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Does the PNM care about foreign investors?

Published: 
Thursday, March 16, 2017

A series of perhaps unrelated events requires the country to ask this question: Given the precarious nature of T&T’s current revenue streams—as a result of the collapse in late 2014 in the price of some of the country’s main petrochemical and energy exports—is the current administration interested in facilitating new investment by a combination of local and foreign capital that can boost and diversify non-energy revenues?

Among the telltale signs that the current administration may not be keen to promote foreign investment in this country are the following:

 

 

1) I am sure that I am not in possession of all of the facts with regard to the matter of the National Gas Company’s gas supply to Methanol Holdings Trinidad Ltd (MHTL), but the Business Guardian energy reporter and I spoke with both of the parties to this dispute last week. After hearing from both sides, I am still not clear on why it appears as though NGC is not treating MHTL equitably in terms of the distribution of natural gas.

Yes, I understand that four of the five MHTL plants are out of contract. But even in the context of NGC not having enough natural gas to supply all of the occupants of the Point Lisas Industrial Estate with 100 per cent of their needs, on the face of it, it seems to me that MHTL is being singled out.

More fundamental is the fact that this dispute over the supply of natural gas has the potential to damage this country’s reputation as a fair and profitable destination for natural gas-based investments.

I wish I knew what some of the other investors on the Point Lisas estate think of what MHTL is going through. And what must the Japanese think about this as one of that country’s leading conglomerates, Mitsubishi, is in the process of investing close to US$1 billion in the construction of a methanol plant with the capacity to convert some of the product to DME.

This issue is important enough for Prime Minister Keith Rowley to get involved in resolving because if MHTL decides that it has had enough of T&T, the consequences for this country would be dire and long-lasting.

And I am writing this as someone who was accused by Proman’s attorney in Trinidad on September 4, 2015, of being “biased,” having a “grouse” and “unhealthy fixation” against Proman, which owns all or most of MHTL and IPSL.

 

2) In the context of the decision by ArcelorMittal to close down and liquidate its iron and steel facility at Point Lisas, nearly 700 workers were terminated and the livelihoods of thousands more who worked for companies that provided contracted services to the steel plant affected.

Minister in the Office of the Prime Minister Stuart Young held a news conference on Tuesday to address some of the issues raised during the Joint Trade Union Movement’s (JTUM) demonstration outside the Office of the Prime Minister on Monday.

At the demonstration, the leader of JTUM said there were at least three potential investors who were interested in acquiring the ArcelorMittal facility, but they needed to have a discussion with the government on the framework of negotiations for the price of natural gas, electricity, port charges and other taxes.

Mr Young said on Tuesday that he had received no request to meet any investor interested in acquiring the iron and steel facility.

I believe him.

But, surely, the minister should not be the first call for any potential investor.

That’s because T&T has at least five investment promotion agencies that have been set up to facilitate investors and investment. The five are:

• T&T Free Zones Company, which is responsible for the promotion of free zones in this country

• InvesTT, which is meant to promote investment by both local and foreign capital

• ExporTT, set up to facilitate the promotion of exports and the diversification of the domestic economy

• Tourism Development Company, which has been scrapped, was mandated to develop and market T&T’s tourism product and improve the local tourism sector, and

• National Energy, a member of the NGC group of companies, whose mandate of the conceptualisation, promotion, development and facilitation of new energy-based and downstream industries in T&T.

It would seem pretty obvious to me that one or more of the five agencies outlined above should be mandated to put a package together that can be handed to any potential investor.

That package should include the Government’s current public position on the price and availability of the natural gas and the electricity needed to run the iron and steel facility as well as on the port charges and taxes the potential investor would be required to pay.

 

3) Presumably, in the case of the potential investors in the iron and steel facility, National Energy could be the one to take the lead in preparing a package. But what of potential investors in the non-energy sector?

With all due respect to Trade Minister Paula Gopee-Scoon, I do not think the current administration has worked out which of the five agencies outlined above is going to take the lead in promoting investment in the non-energy sector.

It could be that with a reduced budget, T&T simply does not have enough money to support the five existing investment promotion agencies in the country.

If that is the case, why would the budget of invesTT be cut by 50 per cent between 2014 and 2017.

I thought that invesTT was the perfect clearing house for anybody wishing to invest in this country. What does it say about the current administration that invesTT’s budget has been reduced to such an extent and no entity has been assigned to perform its important role.

 

The current administration certainly does not have a problem with all potential foreign investors.

It is my understanding that Wilfred Espinet—who was this week announced as a member of the committee to review the future of state-owned Petrotrin—is the person who has been given the mandate to negotiate the deal between the T&T government and Sandals.

It is quite interesting that Espinet has been given that task, while the Government is disbanding the Tourism Development Company, which would have been the place to provide the negotiator with institutional support, research and secretarial services.

Espinet is a former executive at Arthur Lok Jack’s Associated Brands and is also the chairman of TCL.

Also apparently favoured by the current administration is the TTIFC, which is chaired by former Scotiabank CEO Richard Young, whose budget I am told has been increased by close to 20 per cent between 2014 and 2017.

Part of Mr Young’s mandate at TTIFC used to be on trying to make Port-of-Spain a central hub of Chinese investment in this hemisphere.