As the economy diversifies, Trinidad and Tobago continues to push for major transport infrastructure upgrades. Under Vision 2030, a 15-year framework inclusive of UN Sustainable Development Goals, an allocation of TT$1.91bn ($283.3m) was made for FY 2017/18 to the Public Sector Investment Programme (PSIP), which aims boost production through quality infrastructure and transportation.
The PSIP is one of the key policy instruments used by the government to roll out development projects on an annual basis, which are generally assigned to the state-owned National Infrastructure Development Company, through the Ministry of Works and Transport. The 2018 PSIP indicates that 85.2% of its financing is expected to be derived through general revenues, while the remaining 14.8% will be sourced from external loans and grants. According to the mid-2018 budget report, the Ministry of Works and Transport had received $62.5m to continue the expansion of its infrastructure works programme.
T&T has historically been an important centre of maritime transports dating back to when the twin islands were a British colony. After the discovery of hydrocarbons and during the following period of industrialisation, ports became essential for exporting hydrocarbons, and importing materials for economic activity and development.
Currently, T&T has two container ports: the larger Port of Port of Spain (PPOS), which is wholly owned by the government with an area of 142 ha and a capacity of around 700,000 twenty-foot equivalent units, and the Port of Point Lisas (PPL), which covers over 23 ha and is jointly owned by the government and the Point Lisas Industrial Port Development Corporation (PLIPDECO), holding a 51% and 49% share, respectively. Both of the facilities are located in Trinidad, as is Port Fortin, a liquefied natural gas terminal, and the Galeota Point Terminal, which processes condensate and crude oil before shipping.
Although the main port in Tobago is Scarborough, there are plans to construct a new seaport for the island. According to the Ministry of Works and Transport, the construction of the Fast Ferry Port in Toco is part of an economic agenda to develop the north-eastern peninsula of the country and improve marine access between the two islands, enhancing inter-island movement of passengers and cargo (see analysis). Construction is scheduled to take four years and is set to begin in 2019. The facilities will include a docking area of approximately 600 metres to accommodate five ships of 100 metres in length, a two-storey ferry terminal, a marina that will include accommodation for about 30 pleasure crafts and coast guard facilities to provide increased security of the coastline in this part of the country.
In addition to this, speaking in June 2018, secretary of finance, Joel Jack, announced that the consulting engineering firm Lee Young and Partners had been contracted for a feasibility study on the best location for a new industrial port, adding that, “A commercial cargo port in Tobago could facilitate the development of the light manufacturing sector as well as improve the efficiency of commercial activity on the island.” The results of the study are expected by the end of 2018.
Port activity has been in decline in recent years, with throughput decreasing by 3% in 2017 and by 24% the year before. Ashley Taylor, president of PLIPDECO, told OBG, “The decline in port activity is due to generally lower economic activity in the country.” Taylor pointed out that beyond a reduction in domestic cargo, trans-shipment, which accounts for 15% of containerised cargo activity, has also fallen.
To remain profitable amid the reduced volumes, costs have been cut significantly by renegotiating contracts with service providers and improving efficiency in different areas of organisation. An additional way to boost margins could be through modernisation. Upgrading technology would allow for reduced dwell time of containers, and a decongested port would allow for faster turnaround of vessels. Customs, in particular, is an area that could benefit from improvements, since the current processes involve a share of bureaucracy that can result in delays. “The current status of Customs operations is considered by many stakeholders to be a major disincentive for trade,” Taylor told OBG. “Therefore, more measures need to be taken to streamline and digitalise operations,” he said.
In 2017 the Customs and Excise Department implemented the use of container scanners at the PPOS and the PPL. These new devices were meant to improve the examination speed due to the non-obtrusive nature of the inspections, as compared to physical examination stations. Such measures will be central in securing the country’s position as a logistics hub going forward. Taylor told OBG, “For years, we have recognised that the big area of growth potential is not in port operations, but in capturing the overall supply chain. Through this strategy, we will be in a better position to attract international business, particularly in trans-shipment and consolidation of cargo, where there is significant room for growth.” The ability to leverage existing capabilities while making strategic investments will be important to securing the development of the sector.
Commissioned in 2001, Piarco International Airport, located 25 km east of the capital, is the country’s largest airport, handling 95% of all arrivals. The airport’s north terminal features 14 second-level gates with jet bridges for international flights, two ground-level domestic gates and 82 ticket counter positions. The airport is the third largest by passenger numbers in the English-speaking Caribbean. Piarco AeroPark, located within the airport is also the first airport city in the Caribbean.
On Tobago, Arthur Napoleon Raymond Robinson International Airport, formerly Crown Point Airport, is the other point of entry for foreign air travellers to the country. Currently, a new terminal is under construction in order to improve access to the island and increase visitors, key demands of a tourism-driven economy. The upgrade is priced at $500m, excluding land acquisition costs, with funding provided via a public-private partnership (PPP) that utilises a build-own-lease-transfer structure. The Development Bank of Latin America is supporting the project with technical advisory services.
The new terminal and associated works are projected to be completed in 2020, and stakeholders are hopeful that enhancing the physical infrastructure of the airport will also increase the attractiveness of the island as a travel destination, resulting in a boost in capacity and productivity that will increase demand in other sectors of the economy.
Although air arrivals saw a slight decline of 3% from approximately 409,000 passengers in 2016 to 395,000 in 2017, this trend is likely to reverse in 2018. Emmanuel Baah, deputy general manager of the Airports Authority of T&T, told OBG, “Difficulties in obtaining foreign exchange in 2017 impacted the overall travel climate last year, and there is a strong correlation between GDP growth and travel.” Baah added that, as the economy will experience growth in 2018, the sector can be expected to expand over the year as well.
Beyond improving airport infrastructure, increasing connectivity to the country is necessary to open up opportunities for passenger travel and business ties to the twin islands. In particular, strengthening transport links within the Caribbean, which is seen as a major barrier to growth in the region, would benefit T&T (see Regional Relations chapter).
One way the country could do this is by lowering the fees that are seen as an obstacle to greater competitiveness. “Governments need to lower taxes on air travel,” Audra Walker, chief commercial officer at LIAT Airlines, told OBG. “As a percentage of the total fare paid by the passenger, taxes and airport fees range 30-50%, reaching as high as 60% in some cases. Therefore travel between two islands can be more expensive than travelling to the US or Canada.”
Headquartered in T&T, Caribbean Airlines has 600 weekly flights, most of which are routes within the region. In 2018 they opened a direct flight from Port of Spain to Cuba’s capital Havana, increasing their regional presence. The company will operate two flights on the new route each week on Tuesdays and Saturdays, timed to connect with its other Caribbean destinations, including Grenada, Guyana and Barbados. Further improvements in air connectivity could help to lower costs and reinforce links with regional and global markets.
Roads & Highways
Among the strategic investments being made in infrastructure are road and motorway renovations. The two islands are home to over 8320 km of roads, of which around half (4252 km) are paved. The island of Trinidad has three six-lane freeways (Churchill-Roosevelt Highway, Uriah Butler Highway and Beetham Highway) as well as four four-lane motorways (Solomon Hochoy Highway, Audrey Jeffers Highway, Rienzi Kirton Highway and Diego Martin Highway). Tobago, meanwhile, has one motorway; Claude Noel running along the southern coast from Canaan to Scarborough.
Much of this existing network is in need of upgrades or extensions. The projects being prioritised by the government for the 2015-20 period are the Solomon Hochoy Highway Extension to the Point Fortin Project, the Churchill-Roosevelt Highway Extension to Manzanilla, the Churchill Roosevelt Highway/Southern Main Road Flyover and Ancillary Works Project, and the widening of the Western Main Road to Chaguaramas. As of May 2018 these network improvements were in various stages of implementation. While some projects are still in the design phase, such as the road from Valencia to Toco, others like the temporarily suspended Churchill-Roosevelt Highway Extension to Manzanilla and the Solomon Hochoy Highway to Point Fortin have scheduled completion dates in 2019 and 2020, respectively. The Curepe Flyover, which would significantly improve traffic in the east-west corridor, is also scheduled for completion by the end of 2019.
These projects are central to decongesting traffic on the twin islands. According to estimates from the Ministry of Works and Transport, 35,000 vehicles were imported in the first three quarters of 2017, and there are already 0.5 cars per person in the 1.37m-person nation. Many of the country’s 800,000 motor vehicles are concentrated in the Port of Spain region, creating traffic issues. The east-west corridor, a major urban area that spreads east from Port of Spain alongside the Eastern Main Road and the parallel Priority Bus Route, also suffers from serious congestion problems. In order to address traffic, the government plans to remove traffic lights through construction of interchanges in certain roads and motorways, including Churchill-Roosevelt Highway and the Southern Main Road, scheduled to be completed by 2019. Additionally, to improve traffic monitoring, the authorities plan to expand the traffic surveillance and control system, and the corridor traffic management system. The government also passed legislation to enforce traffic regulations, reform the fixed penalty traffic system and introduce a demerit point system. Along with road upgrades, these measures should help bring the country’s transport infrastructure up to speed with the increase in motor vehicles.
Public Transport Deficit
However, improving public transport is also necessary to tackle traffic congestion. According to government reports, the limited road network and deficiencies in the public transport system are the main causes of transit delays, as well as a significant contributor to low levels of labour productivity.
The main public transport service is the bus network. Established in 1965, the Public Transport Service Corporation (PTSC) is the sole operator of this service. Maxi taxis operate alongside the PTSC and have fixed routes, fixed fares and fixed meeting points, although they are privately owned. The PTSC has around 300 buses, 80% of which are meant to be in operation, allowing 15-20% of the total to receive preventative maintenance or repairs daily, which puts the actual number of buses on the road at approximately 240. In June 2018 Edwin Gooding, chairman of the PTSC, told local media, “I am aware we are not servicing the public as well as we could,” adding that there were not enough buses to service the 163 routes across the country, resulting in operational inefficiencies; some routes that are meant to run three times per day only run once or twice.
One main obstacle to maintaining the fleet is securing spare parts to repair the buses, which are 15 years old on average. The PTSC calculates they are in need of approximately $4m in parts to fully repair all the vehicles. The government has been working to resolve this issue by adding 35 new buses to the fleet in 2018 and allocating $30m to purchase 25 more new vehicles in early 2019. Twenty-two of the buses will be equipped with wheelchair ramps and lifts, and some of the new fleet will run on natural gas. This dovetails with a recent sustainability push that calls for an increase in natural gas-operated vehicles as opposed to petrol.
Finance & Regulatory Support
A large number of transport infrastructure projects are currently in the pipeline. Although the government continues to pledge money for these projects, they are also facing ongoing fiscal constraints, and thus the private sector has been called upon to play a greater role in financing. The Vision 2030 development strategy attempts to remedy this, calling for the development of PPPs with the goal of creating drivers for long-term economic growth.
However, according to the Ministry of Works and Transport, for PPPs to be effective, the public investment strategy will need to be based upon strategic priorities, which include investment in specific economic activities and areas for mutual reinforcement of public and private investment. The plan also calls for the streamlining of national investment-related policies such as trade, tax legislation, policies related to intellectual property, environmental laws and labour market regulation — an area that stakeholders have been calling for the government to address for some time.
“The lack of a strong regulatory framework and the necessary legal enforcement infrastructure for the shipping industry, such as federal maritime licences or the Transportation Security Administration requirements for air freighters in the US, means that anyone possessing a means of transport can effectively work in the sector,” Peter Patience, director at Cargo Consolidators Agency, told OBG, “The lack of standards, quality and consistency, and the legal requirements to abide by the former, hamper the full development on the sector.”
While some areas of transport and logistics have experienced a decline in performance in recent years due to overall sluggish economic performance, a projected turnaround in 2018 will likely have a positive impact on the industry. According to the IMF, as a result of a recovery in the non-energy sector in 2018, nominal GDP is expected to grow from $154.4bn in 2017 to $163.9bn in 2019.
From port and airport, to road construction projects and upgrades, there still is a ways to go to bring T&T’s infrastructure up to speed with economic demands. Beyond financing new projects, finding ways to improve productivity and competitiveness by streamlining processes and modernising systems will be essential to elevate the sector and enable it to better contribute to the country’s diversification strategy as well as boost overall economic growth.
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