Jan 2015 Financial News

Final DME decision pushed back

Jan 29, 2015

A final investment decision of the proposed US $1 billion methanol and dimethyl ether (DME) plant has been pushed back to the second quarter of 2015 by the consortium led by Mitsubishi Gas Chemicals that also included local company Massy Group.

According to Massy Energy’s executive chairman Eugene Tiah, the delay is to ensure that the project financing is in place before a final investment decision.

In an interview on Tuesday he told BG: “When we say a final investment decision that can only be made when we have the financing in place and at the moment we do not. We are working on that and we feel we will be able to conclude that part by the second quarter and therefore that is when we will be in a position to make a final investment decision.”

There have been delays in the project which was originally scheduled to start construction in the fourth quarter of 2014.

Mitsubishi Corporation leads a consortium that includes Mitsubishi Gas Chemicals, local partner Massy Holdings Ltd and Integrated Chemical Company Ltd (ICCL), a Texas, United States-based company.

Negotiations were led by Mitsubishi Corporation for the project, the first phase of which will involve a total investment of US$1 billion and will be situated in the Union Estate Industrial Park near La Brea in south Trinidad.

Tiah confirmed that the project proponents have received their certificate of environmental clearance (CEC) from the Environmental Management Authority (EMA) which allows them to proceed with the project.

Massy Energy’s CEO confirmed that the labour costs were US$100 million above what was originally planned and as a result the consortium has had to make a deal with the main contractor which would see the company gaining part ownership of the project but he insisted that Massy group has not given up any of its shareholding in the project.

“You seem to know a lot of what is happening in the project. The answer to the questions is that the contractor now has a shareholding in the project in return for a reduction in the price. Massy group has its ten per cent in the project in keeping with the original proposal.”

The plant is due to be built at Union Estate in La Brea, the same estate which the Alutrint aluminium smelter was to be built. The government walked from the project and when the methanol/DME project was launched Massy Group’s executive chairman Gervais Warner said the project would be good for the environment.

He said, “One of the applications is that it is a substitute for diesel. I would expect that any environmentalist will want to see as much DME replace diesel in Trinidad and Tobago because we do not have the cleanest burning diesel. We have that grey black smoke diesel that we see on our highways. Won’t it be fantastic to see less of that and more of clean fuel on our nation’s highway? I hope they can see this is a good.”

Warner said the project will create job opportunities for thousands and special preference will be given to people in the area.

Tiah, who was president of Phoenix Park Gas Processors for more than a decade, told BG that the issue of water had been settled and the consortium had given up on its desire to build its own desalination plant rather than depending on WASA.

He explained: “When you have a project you want to control as many elements of it as possible but to be honest I worked on the Point Lisas Industrial Estate pretty much from its early days and to be truthful WASA has almost always been reliable in the provision of water. They say they will meet our needs and we have to be confident of that.”

If the project gets sanctioned it will be the first downstream project since the PP came to government.

Source:
Trinidad Guardian, BG6
Thursday January 29, 2015