May 2016 Financial News

PP collects $6.8B dividends from NGC

May 10, 2016

AN EXTRAORDINARY event.” That was how Independent Senator David Small yesterday described a manoeuvre – made during the tenure of the People’s Partnership (PP) administration – in relation to the National Gas Company (NGC).

A Parliament committee chaired by Small heard how in the year 2015, the State invoked its right to request payment of a whopping $6.8 billion dividend, to itself. This request came in a year when NGC’s profits fell to $605 million.

“That has to be an extraordinary event,” Small said during the sitting of the Joint Select Committee on State Enterprises.

“There should be some explanation for that extraordinary event.” The committee heard how the NCG made a profit of $605 million in 2015. This was down from $3.3 billion in 2014; $4.4 billion in 2013 and $3.9 billion in 2012. Over the years, dividends have been paid out: $3.8 billion in 2014, $2.6 billion in 2013 and $1.6 billion in 2012. Small said the $6.8 billion payment in 2015, appeared to come out of retained earnings.

“The company is paying dividends out of retained earnings,” Small said. “And that is not necessarily the best practice. That was more than double the profits. That was not the best financial practice in my respectful view.” NGC Ag VP (Finance and Info Management) Narinejit Pariag said the Stateowned company has a dividend policy which allowed payment of up to 99 percent of profit.

However, payments are also made based on, “special requests from shareholders”.

“The company is well-capitalised,” Pariag said. “At the end of 2015, the company’s gearing ratio is just around 11 percent.

This allowed the company to make the payment of dividends without jeopardizing the company. The point made is noted. It is not something that is sustainable...The request would have been made during the course of the year and that would have been fulfilled by the organisation.” Mere months after this dividend payment, a freeze on salaries and bonuses would be implemented by NGC which employs 811 persons according to information given to the committee.

Officials also said a lack of capital investment over time, resulted in a gas supply shortage, which will only be remedied in 2017 or 2018.

Questioned on this matter yesterday, Former Finance Minister Larry Howai said, “I don’t recall that figure. Without researching, it could be either the inclusion of part of the prior year as well as proceeds of the (NGC) IPO.” The committee also heard that the controversial Beetham Wastewater project was 78 percent complete when the contractor left the project amid a legal dispute. The project, according to NGC’s Ag President Olave Maria Thorne, remains under review. Pariag said about $943.7 million was spent on the project thus far.

Thorne alluded to the official trip of NGC chairman Gerry Brooks who yesterday signed a Memorandum of Understanding on joint identification and development of commercially viable natural gas projects with Thomas Manu, Ag CEO of Ghana National Petroleum Corporation (GNPC), in Ghana.

She said the NGC is looking to other international arrangements, including with Venezuela.

“We are looking at the possibility of getting gas outside of Trinidad, primarily from Venezuela,” Thorne said. She said Venezuela offered medium to long-term prospects, including its Loran-Manatee field.

Source:
By Andre Bagoo
Newsday
Tuesday May 10, 2016

http://www.newsday.co.tt/politics/0,227620.html