Six years ago in 2013, the National Gas Company (NGC) recorded the highest ever after-tax profit in its history.
That year the NGC made a whopping after-tax profit of just over $6.5 billion.
The NGC’s financial statements, however, now paint a much different picture as the company seems to have transformed from the Hulk back to Bruce Banner.
After three consecutive years of profitable growth, following a dramatic fall in the company’s after-tax profit to $561 million in 2015, NGC has now recorded an 83 per cent decrease in its profits.
And this had nothing to with the COVID-19 pandemic.
NGC has recorded a group profit after tax of $396 million for the year ended December 31,2019.
This represents a decrease of $2 billion from the 2018 profit after tax of $2.396 billion.
In his statement on the financial results, NGC’s chairman Conrad Enill said that the group’s performance last year was impacted by “challenging market conditions”, including “lower margins and higher impairment charges.”
Enill was appointed NGC’s chairman last July replacing Gerry Brooks.
“Ammonia prices fell by 23 per cent while methanol prices experienced a 31 per cent drop from 2018. Additionally, Natural Gas Liquids (NGL) prices weakened by 23.4 per cent due to supply imbalance,” Enill stated.
“At the same time, higher prices supplies delivered under new gas purchase contracts resulted in an uptick in the weighted average cost of gas, further compressing sales margins. Nevertheless, the NGC Group remains focused on the execution of it strategy and building strong sustainable business,” he stated.
Enill said that ensuring adequate supply in the upstream remains a “critical imperative for domestic growth”.
“In 2019, NGC successfully negotiated a fully termed Domestic Gas Sales Contract (DGSC) with Shell. A year for growth into international markets, NGC signed a historic LNG agreement with China in 2019, subsidiary National Energy opened an office in Guyana, and Phoenix Park Gas Processors Limited (PPGPL) pursued the acquisition of NGL assets in the USA,” he stated.
Enill said these developments will move the NGC Group closer to becoming a global energy brand.
Last year Prime Minister Dr Keith Rowley accused the former People’s Partnership administration of pilfering funds from the NGC during his “Mind Your Business, It’s Your Business” presentation.
“There was $14 billion in cash at the NGC. The government had $6 billion in cash. By the end of 2015 the accounts were-NGC, gone, the $6 billion gone and an overdraft of $9 billion spent at the Central Bank. That is $29 billion of cash that was burnt up in that period,” Rowley said.
“Never before did a government go into the NGC and just spend out all the money in the NGC…in fact in (2010) they went into the NGC four times….after four raids none was left,” he said.
Previously former energy minister Kevin Ramnarine defended the People’s Partnership’s government’s management of the NGC.
“Over the period 2010 to 2015, the shareholder of the NGC requested increased dividend in light of the increased profits of the company. These funds were transferred to the COnsolidate Fund and used for budgetary support. That is to say they were used to support government revenue,” Ramnarine stated.
“The alterative available to te Ministry of Finance, at the time, would have been to raise revenue by increased taxation or to increase borrowings. Borrowing would have increased the debts to GDP ratio of the country. In addition, the shareholder calling for dividend did not impede the strategic and operational objectives of the NGC, he stated.
Last year, the NGC made $13.6 billion in revenue as compared to $16 billion in 2018.
The NGC’s net cash and cash equivalents saw a decrease of $3.2 billion between the two years.
As it pertains to “clean energy” Enill stated that NGC began construction of a flagship fuelling station at the Presysal interchange.
“Meanwhile, the group continued to lobby for energy efficiency through its work with the Cabinet-appointed Committee for the Development of a National Energy Conservation and Energy Efficiency Action Plan for T&T,” Enill stated.
“A Super Energy Service Company (ESCO) Project was launched to assess energy use among Light Industrial and Commercial Customers (LICs) with a view to improving their efficiency. The group is also collaborating with BP, Shell and Lightsource BP to produce a 130 MW Utility Scale Renewable Energy Project in T&T,” Enill stated.
Prime Minister Dr Keith Rowley in his address during the Energy Chamber’s virtual Energy Efficiency and Renewables Conference titled “Shaping the Caribbean’s Energy Future lauded the need for renewable energy initiatives.
“Now more than ever, renewable energy and energy efficiency initiatives are needed as we come face to face with a rapidly changing energy and economic landscape, combined with the threat of climate change,” Rowley said.
“However, in addition to looking to renewable energy and energy efficiency to secure a clean, sustainable future for generations to come, it is also our duty as the Government of the Republic of Trinidad and Tobago to ensure that we are maximizing the use of the country’s rich natural resources to the benefit of the citizens. We must, therefore, re-examine how we derive the greatest value from our natural gas,” he said.
Chief executive officer of the Energy Chamber Dr Thackwray Driver described Rowley’s announcement as a game-changer.
“I can’t help noting one thing in particular when you were discussing the utility scale solar your comment that we would be producing energy on par with local electricity costs, now that’s a big announcement because local electricity has been cheap and it has been historically cheap and if we’re able to produce solar on par with that, that’s a game-changer,” Driver said.
The NGC was incorporated 45 years ago in August 1975 by the government as a wholly-owned state enterprise.
It is an energy company whose core business activities are the aggregation, purchase, sale, transmission and distribution of natural gas.