable &
Wireless affiliated carriers.

Meanwhile, local start-up mobile provider Laqtel still has not
launched service and has for the second time parted ways with a
would-be partner, this time Paltel, a Palestinian based
telecommunications company. Laqtel has already signed co-location
and interconnection agreements with TSTT but has yet to enter the
market. Saskatchewan Telecommunications International of Canada was
Laqtel's previous partner.

--------------

5. HBO to Plug Flow
--------------

Local attorneys for U.S. cable network HBO issued a warning letter
to T&T cable company Columbus Communications, also know as Flow,
calling on the company to immediately cease broadcasting HBO's
programs. The November 10 letter warned that Columbus is liable for
both criminal and civil proceedings under T&T's Copyright Act for
rebroadcasting HBO's programs to the public as part of a
subscription package without authorization. Responding to press
inquiries, a Columbus official asserted that negotiations with HBO
are still ongoing and active and faulted DIRECTV Trinidad - part of
California-based DIRECTV Group and the main complainant against
Columbus Communications' cable piracy - for not cooperating with
Columbus' efforts to negotiate with HBO (see reftel B).

--------------

6. T&T/India to sign BIT
--------------

India's Vice President Bhairon Singh Shekhawat visited T&T recently
to hold discussions with the GOTT towards the signing of a bilateral
Investment Treaty (BIT). T&T Minister of Trade and Industry Kenneth
Valley said that the agreement would most likely be signed when
T&T's Far East mission visits India next year. Valley said that the
BIT could facilitate joint ventures between Indian and T&T companies
in health, information technology and filmmaking. India is reported
to be T&T's fourth largest source of inward foreign direct
investment in the amount of USD 28 million annually. Shekhawat
stated that India will increase the number of Indian Technical and
Economic Cooperation (ITEC) scholarships for T&T nationals from 20
to 30 a year.

--------------

7. U.S. Consultants Derailed
--------------

On November 7, the GOTT Ministry of Works and Transport announced
that it terminated a contract with U.S. company Parsons
Brinckerhoff, Quade and Douglas's to oversee the tendering of a US$1
billion rapid rail project. The Ministry cited Parsons
Brinkerhoff's failure to disclose its involvement through a
subsidiary company in a joint venture with Canadian firm Bombardier
in a bid for a railway project in Isreal; Bombardier is a member of
one of the consortia bidding for the rapid rail project. The
National Infrastructure Development Company (NIDCO) reportedly has
engaged a new consultant to evaluate bids for the project, which
were due August 31, but NIDCO has not disclosed the new consultant's
identity. Selection of the preferred contractor will be made by
December 31.

--------------

8. GOTT Convenes Smelter Symposium, but...
--------------

In light of concerns raised, and ongoing objections to the proposed
construction of aluminum smelters in T&T, Prime Minister Patrick
Manning announced the convening of a national symposium on this
issue. The symposium is scheduled for December 6 and is being
organized by the South Trinidad Chamber of Industry and Commerce in
collaboration with the National Energy Corporation. Chamber CEO
Thackwray Driver said he expects some U.S. and other foreign experts
to participate.

In spite of calling for the symposium, PM Manning continued to
insist that government will stand firm on smelters and that neither
protests nor objections will dictate the pace of GOTT development
plans. He said "We will hear what has to be said. We will separate

PORT OF SP 00001358 003 OF 003


fact from fiction and we will take a decision which we believe to be
in the best interest of the people of T&T."

--------------

9. Smelter Number Three?
--------------

According to newspaper reports, Mitsubishi Corporation, Japan's
largest general trading firm, has submitted a third proposal for an
aluminum smelter plant in T&T. Prime Minister Patrick Manning had
previously revealed that the GOTT had received an offer. The Prime
Minister set off a storm of criticism and commentary when he told
reporters that once the documents have been examined and accepted by
Government, and if the proposal meets the requirements of the
Environmental Management Authority (EMA),"it would be smelter plant
number three." According to press reports, Mitsubishi smelter has
proposed a 125,000 metric ton smelter, would match the production of
the proposed Alutrint smelter, significantly smaller than the US$1.5
billion, 341,000 metric-ton smelter proposed by Alcoa.

-------------- --------------

10. EMA faults Alutrint's EIA, sets terms for Alcoa's
-------------- --------------

Alutrint, operator of the smaller of two planned aluminum smelters
provisionally approved by the GOTT, was required to resubmit a
technical report to T&T's Environmental Management Authority (EMA)
for the second time, after the EMA ruled that Alutrint had not
sufficiently addressed environmental and public consultation
concerns for its environmental impact assessment. The EMA requested
Alutrint to provide more information, particularly on its plans for
public consultation and the buffer zone for the plant.

The EMA also announced the final terms of reference for the
environmental impact assessment (EIA) of Alcoa's planned aluminum
smelter. According to the TOR, Alcoa must evaluate the risk of
aquifer contamination, hydrogen fluoride emissions and perform a
social impact assessment to be granted approval by the EMA for its
planned aluminum smelter in Chatham. Alcoa must also conduct "site
specific human health and ecological risk assessments." Alcoa said
it would take approximately six months to address all the EMA's
concerns.

--------------

11. More Smelter Matters
--------------

Trade and Industry Minister Kenneth Valley told press that he is
encouraging manufacturers to begin looking at possible joint venture
partners to take advantage of the opportunities should the smelter
projects get the green light. GOTT agency ETecK (Evolving
Technologies) has been mandated to come up with a business plan for
the industry, which includes identifying the downstream prospects
for aluminum i.e. cans, bottle caps, ladders, car parts. E-TecK
reportedly has already received inquiries from foreign downstream
manufacturers regarding the possibilities of setting up plants in
T&T.

AUSTIN