TRINIDAD ECONOMIC HIGHLIGHTS - JULY 15-31

UNCLAS SECTION 01 OF 02 PORT OF SPAIN 000931

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E.O. 12958: N/A
TAGS: EAVI ECON EIND EPET ETRD TD
SUBJECT: TRINIDAD ECONOMIC HIGHLIGHTS - JULY 15-31


The following were notable economic issues in T&T
during the second half of July:


1. Alcoa clears another hurdle

2. Alcoa partners with Bechtel

3. Laqtel launching soon

4. IMF calls for spending cuts in T&T

5. T&T leads economic growth in the region

6. Possible privatization for BWIA

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1. Alcoa clears another hurdle
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ALCOA is one step closer to starting construction of
its proposed Cap-de-Ville aluminum smelter after the
Environmental Management Authority (EMA) accepted the
company's application for a Certificate of
Environmental Clearance (CEC). Alcoa lodged its
application for the CEC in March amidst numerous
protests from residents of surrounding communities and
environmental groups concerned about the possible
health risks associated with the aluminum smelters.

In its press release, Alcoa said that acceptance of the
application will result in development by the EMA of
Terms of Reference for completion of a comprehensive
Environmental Impact Assessment (EIA) for the proposed
site, which is expected in 21 working days. Terms of
Reference are essentially instructions for conducting
the EIA.

The statement added that, "the EIA process requires
that the Terms of Reference must be open for public
review before they are finalized. This ensures that
members of the local community, non-governmental
organizations, and members of the public in general can
determine whether or not the Terms of Reference cover
all the questions that developers must answer in order
to allow a proper evaluation of the proposed project's
environmental and social aspects." Randy Overbey,
Alcoa's president of Primary Metals Development,
described the EIA as essential to fulfilling Alcoa's
goal of designing a world-class facility in terms of
its operational, environmental, and social performance.

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2. Alcoa partners with Bechtel
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Planning beyond the EIA, ALCOA has selected Bechtel as
principal partner to participate in the completion of
current feasibility studies associated with its
proposed aluminum smelter project at Cap-de-Ville. The
feasibility studies for the construction of the
aluminum smelter plant should be completed by the end
of the year. In its announcement, Alcoa noted that
Bechtel is currently constructing its aluminum facility
in Iceland and that the Trinidad smelter would likely
incorporate similar design and environment, health and
safety performance standards. Bechtel Corporation is
the largest engineering company in the United States,
and the sixth largest privately owned company in the
USA. Among other projects, Bechtel is involved in the
liquefied natural gas industry in T&T, more
specifically having been a part of Atlantic LNG's Train
4 construction.

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3. Laqtel launching soon
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Local telecom company Laqtel recently announced to the
local media that all of the necessary equipment to
operate is in the country and has undergone the
required testing. Nearly a year and a half after being
awarded the original contract by the Telecommunications
Authority of TT (TATT),Laqtel hopes to launch its
mobile services by October of this year. Its prospects
as a viable company within T&T are bolstered by the
interconnect agreement with Telecommunications Services
of T&T (TSTT) in which line to mobile and mobile to
mobile calls between the networks will carry the same
interconnect rate. The Laqtel officials disclosed that
the only obstacle at this point is paperwork related to
Laqtel's new technological partner, the Palestinian
Telecommunications Company (Paltel),coming on board
following a recently signed agreement for Paltel to
purchase majority equity in the local telecom. Paltel,
subsidiary company of Palestine Development and
Investment Ltd., was formed in 1995 and offers a wide
range of telecom services including mobile and fixed
phone services. It recorded USD15 million profits in

2004.


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4. IMF calls for spending cuts in T&T
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The IMF advised the GOTT to restrain its public
spending during a recent Article IV consultation - an
annual visit by IMF staff to collect economic and
financial information and discuss with officials the TT
economy's economic developments and policies. Caroline
Atkinson, deputy director of the IMF's Western
Hemisphere division, noted that the T&T economy was
operating near its full capacity with growth of twelve
percent expected this year. As a result, inflation has
accelerated, real estate prices have risen, and the
labor market has tightened. Further, the IMF suggested
that the GOTT should improve the efficiency of the tax
system, design well-targeted social programs, and
strengthen the implementation of spending programs.
Atkinson also noted that the GOTT's planned Heritage
Stabilization Fund was an important step towards saving
more money from the current, oil-driven economic boom.
In response, Conrad Enill, Minister of Finance, said
the legislation for the revenue stabilization fund
would be debated in Parliament on August 16.

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5. T&T leads economic growth in the region
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Strong exports and a solid U.S. economy will help Latin
American and Caribbean countries post overall economic
growth of five percent in 2006, compared to 4.5 percent
growth last year, according to a report by the Economic
Commission for Latin American and the Caribbean, ECLAC.
This would mark the fourth consecutive year of growth
for the region. Jose Luis Machinea, executive
secretary of the Santiago-based agency, said the

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region's solid economic performance resulted partly
from an expected slowdown in the U.S. economy that
never materialized; the U.S. is a leading destination
for the region's exports and a major source of
investment. Trinidad and Tobago, with 10 percent GDP
growth, and Venezuela with 8 percent growth, were
expected to lead the region's economic expansion,
boosted by each country's oil revenue. Overall,
however, high energy prices are expected to depress the
region's economies in 2007, when growth is expected to
slow to 4.5 percent, according to ECLAC.

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6. Possible privatization for BWIA
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The GOTT is contemplating taking itself out of the
airline business by selling its shares in BWIA and
having the airline run as an entirely private sector
entity according to the vice-chairman of the ruling
People's National Movement (PNM) party at a press
conference given on July 16. Responding separately,
BWIA's chief executive officer Peter Davies added that
he believed it was the Government's intention to fully
privatize the airline. Davies stated that
privatization "is in line with my mandate to provide a
safe, effective, and profitable carrier which would
connect the Caribbean to the rest of the world." The
GOTT privatized BWIA in 1995, retaining only minority
shares in the company, but provided significant
financing in 2002, when the airline industry was in
financial crisis.

Since then, the GOTT has injected over USD250 million
for the airline's restructuring and the Cabinet
recently approved an additional USD100 million to meet
the equity injection in the recapitalization of the
airline. BWIA's shares, however, were suspended by the
Stock Exchange last November at the request of its
board of directors for a three-moth period. Terrence
Clarke, managing director of the Securities and
Exchange Commission said there was a request from the
Stock Exchange to de-list the company because it had
not been providing financial statements; the matter is
now before the board of directors of the SEC. (NOTE:
There is no clear candidate lined up to purchase BWIA
this time, should full privatization take place. END
NOTE.) TT Minster of Work Colm Imbert told Charge that
no domestic ownership requirement was being considered.
The Government simply wants to be out of the airline
business.

SWEENEY