Aug 2016 Financial News

Chamber optimistic over gains from DME plant

Aug 15, 2016

CEO of the Energy Chamber of T&T Thackwray “Dax” Driver sees the Caribbean Gas Chemical Ltd (CGCL) deal as a major capital investment in T&T.

Driver was giving his views about the new CGCL agreement signed on Monday between the Government and four investors- the Stateowned National Gas Company, Mitsubishi Gas Chemical Company, Mitsubishi Corporation, of Japan and local conglomerate Massy Holdings to construct a petrochemical complex comprising methanol and dimethyl ether (DME) plants in La Brea with an investment of about US$1 billion.

On Thursday, Minister in the Office of the Attorney General and Legal Affairs Stuart Young raised concerns about the initial agreement signed under the then People’s Partnership which he said had the potential to expose T&T to billion of dollars in claims.

Young also claimed that former attorney general Garvin Nicholas was pressured into signing off the project development agreement on election day, September 7, 2015.

In April 2013, then energy minister Kevin Ramnarine had signed the agreement with the investors.

Yesterday, Driver said major capital investments such as these add further value to the economy and drive economic growth.

“The plant’s construction will create many short-term jobs in La Brea and surrounding communities and, once in operations, there will long-term secure jobs and opportunities for economic activity for other companies selling goods and service to the facility. It is very positive for Trinidad & Tobago to attract a major investment from a diversified Japanese conglomerate,” said Driver.

He said he hoped that this investment will be a positive experience for Mitsubishi and he hoped that the corporation would consider future investments, including outside of petrochemicals.

He said methanol was used as an input in many other chemicals and demand for it tends to correlate with overall global economic growth, especially if there was growth in sectors like home construction.

“There is also significant growth in the use of methanol as a cleanburning fuel. Current global initiatives to reduce pollution and increase efficiency of transport fuels means that demand for methanol in the fuel sector is likely to increase, especially in China.”

While there is a demand for methanol in all major industrial markets, Driver said, “China is an important and growing market.”

With Government, through NGC, being a 20 per cent shareholder in this deal, Driver said returns from a major investment such as this will come in the medium to long-term.

“Government revenue will come both from the dividend payments via the NGC and from corporation and other taxes on the plant. It will not provide direct revenue to the State in the short-term.”

Driver said the Energy Chamber has a deep and ongoing relationship with the shareholders in the project.

“We have worked closely with the project developers to provide training and certification in basic HSE awareness to potential construction workers in the La Brea community,” he said.

Yesterday, Nicholas did not respond to several questions emailed to him, among them if he had picked up anything unusual in the agreement.

Nicholas also refused to say if he was caught in a ticklish situation in signing the agreement.

He said he had nothing to defend since he did not sign off on the document.

“I received the documents a few days before September 7, I cannot recall exactly when,” Nicholas said.

Asked if the People’s Partnership government had tried to use him as a scapegoat in this deal, Nicholas wrote “I couldn't comment on the scapegoating allegations as I have no information on this. I didn't hear what was said at post-Cabinet,” Nicholas wrote.

Responding to text messages yesterday Young said “I will be making a full and detailed statement in Parliament.”

Ramnarine stated that he was “not yet ready to comment on Mitsubishi.”

Days before the last general election, then prime minister Kamla Persad-Bissessar turned the sod for the complex.

Persad-Bissessar did not respond to a text message, while Gerry Brooks chairman of NGC Group of Companies was in a meeting

ABOUT THE COMPLEX

The project aims to produce 1 million tonnes of methanol and 100,000 tonnes of dimethyl ether (DME) per year with an investment of US$850 million or $5.4 billion.

The project will initially use 100 million standard cubic feet per day of natural gas to produce the 1 million tonnes of methanol, of which 140,000 tonnes will be used to produce the 100,000 tons of DME.

 

Source:
Rhondor Dowlat
Shaliza Hassanali
Trinidad Guardian
Saturday August 13, 2016

http://www.guardian.co.tt/news/2016-08-13/chamber-optimistic-over-gains-dme-plant