Minister Patrick Manning, centre, shares a joke with Trade
Minister Ken Valley, left, and Energy Minister Eric Williams.
by JUHEL BROWNE
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
we move further in this type of activity, what do we do in
terms of the tax regime for gas and gas-based activities?
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
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&Ts
leading energy sector export.
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.
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
South Trinidad Chamber of Industry and Commerce president
Dr Jim Lee Young, who had criticised the Manning administrations
energy policies on behalf of the South Chamber last February.
Lee Young, who did not attend last weeks 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 Governments 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.
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
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 Governments
new policy to encourage downstream capacity and supports the
pursuit of greater value added products
(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
rate of reserves to production ratio in term of gas, we have
about 13 years, Rambarran said.
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
chief economist Jwala Rambarran questioned whether a breakfast
event was the right forum for announcing a major shift in
Governments energy policy.
Prime Minister Patrick Manning announced Governments
new policy concerning ammonia and methanol last week while
delivering an unscripted speech in front of more than 100
of the nations business leaders.
However, it certainly did not seem as if Manning made the
revelation at the last minute.
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 Governments 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.
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.
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 Governments energy policies in February, said on
Tuesday that there is a limit to how much can be revealed.
need for commercial secrecy you cant 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.
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)
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.
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.