Issue:

09/ 01

SPECIAL February 27, 2009

RNM UPDATE
THE OUTCOME OF THE FEBRUARY 5
2009 ENERGY SERVICE SECTOR
CONSULTATION
On February 5 2009, the Caribbean Regional Negotiating
Machinery (CRNM) with the funding support of BizClim,
hosted a consultation to discuss the assessment of the
energy services sector conducted by the South Trinidad
Chamber of Industry and Commerce (STCIC) which was
commissioned by the CRNM. The following is meant to
provide a summary of the conclusions which emanated from
consultation.
Background
The underlying purposes of the study were to (i) formulate
recommendations on improving the sector’s contribution to
economic development and (ii) to propose
recommendations on restructuring the trade negotiating
agenda to ensure that negotiated agreements would include
provisions designed to support the sector’s development.
The energy industry is traditionally thought to be
characterized by goods mainly related to fossil fuels namely
oil, gas and coal. However, a wide range and number of
underlying services also characterize the industry along the
entire production value chain. As the study indicated few
service sectors are as broad in scope. Neither does any
other sector rival the energy services sector in terms of
its connection to the alleviation of poverty and the
achievement of sustainable growth.
In spite of this, the report revealed that with respect to
development, the current treatment of the energy sector
by Governments within the Caribbean has not been
focused on addressing the development and
improvement of the structure or delivery of energy
services. Instead, the primary focus has been limited to
accessing lower priced fossil fuels through treaties and
assistance packages negotiated between governments.
Notwithstanding the importance of energy services to
economic growth, within the Caribbean there is a
general absence of aggressive government policies
designed to develop an indigenous energy services
sector. The encumbrance on the sector’s development
is further compounded by the lack of a specific regional
policy on the energy services sector evidenced by the
lack of emphasis on the energy services sector in the
draft CARCIOM energy policy.

CRNM UPDATE is the flagship electronic trade newsletter of the Caribbean Regional Negotiating Machinery (CRNM). Published in English, it is a rich
source of probing research on and detailed analyses of international trade policy issues and developments germane to the Caribbean. Prepared by the
Information Unit of the CRNM, the newsletter focuses on the CRNM, trade negotiation issues within its mandate and related activities. Its intention is to
provide impetus for feedback by and awareness amongst a variety of stakeholders, as regards trade policy developments of currency and importance to
the Caribbean.
http://www.crnm.org
Such deficiencies at the policy level become quite stark
especially when consideration is given to certain facets
that characterize the Caribbean’s energy sector. These
are mainly that the Caribbean is characterized by high
dependence upon imported fossil fuels; vulnerability to
systemic instability due to high and fluctuating
international energy prices; and inefficiency in the use of
energy for productivity and wealth creation.
In light of these characteristics, the ultimate conclusion
of the study is that the region’s current treatment of the
sector should be revisited with the aim of reprioritizing
the sector’s role in economic planning and development
activities, including the region’s external trade
negotiation agenda. The point reiterated in the report is
that the energy services sector should be seen and
treated as a sector with potential for regional
investment, business development and economic
growth.
• In most countries the legal and regulatory framework for the
management and development of the energy services sector
is inadequate.
• Bureaucracy, lack of clarity and uncertainty in the
administration of Customs and Immigration regulations is
hampering the development of a regional energy services
industry.
• With the exception of CARILEC (an association of electricity
utilities), there are currently no regional trade associations
concerned with the energy sector, though arguably the STCIC
is beginning to fulfill this role.
• Illegal markets in energy and energy services exist in many
countries of the region, hampering the growth and
development of legitimate businesses.
• The development of the industry is hampered by a lack of
standards and the effective enforcement of standards when
they do exist.

With respect to the relationship between the • Most companies face difficulties in attracting and retaining
development of the energy services sector and the trade skilled professional and technical staff. This problem is
negotiating agenda, there is a link between the removal especially acute in Guyana.
of barriers on market access and the improvement of
competition within energy services markets on one hand
and on the other, economic growth and poverty Recommendations of the Study
alleviation. However, as the study acknowledges,
governments for reasons attributed to the protection of It is on the basis of such findings that the study
national security and sovereignty, even within the proposed a number of recommendations. These include
framework of single markets, are reluctant to ‘open’ the following:
energy services markets to foreign companies.
1. Increased emphasis should be placed on the energy
services sector at both the level of CARICOM and by national
In addition, the study also revealed the following:
Governments.
• Outside of companies providing services to the oil and gas
2. CARCIOM should urgently develop a regional energy
sector in Trinidad & Tobago, there is very limited regional
policy, which will provide the necessary framework for the
private-sector involvement in the energy services sector.
development of the regional energy services sector, in
particular the integration of energy markets.
• The regional private-sector has traditionally not seen the
energy sector as an area in which they can win business or
3. The CARICOM energy policy should include the
grow sustainable companies.
harmonization and extension of all local content provisions in
the energy sector to make them compliant with the Treaty and
• Regional private-sector companies are nervous about doing
supportive of regional business development.
business in other countries in the region and their business
decision-making is hampered by a lack of accurate and timely
4. The energy services sector should be recognized as a
information.
potential area for Caribbean private-sector investment and
regional Governments should include the energy services
• In most countries the legal and regulatory framework for the
sector in their business and export development activities.
management and development of the energy services sector
is inadequate.
CRNM UPDATE is the flagship electronic trade newsletter of the Caribbean Regional Negotiating Machinery (CRNM). Published in English, it is a rich
source of probing research on and detailed analyses of international trade policy issues and developments germane to the Caribbean. Prepared by the
Information Unit of the CRNM, the newsletter focuses on the CRNM, trade negotiation issues within its mandate and related activities. Its intention is to
provide impetus for feedback by and awareness amongst a variety of stakeholders, as regards trade policy developments of currency and importance to
the Caribbean.
http://www.crnm.org
5. Energy services should be one of the offensive areas to
pursue in trade negotiations and a specific Energy Services
team should be established, with representatives of both the
private-sector and CRNM.
6. The skills gap in the energy services sector requires a joint
public-private approach to be filled. The Energy Industry
Competency Development Initiative (EICDI) should be
supported at the regional-level to create a common and
internationally recognized system of technical training and
certification for the Caribbean energy sector.
7. Existing barriers preventing local firms from accessing
contracts with multinationals in the Caribbean energy sector
need to be addressed through efforts such as the Safe To
Work (STOW) project and these should be pursued on a
regional basis.
8. There is significant scope for increased collaboration and
sharing of information between national business
communities with respect to opportunities in the energy
sector. Closer relationships between some of the potential
areas for hydro-carbon development are already developing,
in particular between the STCIC and the Suriname Chamber
of Commerce, and these need to be encouraged and
supported by regional Governments.
The Conclusions of the Consultation
The participants of the meeting, which included
representatives from the private and government
sectors, were divided into five syndicate groups which
were to approve or amend the recommendations of the
Study, identify actions to move the approved or revised
recommendations forward, and to develop actions to
promote the development of renewable energy sources
in the region.
The conclusions and recommendations related to an
action plan were classified according to the following
categories of required intervention, namely regional;
national; company-level and private-public sector
collaboration.
Regional Level Intervention
The study recommended that the following interventions
should be made at the regional level:
• Increased emphasis should be placed on the
energy services sector at both the level of
CARICOM and by national Governments.
CRNM UPDATE is the flagship electronic trade newsletter of the Caribbean Regional Negotiating Machinery (CRNM). Published in English, it is a rich
source of probing research on and detailed analyses of international trade policy issues and developments germane to the Caribbean. Prepared by the
Information Unit of the CRNM, the newsletter focuses on the CRNM, trade negotiation issues within its mandate and related activities. Its intention is to
provide impetus for feedback by and awareness amongst a variety of stakeholders, as regards trade policy developments of currency and importance to
the Caribbean.
http://www.crnm.org
• CARCIOM should urgently develop a regional
energy policy, which will provide the necessary
framework for the development of the regional
energy services sector, in particular the integration
of energy markets.
• The CARICOM energy policy should include the
harmonization and extension of all local content
provisions in the energy sector to make them
compliant with the Treaty and supportive of regional
business development.
• Energy services should be one of the offensive
areas to pursue in trade negotiations and a specific
Energy Services team should be established, with
representatives of both the private-sector and
CRNM.
While agreeing that the study’s recommendations would
stimulate the sector’s development, the participants also
offered additional recommendations. These are that
• In order to benefit from economies of
scale, connectivity of regional and
geographical supply grids should be
explored.
• Special focus should be placed on the
consumer side of the energy services
value chain.
• A sound intra-regional negotiating
infrastructure should be developed so that
more developed sectors in certain
jurisdictions do not “leapfrog” over others.
National Government Level Intervention
The study recommended that the following interventions
should be made at the national level:
• The energy services sector should be
recognized as a potential area for
Caribbean private-sector investment and
regional Governments should include the
energy services sector in their business
and export development activities.
The participants agreed with the above but prioritized
the following:
Legislation – legislation is required that responds to
commercial and national needs. Such legislation will
cover environmental protection, fair competition,
investment policy and promotion of innovation/research
and development.
Business support – support is needed in terms of
incentives to increase private sector activity. These
include rebates, tax incentives, bidding standards and
training for contract negotiations. Business support can
be achieved through trade promotion agencies,
collaboration with overseas accreditation bodies and
empowering industry associations.
Financing - energy investments are high risk, so
governments should provide initial capital and create
opportunities for firms to buy back shares over time, with
a view to obtaining full ownership.
Transparency mechanisms – such mechanisms are
required to build credibility and commitment to non-
discrimination. Mechanisms are to address all levels:
the policy making process, commercial bidding
processes and job selection criteria.
Company Level Intervention
The study recommended the following:
• Existing barriers preventing local firms
from accessing contracts with multi-
nationals in the Caribbean energy sector
need to be addressed through efforts such
as the Safe To Work (STOW) project and
these should be pursued on a regional
basis.
The participants, with respect to this recommendation,
were of the view that the efficacy of any company’s
actions was critically reliant on building lobbying
capacity through an umbrella-type organization,
operating at all levels:
CRNM UPDATE is the flagship electronic trade newsletter of the Caribbean Regional Negotiating Machinery (CRNM). Published in English, it is a rich
source of probing research on and detailed analyses of international trade policy issues and developments germane to the Caribbean. Prepared by the
Information Unit of the CRNM, the newsletter focuses on the CRNM, trade negotiation issues within its mandate and related activities. Its intention is to
provide impetus for feedback by and awareness amongst a variety of stakeholders, as regards trade policy developments of currency and importance to
the Caribbean.
http://www.crnm.org
• National – strengthening coalitions that already
exist.
• Regional – to build lobbying capacity to influence
the CARICOM Secretariat.
• International – to secure more information on
international trade regulations and barriers as a
basis for more focused regional negotiating.
Public Sector-Private Sector Collaboration
The study recommended the following:
• The skills gap in the energy services sector requires
a joint public-private approach to be filled. The
Energy Industry Competency Development Initiative
(EICDI) should be supported at the regional-level to
create a common and internationally recognized
system of technical training and certification for the
Caribbean energy sector.
• There is significant scope for increased
collaboration and sharing of information between
national business communities with respect to
opportunities in the energy sector. Closer
relationships between some of the potential areas
for hydro-carbon development are already
developing, in particular between the STCIC and
the Suriname Chamber of Commerce, and these
need to be encouraged and supported by regional
Governments.
The participants agreed with these recommendations.
They also acknowledged that there is a need to use the
services of Caribbean Export (Caribisnet1) and of
Caribbean Association of Industry and Commerce
(CAIC), especially in lobbying for policy measures.
1 http://wwww.caribisnet.org
They also recognized that the following actions should be
prioritized:

Renewable Energy Development

During the discussions held during the consultation, the development and institutionalization of renewable energy
was considered to be a top priority because of the high costs of energy. However, there was consensus that in spite
of the importance of renewable energy, it was not being treated at the regional level as a priority and as a result,
inadequate funding resources were being allocated to its development. The participants were therefore tasked with
the identification of the actions required at regional, national, company levels and through public-private sector
collaborative efforts to develop renewable energy sources. During this exercise the participants recognized a list of
issues and identified the intervention level(s) required to resolve these issues.

CRNM UPDATE is the flagship electronic trade newsletter of the Caribbean Regional Negotiating Machinery (CRNM). Published in English, it is a rich
source of probing research on and detailed analyses of international trade policy issues and developments germane to the Caribbean. Prepared by the
Information Unit of the CRNM, the newsletter focuses on the CRNM, trade negotiation issues within its mandate and related activities. Its intention is to
provide impetus for feedback by and awareness amongst a variety of stakeholders, as regards trade policy developments of currency and importance to
the Caribbean.
http://www.crnm.org
In addition, participants prioritized the management of
certain risks. One notable risk was the breakdown in
credibility arising from a lack of transparency of the
energy services sector. The risks to the interests of
other Caribbean countries due to Trinidad and Tobago’s
possible dominance in influencing the region’s agenda
to develop the sector ensuing from the advanced level
of development of Trinidad and Tobago’s sector was
also identified.

The participants asserted that the risk of Trinidad &

Tobago domination can be managed through specific
inclusion of the Caribbean Association of Industry and
Commerce (CAIC) and the CARICOM Secretariat.
However, the participants also concluded that limited
export opportunities will persist until the renewable
sector was further developed.

It is expected that the recommendations emanating from

the study and the consultations will be used to advance
future dialogue on the development of region’s energy
services sector.
To Access the Study, please visit our
****** website for more information:

http://www.crnm.org

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CRNM UPDATE is the flagship electronic trade newsletter of the Caribbean Regional Negotiating Machinery (CRNM). Published in English, it is a rich
source of probing research on and detailed analyses of international trade policy issues and developments germane to the Caribbean. Prepared by the
Information Unit of the CRNM, the newsletter focuses on the CRNM, trade negotiation issues within its mandate and related activities. Its intention is to
provide impetus for feedback by and awareness amongst a variety of stakeholders, as regards trade policy developments of currency and importance to
the Caribbean.
http://www.crnm.org