Failed NGC deal a ‘bitter blow’

THE shutdown of two of Methanol Holdings (Trinidad) Ltd (MHTL) plants on Thursday, after a failed gas supply agreement with the National Gas Company, has been described as a “bitter blow” to the energy industry by stakeholders. It is the latest in a series of halted operations among plants at the Pt Lisas Industrial Estate.

Former energy minister Kevin Ramnarine, who addressed the issue on his Facebook page, said the energy sector and the estate were in trouble after the closure of four methanol plants out of seven, and out of 20 other plants, seven have been shut down in the last few years.

He said, “The reasons are not enough natural gas (production is at its lowest level in 16 years) and the high price of natural gas which renders the operations of many plants uneconomic.

“How did we get to this point? The slide can be halted but there must be first an understanding of the gas value chain and its relation to taxation royalties; and secondly a willingness by all players along the chain (including government) to compromise such that the redistribution of value allows for all to survive. “This requires trust and it requires leadership and that, like natural gas, is in short supply in TT.”

2 PLANTS GO IDLE

On Thursday, NGC and MHTL announced they had failed to renew a contract for the continued supply of gas, which forced the energy giant to idle two of its plants because the proposed prices are too high. MHTL falls under the Switzerland-based Proman Group.

In an internal message to employees, managing director Claus Cronberger said the company had been working on a long-term gas supply contract since March, but owing to high pricing by the NGC it was unable to secure a favourable contract.

Cronberger said, “I regret to inform you that we have been unable to source an economically viable short-term gas supply contract for the month of April and therefore we have had to take the extremely difficult decision to idle M4 and M5000 plants, effective immediately. M2 and M3 will continue running on DeNovo gas only.

“While we have reached the absolute limit of our flexibility on contract price and the terms and conditions, we are continuing to take a solutions-oriented approach and engaging with NGC and the government. My number one priority is to sustain operations and secure the livelihoods of all of our people.”

Cronberger said, however, if the situation persists and the company is forced to shut down for a longer period, then it will have to revisit its overall operations.

NGC said in a media release that this particular contract ended on April 1, despite its efforts to reach an agreement, but it will continue to engage with MTHL for other gas sales.

“NGC will continue to exert all reasonable efforts to try to secure a mutually acceptable agreement with MTHL. NGC will continue to honour its contractual obligations for the supply of gas to MHTL under its other gas sales contract.”

CHAMBER CONCERNED

President of the Couva/Point Lisas Chamber Ramchand Rajbal expressed concern over the latest shutdown, but said it came as no surprise, given the poor state of the energy sector.

He told Newsday the Confederation of Regional Business Chambers planned to meet as soon as possible to discuss the implications this would have on the formal and informal sectors.

Rajbal said, “It is difficult to operate these plants with the scarcity of gas and the current pricing. The impact is greatest for the workers, and then there will be a ripple effect on the communities surrounding the estate.

“We hope it is not a case of doom and gloom, but we really hope government can step in an adjust their deals for NGC to supply gas at a cost that can be easy and more flexible.”

He added that the current trend will see more plants following suit.

UNC deputy leader and Pointe-a-Pierre MP David Lee chastised Energy Minister Franklin Khan for the closure of MHTL’s plants. In a media release, he said this was the result of government’s continued failure to stimulate the energy sector.

He said the “massive failure which will continue to rattle our already fragile economic framework once more vindicates the Opposition’s motion of no confidence in the Energy Minister.

“These shutdowns, like the other major petrochemical plant shutdowns in the past months, are a direct result of this administration’s failed Houston gas price negotiations as well as their thorough inability to address the gas shortage.

“There can be no blaming covid19 or global market conditions as since 2017 we have seen major petrochemical plants shutdown with giants such as Yara closing down in 2019, all because of the unattractive conditions created by this government.”

Lee added that the economic effects were detrimental and accused the government of favouritism.

“It is damning and detrimental to the economic well-being of our nation that the gas supply of a company like Proman which has generated millions in revenue, forex as well as created hundreds of jobs in the past would be hindered, yet Niquan a company that has no industry track record and is reportedly struggling to meet its production targets has been given a guaranteed supply of gas.”

Government, he said, has been irresponsible by ignoring the gas crisis facing the downstream sector, which has gravely harmed TT’s ability to generate revenue, foreign currency and economic activity from the country’s main sector.