Home' Trinidad and Tobago Guardian : August 7th 2014 Contents AUGUST 2014 • WEEK ONE www.guardian.co.tt BUSINESS GUARDIAN
NEWS | BG7
British energy company Centrica expects to generate proceeds
of around £1 billion for assets it intends to sell, including some
in T&T, Nick Luff, the company s chief financial officer told
investors on its second quarter (Q2) 2014 results earnings con-
ference call on July 31.
Luff was speaking about mergers and acquisitions (M&A)
when he said the company had closed on a Bord Gas acquisition
on June 30. He said, however, the acquisition was "more than
offset by the Texas CCGT (power plant) sale hence the £329
million inflow you see out there."
The second half of 2014 will see Centrica complete the
US$200 million sale of its stake in its existing gas facility in
Canada to QPI, as well as the receipt of "the US$450 million
cash settlement of Ontario home services sale," offset by the
reinvestment of some of that cash into a smaller acquisition,
"We do have a number of other disposal prices underway
as we seek to ensure capital is deployed where we see the best
return in growth prospects," he said. In addition to the Ontario
home services sale, he said Centrica had already announced
its intention to sell the three largest CCGTs in the UK.
"We will also potentially get to all these capital from our
gas assets in T&T and for our operational wind farms in the
UK. In total we expect to realize proceeds of around £1 billion,"
he said. The proceeds, he said, will be used to reduce debt
and improve the company s credit metrics.
In the same breath, he said a "scrip dividend alternative"
will be offered to shareholders next year. He said he believes
that this will attenuate a higher business risk profile that the
group faces, as it seeks to retain its current A3/A- (investment
grade) credit ratings.
When will Centrica sell more T&T assets?
As for the timing of the asset sales, in answering an analyst s
question, Luff said: "In terms of what that means for net debt,
I think by the end of the year, by which time of course we d
have the Ontario home services sales proceeds in, but the
other processes I talked about on the CCGTs, Trinidad and
the wind farms are not in our forecast, possible some of those
could happen this year."
Responding to another question, Centrica Chairman Rick
Haythornthwaite addressed what is expected from the disposal
of its T&T assets.
"And your last question on disposals and dilution, if you
go across the four Ontario home services, CCGTs in the UK,
Trinidad, and the windfarms, they actually all broadly net out
if you take them all together," Haythornthwaite said. The
Ontario home services is a profitable business generating
US$37 million of annual earnings before income tax, depreciation
and amortization (EBITDA), he said.
The chairman said that from its wind business, the company
could make around £50 million. As for the CCGTs, he said
some of these are losing over £130 million in total.
"Trinidad is largely a development opportunity, and not a
lot of existing production profits there. So that doesn t have
a material impact so net-net that actually shouldn t be that
material," he said.
So far US$23m for 2 blocks
Trinity Exploration and Production plc announced in mid-
July that it will be acquiring Centrica s 80-per cent opera-
tor-ship holding in blocks 1a and 1b in the Gulf of Paria for
A Centrica statement at the time had said: "This divestment
is part of Centrica s ongoing strategy to optimise its upstream
portfolio, investing to develop and maximise our hubs, while
looking to divest non-core assets."
However, Centrica remains with assets in T&T. Centrica
still has a 17.3 per cent interest in NCMA-1 (a north coast
block), which contains six producing gas fields 60 kilometres
(km) north of Trinidad with partners BG, Petrotrin and ENI.
Centrica also has a 90 per cent interest in Block 22, which
includes two gas discoveries 25 km north of Tobago and 80
per cent of NCMA-4, which holds two gas discoveries 50 km
west of Tobago, both with partners Petrotrin.
Centrica expects around
£1 billion from asset sales
Onetime UNC minister , who was appoint-
ed to the Central Bank s board last month,
says Government s challenges in the upcoming
2015 Budget include how it handles the Inter-
national Monetary Fund s (IMF) recent advice
to tighten its macro-economic policies.
Sudama, an economist, spoke yesterday
about his appointment to the Central Bank
board. Sudama 75, was UNC s former
Oropouche MP under the previous Panday-
Sudama said he was approached to serve
in a national capacity several months ago by
Oropouche East MP Roodal Moonilal.
Moonilal yesterday confirmed he had
approached Sudama, a recommendation based
on Sudama s wide experience was made and
Cabinet had appointed him to the Central
Moonilal added: "All MPs recommend peo-
ple from their constituency if they have the
potential to serve. Sudama has vast experience
especially in finance and the economy and he
is also instrumental in the constituency par-
ticularly on drainage and the anti-flooding
Sudama served as Oropouche MP between
1981 to 2001. He was the UNC s Agriculture
Minister over 1995 to 2000.
In 2001, a rift developed between then
Prime Minister Basdeo Panday and then UNC
MPs Ramesh Lawrence Maharaj, Sudama and
Ralph Maraj who left the front benches leading
to the UNC s election defeat and formation
of Maharaj s Team Unity party. Sudama said
yesterday he resigned from the UNC and never
joined the PNM or any other parties. "I ve
now reached the point of being non political
and neutral," he added.
In 2010, Sudama wrote a series of articles
on the Debe-Mon Desir Highway extension
issue and was critical of the Government.
On the Central Bank appointment, he said
he had worked at CB in the 1960s as Superviser
of Bank Operations and left in 1970.
His financial background included training
at Barclays Bank in London after leaving UWI
in the 1950s and he also worked at the bank s
local branch as a management trainee. He said
he left Barclays in 1966.
On the Budget, Sudama noted the IMF s
cautionary note to Government that T&T
remains vulnerable to a decline in energy prices,
and the IMF s advice for structural reforms
to diversify the economy and improve growth
The IMF also recommended reduction in
economic slack and noted the need for a
durable consolidation of the fiscal position. It
suggested a tightening of macro-economic
policies may be necessary in the near future.
Sudama said how Government deals with
that advice may provide the basis for the future
developmental infrastructure. A critical aspect
in the issue would, therefore, be expenditure,
particularly given the upcoming general elec-
tion, he noted.
He said the Central Bank reports had shown
economic growth and that the country s foreign
exchange reserves provided 12 months of
import cover. On the foreign exchange demand
situation, however, Sudama said he was baffled
by continued complaints since the Central
Bank had supplied authorised dealers with
Sudama, 75, appointed
to Central Bank board
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