May 2016 Financial News

Insufficient gas from NGC

May 10, 2016

State-owned National Gas Company (NGC) has about 20 per cent less gas to supply its customers than is currently required.

This was revealed by the company’s consultant and technical adviser Frank Look Kin during a two-hour meeting yesterday with the Joint Select Committee of Parliament on State Enterprises at J Hamilton-Maurice Room, Tower D, International Waterfront Centre, Port-of-Spain. The meeting was chaired by Independent Senator David Small.

Look Kin was responding to a question about challenges facing the company from JSC member and Minister of Social Development and Family Services, Cherrie-Ann Crichlow-Cockburn.

He said NGC’s current gas production is “probably about 20 per cent less than the volumes required to service our customers.” The situation started in 2008/2009 due to a combination of factors, he said, including “no new investment, platform coming down for special maintenance and gas production was falling”

From 2011 the gas supply “was not sufficient to meet even the reduced gas demand that we had in the country” and the situation continues.

“It is about in 2017/18 that we will probably see significant impact of new capital investment to raise the production levels back up to be able to minimise the shortage of gas that exist in the country today,” he said.

Look Kin said when British Petroleum’s Trinidad Regional On-shore Compression Project (TROC) and another project come on stream there will be about 590 million cubic feet of gas. That will slow the rate of decline and result in a higher level of gas availability. However, he underscored the need for “more capital investment in T&T to be able to generate more gas.”

Another option being considered is importation of gas from Venezuela, Look Kin added, but that is “a more medium to long-term prospect.”

Small expressed concern about the payment of dividends by the company over the past few years. He said in 2014 NGC’s profit was $3.1 billion and it paid $3.8 billion in dividends and in 2015 the profit was $605 million and paid $6.8 billion in dividends—a clear indication of dividends being paid out of retail earnings, which is not the best financial practice, he said.

The senator said he wanted to know the factors that caused NGC “in the past three years, to put out nearly $14 billion in dividends when that is more than double the amount of profits.”

NGC acting vice president for Finance Narinejit Pariag said the company has a dividend policy “which allows us to pay up to 99 per cent of out profit available to (for) distribution based on special request from the shareholder.” He said a special request can be made annually and the company “has paid dividends in excess of reported profit on an annual basis over the last couple years.”

Pariag said at the end of last year NGC’s gearing ratio was around 11 per cent and dividend payments were made without putting the company into jeopardy. In response to another question, Pariag said at the end of 2015 NGC was owed $1.7 billion. Acting president Maria Thorne said the company’s new strategic plan for 2016 to 2020 is almost complete and there is likely to be restructuring of management.

She said the appointment of a permanent president is before the board and should be determined in due course.

Source:
Richard Lord
Trinidad Guardian
Tuesday May 10, 2016

http://www.guardian.co.tt/business/2016-05-09/insufficient-gas-ngc