Trinidad and Tobago's energy sector is lacking lustre.

While it may have been the foundation for Trinidad and Tobago's economic success, the future may be grim.

That's the view of outgoing Central Bank governor Ewart Williams during his exit interview at the Central Bank tower at Independence Square, Port of Spain last Friday.

Williams' term comes to an end on July 16.

As the man formerly in charge of directing the country's monetary policy, Williams is pragmatic.

"Oil and gas have brought us to where we are. It has facilitated the level of development that we now enjoy. I am not sure how far oil and gas...there's no guarantee, let's put it this way, that oil and gas can take us for the rest of the journey. Oil and gas can certainly play a role. Whether oil and gas can continue to play the dominant role that it has continued to play in the past is still an open question," he opined.

"And if one wants to take the sensible risk management approach I think we should start preparing for the time when oil and gas is not that critical of our critical well-being. We need to wean ourselves," he advised.

Williams pointed out that in the first five months of 2012 the energy sector has contracted.

The facts are:

• Oil production is 13 per cent lower than corresponding period last year.

• Gas production is also down.

• The main producing facilities are all tied up in maintenance operations.

• There was an unplanned shutdown in one of the gas facilities.

"The energy sector is not doing well. I hope it's temporary. On the positive side there are signs of exploration activity. But production of oil and gas are seriously down," he stated.

Williams' lament comes in the face of three years of economic slump and fiscal policies that have not provided the necessary stimulus to kick-start the economy.

While worried about the state of the economy as he exits, he believes the country has sustainable buffers.

Nonetheless, his primary concern is that Trinidad and Tobago's fortunes remains married to its resource wealth. That position, he believes, is unsustainable.

As the Ministry of Finance prepares for Budget 2012/2013, Williams observed that one harsh fiscal reality is that energy revenues are down.

"Analysis during the year shows that collections of revenues are misleading because you are comparing the artificial with a price," he explained.

The 2012 budget was pegged on an oil price of US$75 a barrel.

"I would suspect however it would show that collections are below what was estimated simply because production volumes of both oil and gas are down. Of course, the oil and gas regime was a bit complicated because there's all sorts of concessions," he said.

He noted that fiscal data pointed to a surplus in Central Government operations when it should have been in deficit.

The last two budgets, he noted, sought to provide public sector stimulus because the private sector was not responding strongly.

"We thought that the budget in 2011-2012 would've led to a turnaround in economic activity. Again, based on the information I have seen so far, that has not yet happened.

But you know, I need to caution that a country cannot keep running budget deficits for too many years. Therefore we need to get private sector activity up and vibrant very quickly so that the public sector takes serious steps to re-establish discipline and move towards fiscal balance. Unsustainable public debt is the enemy to medium term sustainability when you have to spend significant parts of your revenue simply to pay off debt. You certainly don't want to go too far," he said.

Asked what his advice would be to Finance Minister Larry Howai, he said: "Tread carefully. Start to chart a path to fiscal balance."

"That involves difficult political decisions particularly with the uncertainty that now exists in the energy sector. I don't think we've analysed that very well. Something is happening in the energy sector which needs greater analysis. I understand that the energy companies need to focus on maintenance which was delayed for many years. I understand that investment in security," he said.

Even so, Williams says there are more questions than answers.

One such question, he identified was the extent to which the current regime is really responsible for the uncertainty and for the decline in the energy sector.

"We have to sit back and seriously analyse the outlook for our energy sector," he said.

Given all the acceptance and need for diversification, why has it simply not happened yet? the Business Express asked.

"Because God is a Trini. Every time we think things bad, something comes in, no? Train 1, 2, 3 and 4. There hasn't been a train since, eh. The train has gone...the train has gone," he shrugged.

He noted that African nations were finding oil and regional countries such as Guyana, Suriname and Belize were discovering significant oil supplies which would increase competition for market share.

"We may not be the first priority again. That's the risk again," he said.

If not energy, then what? asked the Business Express.

"We are small enough not to have to depend on any one big thing. We are small enough to put some eggs in the tourism basket, to put some eggs in agriculture, to put some eggs in manufacturing. There are only 1.4 million of us. We are small enough to develop small business activity which are packages of carefully selected non-energy sector industries and could bring us closer to economic sustainability. We already start off with the advantage of a pretty solid infrastructure base," he said.