Home' Trinidad and Tobago Guardian : August 20th 2015 Contents BG4| COVER STORY
BUSINESS GUARDIAN www.guardian.co.tt AUGUST 20 • 2015
Two of state-owned National
Gas Company s (NGC) top
officials have expressed con-
fidence in the company s offer
of 75.8 million shares in
TTNGL, a holding company
for about 19 per cent of Phoenix Park Gas
In August, 2013, NGC acquired an additional
39 per cent stake in Phoenix Park from US
energy giant ConocoPhillips for US$600 mil-
lion ($3.8 billion), taking its overall shareholding
in the company to 90 per cent.
NGC, in accordance with a mandate from
the Cabinet, is offering 49 per cent of the
Phoenix Park shares it acquired in 2013, to
local individuals and institutions at $20 a
share. If the initial public offering of shares
is fully subscribed, NGC will raise $1.5 billion,
which is targetted to go back to the Govern-
ment to reduce the country s fiscal deficit for
In an exclusive interview with the Business
Guardian on Tuesday afternoon, the officials---
company president, Indar Maharaj, and chief
financial officer, Anand Ragbir---expressed
confidence that the prices of Phoenix Park s
products would be sold for higher prices than
currently when global oil prices recover.
Phoenix Park produces propane, butane and
natural gasoline, most of which is exported
to markets in the Caribbean and Latin America
for US dollars.
They said the coming on stream of BP s
Juniper platform in 2017 should ease both
Phoenix Park s natural gas curtailment issues
and the fact that the gas it takes in now has
less liquids than in the past.
An NGC table reproduced in the last Sunday
BG reveals that the liquids in Phoenix Park s
natural gas input declined by 31 per cent
between 2010 and 2014.
The NGC executives also pointed to $266
million on TTNGL s balance sheet that is avail-
able for distribution as dividends should the
directors of the company be so inclined. The
$266 million comprises $241.3 million that is
due from the parent company and $24.7 million
in dividend receivable.
Maharaj said: "The $266 million is cash
that is available to the company that is available
for distribution as dividends if the directors
of the company choose to do so."
Ragbir said the $266 million due from the
parent company and dividends represents $1.72
a share that is available for distribution as div-
Asked whether $1.72 a share will be paid
out to TTNGL s new shareholders as a div-
idend, Maharaj said: "We as NGC cannot make
that decision. When TTNGL becomes a pub-
licly listed company, the board will have to
make that decision.
"As the majority shareholder in TTNGL,
we can expect that it would be paid, but we
can t say that for a fact.
"NGC chose to leave the money in TTNGL
so that the new company would have to make
a decision on its use."
Asked if the potential payment of $1.72 per
share as a dividend was a sweetener that
increases the attractiveness of the IPO, Maharaj
said: "Most definitely. I am sure that if I were
an investor, I would find that attractive."
They said the first dividend would be made
within a few months of TTNGL s listing in
October, following the constitution of the
They said there was nothing preventing the
new TTNGL board from taking a decision to
distribute most of the company s first half
profit as a dividend, plus some or all of the
$1.72 a share "goodwll cash."
Maharaj said he saw no reason for the com-
pany to leave the money on TTNGL s balance
Responding to a question on the lack of
clear guidance on TTNGL s future dividend
policy---compared with the First Citizens
prospectus which states that the bank will pay
out between 45 and 55 per cent of net income
as an annual dividend---Maharaj said: "We
have applied the dividend policy at PPGPL
to TTNGL. PPGPL s dividend policy states
that the directors can choose to allocate up
to 99 per cent of its profits, after you back
out the expenses, as a dividend.
"If Phoenix Park is planning a major capital
expenditure programme, the board may take
a decision to set aside some funds. It would
be for the TTNGL board to decide." (See box
for 2015 to 2020 capex)
The executives said the decision to go with
a holding company structure rather than allow-
ing new shareholders to own shares directly
in Phoenix Park was based on the choice of
the best option.
Ragbir said: "The holding company structure
provides shareholders with a measure of pro-
tection as NGC will continue to own 51 per
cent of the shares in TTNGL. The holding
company structure also follows the NEL
Maharaj added that because there were pre-
existing shareholders agreement at Phoenix
Park, direct ownership of shares in that com-
pany would have meant having to amend those
agreements.tax efficiencya direct so that direc-
tors can decide there was clear of the bank
going forwardAsked about TTNGL s dividend
policy going forward
Trafigura selling cooking gas
The NGC executives confirmed that a Dutch
company named Trafigura had been engaged
by Phoenix Park, after a competitive tender
process, to market some of its cooking gas
exports (cooking gas is propane and butane).
The three-year contract began last year.
"Trafigura has come in with far more attrac-
tive prices for our cooking gas exports than
we received previously. We now receive a pre-
mium compared with propane and butane
sold at Mont Belvieu, the US benchmark for
natural gas liquids," said Maharaj, adding that
Phoenix Park is moving to sell all of its product,
based on competitive tenders and bidding.
Ragbir said the risk of marketing cooking
gas is not Phoenix Park s but the marketer.
Asked if NGC was aware that Trafigura had
been involved in a political scandal in Jamaica
some years ago, Maharaj said: "We have done
our due diligence on all the companies that
we have engaged on contract. There is nothing
in there that should debar us from doing busi-
ness with those companies.
"In fact, Trafigura does business with
Atlantic LNG and with BP. They also do trading
business in the US."
Trafigura was involved in a long-running
scandal in Jamaica since 2006 when the oppo-
sition Jamaica Labour Party revealed that the
firm, which traded oil for Jamaica on the inter-
national market, had transferred US$475,000
(J$31 million) into an account operated by the
general secretary of the ruling People s National
Party at the time.
According to a Wikileaks document from
the US embassy in Jamaica at the time, the
money was used to fund the ruling party s
"lavish" annual convention.
A minister in the PNP administration at the
time referred to the money as a campaign
"donation," but the company said its dealings
in Jamaica were "strictly commercial."
A report in the Jamaica Gleaner last Novem-
ber stated that Trafigura controls 90 per cent
of the LPG (cooking gas) produced by T&T
and that the company moves 1.5 million tonnes
of LPG in the region each month.
Q: Can NGC disclose the Q2 financial
results for PPGPL and TTNGL?
A: Our legal counsel has advised that
neither the Securities Act nor the By-
Laws provide for the filing of financials
during an offer period and it is therefore
recommended that we seek approval from
the Trinidad and Tobago Security
Exchange Commission (TTSEC). We have
engaged the process for approval from
Q: PPGPL issued two notices which were
included on its website. What are those about?
A: PPGPL has issued two Expressions
of Interest (EOIs) to the market which
involve the following
(1) the purchase of propane and/or
(2) the lease of spare storage capacity
in the product storage tanks.
The objective of these EOIs is to gather
information to evaluate the feasibility of
these projects. These projects are currently
under technical and financial evaluation.
No investment decision has been made
at this time.
Q: How many marketers does PPGPL have
for its products?
A: PPGPL currently has nine marketers
for its products: Atlantic LNG, Glencore,
Aerogas, Rubis Eastern Caribbean/Rubis
Cayman, BP Oil International, Repsol,
Shell, Trafigura, Petrotrin
Q: Are the contracts of these marketers
based on a take or pay system?
A: We have one contract that is take or
NGC: We're confident in the IPO
Phoenix Park Gas Processors Limited
Capital Expenditure 2015-2020
These projects are expected to be
internally funded once approved.
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