Young: UNC made bad NGC deals

Minister of Energy Stuart Young said bad deals made by the People's Partnership government in 2013 caused the National Gas Company (NGC) to lose money in 2024.

Young said the purchase of Phoenix Park Gas Processors Ltd (PPGPL) for $2.3 billion more than the fair market price and the acquisition of Caribbean Gas Chemicals Ltd shares resulted in NGC and the country taking a hit every time the two companies were valued lower than the price at which they were bought.

He made the statement during a press conference at the ministry’s head office in Port of Spain, on December 19.

He was speaking in defence of the current NGC chairman Dr Joseph Ishmael Khan who was targeted by opposition MP David Lee while speaking at a UNC cottage meeting at the party’s headquarters in Chaguanas on December 16.

On December 14, NGC released its financial results for 2023 which recorded a $1.3 billion loss for the year.

"Mr David Lee saw it fit to personalise an attack on the chairman of NGC, Dr Joseph Khan. (But) absolutely no part of the losses incurred by the NGC group have anything to do with the current board of directors, the current management of NGC or the current government of TT.

"The losses of 2023 are solely attributable to a transaction in 2013, the acquisition of the shares of PPGPL from ConocoPhillips which were overvalued and one of the worst contracts a government could have entered into in the energy sector – CGCL, which will continue to cost us the citizens billions of dollars."

PPGPL is a TT-based gas processing company formed in 1989. NGC acquired a 39 per cent share of the company from ConocoPhillips for US$600 million in 2013.

The acquisition of the shares would have meant that NGC would have had control over 90 per cent of the company, with NGC NGL having control over 51 per cent of the company and NGC owning 39 per cent, under the direction of then energy minister Kevin Ramnarine.

In early 2015, the government announced it would be investing along with the Japanese-based Mitsubishi Corporation, Mitsubishi Gas Chemicals and Mitsubishi Heavy Industries in CGCL, a methanol-producing plant.

Young said when the PNM came into power in September 2015, they met the deal with CGCL all but done.

"All of the legal documentation had already been executed. There was only one outstanding item to complete the CGCL deal, which was a standard opinion given by the attorney general to the financiers, the Japan Bank for International Co-operation.

"The Prime Minister tasked me and the then attorney general with locating the file. When we did, the public servants had written on the file in red ink saying that they would not approve attorney general's opinion because the deal was not good."

He also found correspondence from the then NGC president to Ramnarine and Minister of Finance Larry Howai.

He said in February of that year, NGC warned the government that the CGCL was not a good deal.

A part of the deal was called a "greenfield policy" which prioritised gas supply to newer plants over older ones, once the supply was limited.

"That would have led to billions of dollars in lawsuits because it would have meant breach of contract."

He said the PNM government made several attempts to change the circumstances of the deal through re-negotiation but were only successful in changing a few conditions, including the greenfield policy.

Young said while the two companies are contributing to losses for the moment, people should not panic because as gas becomes more readily available with new deals and better-negotiated prices, the companies will see a turnaround.

"PPGPL remains a very good company and investment. We have also worked hard on the company," he said.

Young said NGC is looking at options for reducing the losses from the company.

"That is being looked at and is being discussed with accountants and they have come up with a number of options that will be rolled out next year, but we had to take this hit."