Home' Trinidad and Tobago Guardian : January 16th 2014 Contents On Tuesday, I received a four-page, 4,000-
word letter addressed to the CEO of the Energy
Chamber Dr Dax Driver (whose parents named
him Thackwray) on the issue of the implica-
tions of a group of foreign investors, operating
through an investment vehicle named Consolidated Energy,
gaining control of Methanol Holdings (Trinidad) Ltd (MHTL)
and its Oman-based sister company.
The letter, which was written by Concerned and Patriotic
Trinidadians working in the Energy Sector, outlined how
Proman---the largest shareholder in Consolidated Energy---
has developed into one of T&T s single most powerful and
According to the letter, Proman is a significant shareholder
in MHTL, by virtue of its position as the largest shareholder
in Consolidated Energy, which owns about 44 per cent of
Proman is also the majority shareholder in Industrial Plant
Services Ltd (IPSL), the T&T company that operates and
maintains the five MHTL plans, the seven-plant AUM complex
and two ammonia plants.
As a result of its acquisition of 51 per cent of a company
formerly known as Clico Energy, Proman is also a significant
shareholder in the ammonia plants, Caribbean Nitrogen and
Nitrogen 2000. Former CL Financial executive chairman
Lawrence Duprey sold Clico Energy three or four days after
he signed the Memorandum of Understanding on January
30, 2009 in circumstances that have always been controversial
and are supposed to be the subject of litigation by the Gov-
The letter postulates that the fact that Proman is a significant
shareholder in MHTL, a significant shareholder in the ammonia
plants and the majority shareholder in IPSL, if the foreign
company were to become a majority shareholder of MHTL
local contractors could be disadvantaged.
That s because, the letter argues, "IPSL is also responsible
for the procurement of goods and services (including main-
tenance contractor services on behalf of MHTL.
"Proman is also a contractor providing maintenance services
to IPSL in competition with other contractors. Because of
the ownership positions held by Proman at the plant owner
(MHTL, CNC N2000) level and at the operation and main-
tenance level, Proman is given unfair advantage over other
contractors competing for work at these facilities. Proman s
ultimate desire is to be the sole source provider of such
services to the MHTL and ammonia plants.
"Should Proman succeed, local contractors providing
services in competition with Proman will find little or no
work on these facilities."
This will remove five of the country s seven methanol
plants, two of the ten ammonia plants and the seven-plant
AUM complex from the available market for local contractors
thus threatening their viability and existence."
The letter also states:
"While we are not privy to the details nor do we know
whether the arbitration matter has been fully concluded, our
understanding is that discussions between Government and
Consolidated Energy are at an advanced stages regading the
sale of Clico/CLF s shares to Consolidated Energy. Such sale
will result in the latter becoming the majority and possibly
sole owner of MHTL."
The letter writers also complains that the sale of MHTL
to its minority shareholders will result in a crown jewel being
transferred from local to foreign hands
The Government "must not miss the opportunity to have
nationals of T&T own a substantial part of the downstream
energy sector through ownership of shares in MHTL and
If this last argument sounds familiar, it is because it is.
The point about T&T nationals owning more of the local
energy sector has been argued repeatedly in this space.
In specific reference to the MHTL situation, as far back
as December 23, 2010 in a piece called "Is MHTL the key?"
it was argued in this space that the sale of MHTL to the
minority shareholders would be a sub-optimal solution, akin
to the Louisiana Purchase in which Napolean Bonaparte
agreed to sell 828,000 square miles of French land in North
America to the US for US$15 million.
On November 1, 2012, in a commentary headlined "Does
it matter who owns MHTL?" the point was made in this
space: "It seems to me that an argument that says that coun-
tries should simply care about whether companies pay their
employees, their suppliers and their taxes and that it does
not matter who owns the company is simply wrong as it
ignores the fairly important issue of profits and dividends."
It was also argued in that piece: "Regardless of what tran-
spires at the arbitration, the best thing for the Government
to do with MHTL would be to create an investment holding
company, like National Enterprises Ltd, and place the 56.4
per cent of the methanol company now owned by Clico into
what would be NEL III."
And there have been other occasions in which this space
has been used to advocate in favour of local ownership of
MHTL (including "Will Govt opt to transfer wealth?"
The timing of the letter is also most interesting.
It comes two weeks before the end of January, which I
understand to be the deadline, established by the arbitrators,
for the Government and Consolidated Energy to conclude
negotiations on a sale price for MHTL.
It is my understanding that if the two sides cannot arrive
at a mutually agreeable price, the arbitration panel has directed
that they will come up with a valuation for MHTL---based
on, one assumes, advice from an investment banker and a
company that specialises in the valuation of petrochemical
When the arbitration panel has determined a price for
MHTL, my understanding of the shareholders agreement
that established MHTL is that the minority shareholders
have pre-emptive rights---which is a privilege extended to
select shareholders of a corporation that will give them the
right to purchase additional shares in the company before
In other words, the agreement between CL Financial and
the minority shareholders is that if CL Financial is going to
sell its shares, those shares must first be offered to the minority
Having argued this point so strongly for so long, I have
reconciled myself to the possibility that the minority share-
holders may end up winning our crown jewel.
But it seems to me that if they do, the arbitration panel
should make them pay dearly for it.
If it is a fact that the value of the MHTL assets are in the
range of US$3 billion, it would be very strange if the minority
shareholders were to win control of 56 per cent of MHTL
with a bid that is less than US$2.5 billion.
If the arbitration panel puts a pricetag of between US$2
billion and US$2.5 billion on the 56 per cent of MHTL that
the minority shareholders do not own, then taxpayers benefit
as between $13 billion and $16.12 billion got to T&T s taxpayers.
At the higher end of the range, the sale price would account
for about 80 per cent of the money that the State pumped
into the CL Financial group.
In this matter, as in all others, it is important that the State
adhere to the law and its legal obligations.
If the minority shareholders cannot come up with the
arbitrators price, then it would be for the Government to
corral local capital from NGC, UTC, NIB and others to ensure
that this important asset does not go astray.
JANUARY 2014 • WEEK THREE www.guardian.co.tt BUSINESS GUARDIAN
COMMENTARY | BG3
Chief editor-business: ANTHONY WILSON
Editing and design: NATASHA SAIDWAN
Fax: (868) 623-2050 (Editorial)
Fax: (868) 623-2050 (Advertising)
22-24 St Vincent Street,
PO Box 122.
Larry Howai, Minister of Finance
Dax Driver, CEO of the Energy Chamber
Is MHTL still key?
"Having argued this point so strongly for so
long, I have reconciled myself to the possibility
that the minority shareholders may end up win-
ning our crown jewel."
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