Home' Trinidad and Tobago Guardian : August 22nd 2013 Contents AUGUST 2013 • WEEK FOUR www.guardian.co.tt BUSINESS GUARDIAN
COMMENTARY | BG3
Chief editor-business: ANTHONY WILSON
Editing and design: NATASHA SAIDWAN
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The decision by 100 per cent state-owned National
Gas Company (NGC) to acquire the 39 per cent
of Phoenix Park Gas Processors held by US energy
giant ConocoPhillips for US$600 million ($3.9
billion) is good news for the country and poten-
tially great news for local institutional and individual investors.
It s potentially great news for investors because Energy Min-
ister Kevin Ramnarine signalled last Friday, the day that the
transaction was announced, that he would be pushing the
Government to ensure that some of the shares acquire by
NGC are sold to local institutions and individuals.
Speaking to reporters at the launch of the 2013 deepwater
bid round, Ramnarine said one of the options the Government
had in divesting the shares to locals would be to do that
through National Enterprises Ltd, the majority state-owned,
publicly-listed company, that already holds a 10.2 per cent
stake in Phoenix Park.
The availability of additional Phoenix Park shares may give
the Government an opportunity to revise its vision for NEL,
which up to now has been as an investment holding company
with a diversified portfolio comprising TSTT, NFM, Tringen,
Phoenix Park and Atlantic LNG Train 1.
Cabinet may wish to consider the need to transform NEL
into a focused energy fund that could be used as the investment
vehicle to acquire the 56 per cent stake in MHTL owned by
Clico and the stake in the offshore blocks that Total, the French
giant is looking to sell off.
Creating an energy-focused NEL would require the sale of
the 51 per cent blocks of shares that NEL owns in TSTT and
NFM, which would raise funds and may have strategic ben-
Whether the Government decides to go with the NEL option
or create a NEL II, it would also be an interesting possibility
to issue the new PPGPL shares in both US and TT dollars and
open it up regional and international investors.
The sale of the Phoenix Park block of shares is something
that I have called for on a number of occasions in this space
and the minister s openness to the idea of deepening the local
capital market is most refreshing.
More high-quality investment opportunities needed
In the BG View column of November 17, 2011, headlined
"Is T&T s economic dysfunction curable?" it was argued that
one of the major dysfunctionalities of the local economy was
the lack of new, high-quality investment opportunities in TT
"This is an issue that...has a direct impact on every working
man and woman in this country...because if individual investors
cannot receive a return on their investment that beats the
local rate of inflation from their TT dollar investments, they
will be forced to look elsewhere for inflation-beating investment
"This has a direct impact on capital flight, puts downward
pressure on the TT to US dollar exchange rate and contributes
to a build-up of deposits that can have a potentially destabilising
impact on the country s rate of inflation."
That commentary also argued that the divestment of a sig-
nificant percentage of First Citizens was an indication that
the Government understood its responsibility and the danger
to the economy that was possible from a lack of action.
But First Citizens alone would not have been enough, that
piece in November 2011 argued.
"The Government should also be looking to divest on to
the local stock market by way of an initial public offering of
PowerGen, which is 51 per cent owned by T&TEC, the 100
per cent state-owned utility, and Phoenix Park Gas Processors,
the producer of propane, butane and natural gasoline that was
51 per cent owned by the National Gas Company of T&T."
Not only has this column been advocating for some time
that the investing public be given greater access to owning
Phoenix Park Gas Processors, but that company s astonishing
profitability and tight management was the focus of a November
25, 2011, commentary headlined "Is Phoenix Park too good
to be true?"
Again in a commentary headlined "Is T&T s middle class
getting poorer?" published on April 11, 2013, it was argued
that the privatisation of profitable companies such as Methanol
Holdings, PowerGen, Phoenix Park Gas Processors and First
Citizens bank could stem the pauperisation of T&T s middle
class which has suffered from low returns on their bank deposits
and financial instruments and wage increases that lagged
Divestment can transform economy
Apparently, a policy to stem the pauperisation of T&T s
middle class by selling shares in profitable state-owned com-
panies to local institutions and individuals did not find favour
with economist and former minister Mary King.
In a letter to the editor headlined, "The economic forest,
not the trees," Mrs King argued that "mimicking the activities
of other countries in developing their economies without
taking into consideration their policies and other circumstances
could result in failure locally if our situation differs."
She also argued that if the Government embarked on a
policy of divestment of the State crown jewels: "Nothing
would have been done about transforming the local economy
from its plantation state or increasing the productivity of our
local financial resources; the aim of economic development."
She s right. The process of divestment is meant to address
the debilitating impact of inflation on the salaried middle
classes, capital flight, excess liquidity and the lack of long-
term, high-yielding, TT-dollar investment opportunities.
The purpose of divestment in T&T at this time is to distribute
wealth, not to transform the economy from its plantation
state. But it is clear that divestment has the power to transform
By plantation state, it is assumed that Mrs King is referring
to the classic West Indian plantation, which was owned in
the main by Europeans, worked by slaves or indentured labourers
and focused on growing one crop that would be exported to
the metropole in its raw state (the so-called muscovado bias).
Other aspects of the plantation included ensuring that the
muscovado was transported in the ships of the colonial power,
insured by companies of the colonial power and financed by
the banks of the colonial power.
When labourers are majority owners...
The question is this: If the plantation was owned not by
an absentee landlord, but by a company in which the labourers
were the majority owners, would it still be considered a plan-
And if by owning the plantation, the labourers were able
to work out, through a process of innovation and market
knowledge, that exporting muscovado (which is raw sugar)
would bring them ten per cent of the value they could get
by combining the sugar with cocoa and exporting chocolate,
would the plantation not have been transformed into some-
thing that was more properly aligned with local realities?
And if the labourers not only had shares in the plantation,
but were also responsible for manufacturing and marketing
the product and owned shares in the shipping line, the insur-
ance company that covered the risk and the banks that
financed the endeavour, would the system still be considered
a plantation economy?
And if the labourers not only had shares in companies
throughout the value chain of production, but were part
owners of the stores in London, Venice, Paris and Vienna
that sold the Trinidad-produced chocolate, would the labourers
still be labourers or would they not be owners---able to relax
and count their dividend cheques and calculate their capital
If we operate within a globalised, capitalist system, how
could it be that who owns the capital is such an unimportant
and unanalysed factor?
Clearly, if T&T s financial institutions and individuals
owned the means of production that drive the local economy,
those institutions would be fully exposed to the rewards, the
risks and the responsibilities that come from ownership.
Economic trees and muscovado biases
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