Home' Trinidad and Tobago Guardian : March 16th 2017 Contents MARCH 16 • 2017 guardian.co.tt BUSINESS GUARDIAN
NEWS | BG5
Curtailing the curtailment
FROM PAGE 4
With a dedicated supply of natural gas from
DeNovo, the four MHTL plants that are now
out of contract will only need 135 million mmscf
of natural gas from the NGC gas grid.
Sources close to the negotiations say the
NGC is very concerned about the signal that
any approval for a direct sale from the upstream
to the downstream will send to other suppliers.
For years there has been dispute between
people in the energy sector over the role of
the NGC as aggregator and whether it is in the
best interest of the country.
MHTL has argued that NGC has failed to
provide it with contracted gas and, more than
that, it is not prepared to contract volumes
required. The company believes it should have
a right to get the gas directly from an upstream
The NGC has insisted it can only contract
gas that it has and, as aggregator, its role is to
ensure all parties has as much gas as possible
and leaving it to a totally free market situation
will be deleterious to the very downstream
sector and will hurt the country's economy.
In the absence of the Gas Master Plan it's
difficult to see how this will be resolved.
Meanwhile, a well-placed government
source said the current administration has
not approved any plan by DeNovo Energy to
supply Methanol Holdings Company Ltd with
80 million standard cubic feet of natural gas
from first quarter next year. This is believed to
be one of the major issue leading to a standoff
between MHTL and the National Gas Com-
The Business Guardian has been reliably
informed that the Government has told the
German company Proman---the major share-
holder in both DeNovo and MHTL---that under
the production sharing contract for Block 1A it
has to get approval from the Ministry of Energy
and Energy Industries for any marketing plan
for the natural gas.
Further, Proman has been told that the
90mmscf/d that it expects to produce from
its Iguana, Zandolie and Anole fields, and a
fourth prospect named Whiptail---which are
all prospective developments in Block 1A---in-
cludes the minister's share of gas which the
minister wants to go into the national grid for
distribution by the NGC.
The Business Guardian has further learnt
that the government has suggested that rather
than build a dedicated pipeline from the field in
the Gulf of Paria to MHTL plant, that the com-
pany use the NGC's existing infrastructure.
"We have said to them they should use the
NGC pipeline because if they don't under the
cost recovery available in the PSC, taxpayers
will be paying for this unnecessary addition-
al infrastructure," the high-level government
First Citizens share
offer will succeed
Two experts in finance are
predicting that the First
Citizens Additional Pub-
lic Offering of 48,495,665
ordinary shares at a price
of TT$32 a share would be
President of the Securities Dealers Associ-
ation of T&T (SDATT) George Sheppard and
Former Minister in the Ministry of Finance
Mariano Brown both weighed in on the APO
in emailed responses to Business Guardian.
Predicting that the response to the APO
would be good, Sheppard said trends are show-
ing that investors are looking for investment
opportunities and therefore would capitalise on
the opportunity to acquire shares in the bank,
which will remain majority owned by the State.
"The issue should be well received given
the lack of alternatives to invest in TT dollars.
The institutional investors, especially those
governed by statutory requirements remain
liquid and will likely participate. The issue is
unlikely to have a noticeably lasting effect on
the T&T market."
The share offer was launched on Monday
and comes after Finance Minister Colm Imbert
announced during the 2017 budget presenta-
tion that government intended to sell more of
its shares held in First Citizens Holdings Ltd.
The proceeds from the sale are intended to fund
government's fiscal programme.
Subsequently, at a meeting of the board of
directors held on Tuesday February 21, the
directors of the bank approved the sale of
48, 495, 665 shares in the bank owned by the
Government through its nominee the offeror.
In July 2013, First Citizens had launched the
then largest ever Initial Public Offering in the
history of the T&T Stock Exchange with a mar-
ket value of approximately TT$1.1 billion on
Monday 15th July at an Offer Price of $22.00
per share. The IPO was oversubscribed and the
bank's stock increased by 59 per cent between
its listing and last Friday.
The IPO had seen an executive of the bank
purchasing a large number of shares and the
subsequent public outrage over the purchase.
First Citizens has since assured that measures
were put in place to prevent a repeat of the
Sheppard said lessons have been learnt and
it "is unlikely to re-occur in the same way."
Overall, he said the economic outlook of
the TT economy is negative and there are no
immediate, visible catalysts to change this ex-
pectation. It means he said that the private
sector would continue to face strong economic
Brown commenting on the APO said the
bank is acting like an agent of the State when
it comes to the offer.
Asked how the APO is likely to impact on
the T&T market, he said the capital market is
short of investment opportunities and given
the "market liquidity overhang and the low
interest rates we can comfortably expect the
offer to be oversubscribed."
Referring to the purchase of shares by the
bank's executives and the controversy over the
IPO, Brown said even though the Securities
Exchange Commission's report has not been
released and therefore "no corrective or puni-
tive actions have been taken, enough lessons
have been learnt."
He added: "New procedures that were in-
troduced in the last public offering by NGC of
its subsidiary shares, suggest that the Ministry
of Finance has learnt some lessons, enough
to ensure that the mistakes of the first FCB
offering have been learnt."
The current share offering does not provide
employees of the bank with their own "bucket"
of shares as they will have to bid for shares as
Commenting on the external environment in
which the APO is being launched, Brown said:
"As with Barbados, the TT government has yet
to lay out its priorities and a clear direction to
guide us through this structural adjustment.
Its failure to give a clear direction in the case
of Petrotrin is a watershed moment. And that
was only an interim increase. It remains to be
seen what the final position will be."
According to the prospectus on the APO,
there are seven authorised stockbrokers:
Bourse Brokers Ltd, Caribbean Stockbrokers
Ltd, First Citizens Brokerage and Advisory
Services Ltd, JMMB Services (T&T) Ltd, Re-
public Securities Ltd and West Indies Sock-
Outlining the criteria for the share price,
the prospectus stated, "In determining the
Offer Price of the ordinary shares, the Offer-
or considered several factors including: The
information set forth in this Prospectus and
otherwise available to the brokers; the pros-
pects for the industry in which First Citizens
competes, the overall economic prospects of
T&T, the assessment of First Citizens' man-
agement; First Citizens' prospects for future
financial performance; the recent market pric-
es of, and demand for, publicly traded shares of
generally comparable companies; the general
condition of the securities markets, and the
offering market in particular, at the time of the
offering; and other factors deemed relevant by
First Citizens, the Offeror and the brokers."
Concerning its dividend policy, the bank
said "The dividend policy of First Citizens is
to distribute to its ordinary shareholders, funds
surplus to the operating, capital and strategic
requirements of the Group as determined by
the Directors with an annual target dividend
payout percentage range of 45 per cent to 55
per cent of net profit after tax."
Referring to its employees the bank assured
that the relationship between the union and
management continues to be a strong one.
"As of December 31, 2016, First Citizens
and its subsidiaries employed over 2,000
permanent employees. The majority of the
non-management bank employees in T&T are
represented by the Banking Insurance and Gen-
eral Workers Union. First Citizens considers its
relationship with its employees and this union
to be good. Since the Government is the con-
trolling shareholder of First Citizens, all salary
rates, including those for senior management
and the collective bargaining positions must
be approved by Government.
Overall the bank's financial performance
continued to be solid.
For a five year period between 2012 and 2016
the bank reported steady Profit before Tax.
Experts cite lack of investment alternatives
First Citizens Group Chief Executive Officer,
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