Khan: People's Partnership approved gas-to-liquids plant sale to NiQuan

ENERGY Minister Franklin Khan on Thursday said the People's Partnership (PP) administration negotiated the sale of gas-to-liquid (GTL) assets of Petrotrin to NiQuan Energy Co Ltd – not the PNM government.

"The decision to sell the GTL assets had the approval of the then sitting government which was the PP," Khan said in signed release in response to claims by Pointe-a-Pierre MP David Lee.

In the wake of an explosion at the NiQuan GTL plant on Wednesday, now under investigation, in his constituency, Lee questioned the timing of the opening of plant a few weeks ago, attended by Khan and the Prime Minister. He said the deal was an "explosive failure" which would have repercussions for taxpayers.

Khan said Lee's claims that NiQuan bought the assets "at a peppercorn rate" and Government agreed to buy all of the offtake were untrue.

He said Lee "is well aware that it was under the PP government that the sale was executed and that all terms and conditions, except for the supply of gas, were finalised."

While the GTL plant was initiated by Petrotrin, Khan said it was abandoned and placed in receivership due to mismanagement and cost overruns. He explained the receiver tried to resuscitate the project but after spending over US$399 million and facing financial constraints, Petrotrin decided to sell the plant at the end of 2010, under the PP.

"Based on such approval, the receiver invited proposals for the acquisition of Petrotrin's GTL assets through an open process."

Khan said by letter dated April 16, 2012, NiQuan submitted a response to the request for proposal. By letter dated July 6, 2012, he said, the receiver informed NiQuan that it had been selected as a prospective investor.

"In October 2014, the board of directors (of Petrotrin) appointed by the PP accepted the recommendation of the receiver, selecting NiQuan as the preferred investor."

When the project came to a standstill in 2016, Khan said Government reviewed it and found it was worth supporting since it would benefit the country.

He cited such benefits as a capital injection of US$125 million in the economy, an estimated $2 billion in taxes and statutory payments, 700 temporary jobs during construction and 65 permanent jobs upon completion.

"Government agreed to provide a gas supply of up to 31 mmsct per day for a period of 15 years in the first instance and for two consecutive periods of five years thereafter on commercial terms," Khan said.

He said the gas supply to NiQuan was provided by the state-owned TT Upstream Downstream Energy Operations Co Ltd "and currently amounts to less than one per cent of daily domestic gas production."

He said in 2018, the company and NiQuan agreed to commercial terms for the gas supply for an initial 15 years which Cabinet approved. He added that the agreed gas price represents the market value for downstream companies in TT.

"It is important to note that the entire project was funded by private capital. No state funding or resources were expended in this project."

NiQuan did not receive any tax concessions, he said, adding that Paria Fuel Trading Co has the right to offtake all of NiQuan's products "namely no-sulphur diesel from the plant which will be exported."

He said the plant received all the approvals before the start of construction and commissioning. Referring to the blast, Khan said, "My understanding is that damage has been limited to the equipment in question due to properly functioning safety systems and procedures, and swift action by the trained personnel at the company."

He promised that "full disclosure will be provided on the cause of the accident" and the plant will not resume operations until all relevant agencies deem it "safe to continue." He said Lee's claims were in keeping with the UNC's condemnation against any initiative that could benefit TT.

"Be it Dragon, Manatee or Sandals. The NiQuan project is no different. The UNC does not want to see TT flourish."