Thursday 3rd June 2004


No more stand-alones

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Prime Minister Patrick Manning, centre, shares a joke with Trade Minister Ken Valley, left, and Energy Minister Eric Williams.


Government has been rejecting proposals by companies seeking to set up plants that would only produce ammonia and methanol.

Prime Minister Patrick Manning announced what he called a “very significant” shift in Government policy concerning ammonia and methanol projects at a breakfast meeting with senior business officials at Crowne Plaza last week.

Manning said this new policy shift was meant to stimulate the downstream energy sector, which he conceded had proven to be a difficult task for previous governments.

However, one senior economist said Government needs to implement a proper tax regime for the gas sector if it is to capitalise on the new policy shift.

Caribbean Money Market Brokers (CMMB) chief economist Jwala Rambarran, who had attended the breakfast, said he supported the new policy shift in ammonia and methanol, but noted existing tax laws may stand in the way of its profit potential to the State.

“As we move further in this type of activity, what do we do in terms of the tax regime for gas and gas-based activities?” Rambarran said.

“We have a tax regime for oil. They need to make a decision on putting in place a proper gas taxation regime.”

Manning did not discuss the gas tax regime, which is now under review, but instead focused on what his administration has been doing to stimulate the downstream energy sector.

Despite his call for a new tax regime, Rambarran believes the new downstream policy for ammonia/methanol is a step in the right direction.

Cabinet is considering the establishment of at least three new ammonia or methanol plants that will manufacture downstream products. It has already allocated natural gas for one such proposed facility.

Manning explained the returns on gas used to manufacture ammonia and methanol are at least $2-$3 lower than that used for the production of Liquefied Natural Gas (LNG), which is T&T’s leading energy sector export.

“If we have a proposal, and we do have many, where a company wishes to manufacture methanol or manufacture ammonia alone, they are told we are not interested,” he said.

“If however, ladies and gentlemen, associated with ammonia and methanol manufacture they make a proposal for some downstream industry which is an area in which we have had difficulty attracting investors in the past, if they make that proposal, then we can sit and talk.”

Government has also found support for its new downstream initiatives from

South Trinidad Chamber of Industry and Commerce president Dr Jim Lee Young, who had criticised the Manning administration’s energy policies on behalf of the South Chamber last February.

Lee Young, who did not attend last week’s breakfast event, acknowledged the importance of the new shift in Government energy policy and its possible effect on the overall economy.

Interviewed Tuesday, Lee Young said the association fully supports Government’s position on increasing investment in the downstream industries.

He said this did not only mean the new policy on ammonia and methanol but also the aluminium smelter (for which Government recently signed a Memorandum of Understanding with ALCOA) and gas refineries which Manning also classified as projects with downstream potential.

Manning conceded while LNG provided huge returns to the State, there were few other benefits associated with the product, all of which is exported to the US.

“In pure monetary returns, it is probably the greatest with LNG. If that was the only investment criteria that you needed, you would be building LNG plan after LNG plant,” Lee Young said.

“Its ability to contribute to local sustainable development, the development of human capacity is limited. Its ability to create jobs is even more limited.”

Lee Young said this was why he supported Government’s new policy to encourage downstream capacity and supports the pursuit of greater value added products

“It (downstream sector) not only has a monetary value, it creates jobs. It creates local entrepreneurs.”

He said an example of this could be found in the proposed US$1 billion aluminium smelter which Manning said would create 2,075 jobs comprising 2,000 jobs during the construction phase, 575 in the smelter operations and 1,500 downstream.

Rambarran said caution must be exercised with regard to any new energy initiatives, a point made by Lee Young in February.

Rambarran said the proposed aluminium smelter, ethylene cracker (for plastics production) and ammonia and methanol downstream projects were not catered for in the existing projection of the life of the natural gas reserves due to present production levels.

“Current rate of reserves to production ratio in term of gas, we have about 13 years,” Rambarran said.

“Unless there is a significant exploration (find) that is going to take place, those reserves are going to run out in a short space of time.”

Lee Young said he was confident there would be a major gas find before the commencement of the aluminium smelter and ammonia/methanol downstream projects in the next two to three years.

Not right forum

CMMB chief economist Jwala Rambarran questioned whether a breakfast event was the right forum for announcing a major shift in Government’s energy policy.

Prime Minister Patrick Manning announced Government’s new policy concerning ammonia and methanol last week while delivering an unscripted speech in front of more than 100 of the nation’s business leaders.

However, it certainly did not seem as if Manning made the revelation at the last minute.

“It is amazing to come to a meeting of business people and make such an announcement as a major policy shift. Should that have not been announced in Parliament, where it could have been debated,” Rambarran said.

He also called on Government to be more accountable to the public with regard to its energy policies.

Rambarran said this is evident in the lack of information about the workings of Government’s energy policy task force led by Professor Ken Julien.

He also noted Government has not yet released the full contents of “The Master Plan for Gas in T&T” designed by the US-based consultants Gaffney/Cline and Associates which was launched in 2001.

“I am not too sure if we are still following the recommendations of the White Paper on Energy that was laid (in Parliament) so many years ago,” Rambarran said.

“Accountability and transparency in energy economy are every important because they using resources that are depleting,” said Rambarran.

South Chamber president Lee Young, who called for more openness in Government’s energy policies in February, said on Tuesday that there is a limit to how much can be revealed.

“The need for commercial secrecy – you can’t have foreign investor going in here negotiating an agreement and then the Government broadcasts what terms he is buying the gas and so on,” Lee Young said.

He called for a comparative system where, for example, the Government details the benefits for the taxpayer of an aluminium smelter as opposed to a methanol plant.

The new policy

Prime Minister Patrick Manning gave some details as to the proposals Government is now actively pursuing with regard to its new ammonia or methanol to downstream policy.

They are as follows:

Three proposed ammonia, urea and uan (urea ammonia nitrate) solution plants.

Manning said two of the proposed plants are targeted for the Union Estate La Brea and the other for Pt Lisas.

He said Cabinet has already approved in terms of the allocation of natural gas for the one of the proposed project.

“All three of those have been given priority by the Cabinet and are now being advanced, actively pursued by the export task force of natural gas,” Manning said.

Two proposed gas refineries which Manning said are huge reformers that convert natural gas into syn (synthetic) gas that can either be used in methanol manufacture or for ammonia manufacturing dependent on the package made in both cases.


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