Home' Trinidad and Tobago Guardian : July 26th 2015 Contents At a news conference at its Point
Lisas head office on June 23, pres-
ident of National Gas Company of
T&T, Indar Maharaj, made a pres-
entation in which he itemised a
long list of the ways that the 100 per cent
state-owned natural gas distributor and mar-
keter contributes to the local economy.
That list included the billions of dollars in
profits and dividends it pays every year to
Corporation Sole, the many groups, sports
clubs, cultural organisations and events to
which NGC makes substantial contributions
and what Mr Maharaj described as the subsidy
that NGC provides to some local manufac-
Given the fact that the issue of energy sub-
sidies to local manufacturers has been a con-
stant thorn in the side of the trade relations
between T&T and Jamaica for the last decade,
what Mr Maharaj said was obviously news-
At the question and answer period after
his presentation, Mr Maharaj confirmed that
NGC does indeed provide subsidies to some
manufacturers through the sale of natural gas.
Fast forward to last week, when eight ques-
tions were sent to NGC asking the company
to clarify the statement made by its president
one month ago.
Following is the response from the company,
in which it confirmed the existence of a five-
year gas price arrangement through which
some 120 manufacturers benefit from a fixed
price arrangement, while avoiding the dis-
closure of the actual price.
In providing answers to your questions, it
is important to state from the onset that the
issue of gas pricing to the Light Industrial
Customers (LICs) should be framed by the
The LIC sector has a total volume require-
ment of approximately 10-12 mmscfd. This
is less than one per cent of NGC s total sales
volume of approximately 1.7 bcfd.
There are about 120 companies that are
served by this small volume of gas and they
are mainly in the manufacturing sector and
food and beverage industry.
While the volume is small, the labour inten-
sive nature of these industries---relative to our
larger energy customers---means that this
supply of gas disproportionately supports the
direct employment and livelihoods of a large
number of persons in the country who are
dependent on the sustainability of these com-
Q: What is the size of the subsidy in TT
dollars on an annual basis?
A: A gas price arrangement was provided
for the five-year period 2012-2016 for the
LICs. The pricing arrangement implemented
for the period allows NGC to support the
activities of the LIC sector.
What is the formula that the subsidy is
The LICs affected are provided with a flat
gas price for a period of time.
When was the subsidy introduced?
The present pricing structure was put in
place in 2012. NGC s Operations Committee
and board of directors approved this pricing
structure in 2012.
Why was the subsidy introduced?
We introduced the new pricing arrangement
to help support the competitiveness of the
sector and to avoid the closure of some of
the operations due to high energy costs.
How many manufacturers benefit from
A significant percentage of the sector ben-
efits from this pricing structure. The other
LICs had a choice of NGC paying for the
pipeline, whereby a higher gas price is pro-
vided, or the customer paying for the pipeline
in which case a lower gas price is provided.
Are the manufacturers obliged to give back
anything as a result of the subsidy?
The preferred pricing arrangement allows
these industries to remain in operation, which
means they pay taxes and continue to provide
Is NGC reconsidering the subsidy?
At present the preferred pricing arrangement
is in effect for the period 2012-2016 and we
will no doubt re-look the arrangement at the
end of that period to make a determination
about the future pricing.
How does the subsidy to local manufac-
turers compare with the subsidy on elec-
The volumes are very different with a range
of approximately 300 mmscfd to 12 -- 10
mmscfd for the LIC sector. The pricing to
T&TEC is lower than that to the LICs at this
point in time.
Some more probing revealed that the NGC
arrangement was more than a "flat gas price,"
but included part of the cost of the gas to the
manufacturers being placed into an innovation
fund for further development of natural gas
usage by local manufacturers.
This innovation fund---I am sure Mary King
would be delighted to know---has been in
existence for more than ten years and has not
been tapped by any manufacturer even once.
Very early Saturday morning, TTMA pres-
ident Rolph Balgobin---who had sight of the
questions and answers above---responsed on
the issues of whether manufacturers repre-
sented by the TTMA receive a natural gas
subsidy and on the status of the innovation
NGC CLARIFIES FUND
Later Saturday morning, NGC responded
to further questions on the Fund:
JULY 26 • 2015 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
COMMENTARY | SBG3
120 NGC customers
receive flat gas price
Phoenix Park valve station
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