Energy Minister Franklin Khan yesterday announced that Government had already had preliminary discussions with some gas companies and they were “open to talking” about re-negotiating their contracts.
Speaking to members of the media during a post-general council meeting press conference at Balisier House, Port of Spain, Khan stressed that Government would not break any contracts, but that re-negotiation may be beneficial to both parties.
Talk of re-negotiating contracts of gas companies were raised during the panel discussion portion of the Energy Ministry’s Spotlight on Energy forum, Hyatt Regency, Port of Spain on Wednesday.
There Khan said, “We are leaking revenue largely because of transfer pricing issue and the nature of the Atlantic LNG (liquefied natural gas) contracts, in terms of the LNG industry. Poten and Partners has articulated where value is being lost and why, sensu stricto (strictly speaking), the companies can claim that they are not illegally breaching any contract.
“Obviously, the contract is ripe for re-negotiation because my basic principle is that the State has a sovereign right to extract a fair economic rent on behalf of the owners of the resources (TT citizens)...We have to plug the leaks (and) I am very, very positive and optimistic that an amicable solution will be found.”
Yesterday Khan said Prime Minister Dr Keith Rowley explained the challenges and issues with payments, taxes and royalties to the members of the General Council, saying Government was not extracting as much economic rent as it could from gas companies.
He added that many of the contracts were long-term and were negotiated several years ago. “The basis of now wanting to renegotiate them is that the circumstances in the gas market are so fundamentally changed that obviously, it is now appropriate to re-open these negotiations because it would be irresponsible of us as a government if we do not at least make an attempt, in a very mature and sensible way, to re-open some of these negotiations.”
Khan stressed that any further discussions with the companies would be held behind closed doors and assured the public that the Government would be well prepared. He also said there was “no acrimony or animosity” between the government and the companies.