In light of the successful arbitration by state-owned Petrotrin against World Gas-to-Liquids Trinidad Ltd (WGTL), the local energy company has secured the services of auditing firm PricewaterhouseCoopers (PwC) to act as receiver in the sale of assets belonging to its former project partner.
Lindsay Gillette, chairman of Petrotrin and company president Khalid Hassanali, confirmed this to the media on Tuesday.
The troubled WGTL Trinidad Ltd plant on Petrotrin's Pointe-a-Pierre refinery compound-touted as the first gas-to-liquids plant in the western hemisphere-was put up for sale back in February.
The joint venture project in which Petrotrin had a minority 49 per cent stake saw tax-payers pump $2.7 billion into the project was four years behind schedule.
The deal went sour. WGTL accused Petrotrin of wrongfully expropriating its funds that reportedly led to a $12 billion lawsuit against Petrotrin in a US court back in February. The local energy giant fired back with an order to stay the lawsuit, compelling WGTL to arbitrate any claims they believed they had.
"Receivership of the WGTL plant means we can no longer put money forward," said Gillette.
"We were being asked all the time (to) please put money forward. WGTL did not have the money to put into the project, yet still they owned 51 per cent. We had no choice but to bring third party in to arbitrate over this whole issue.
"The company can no longer afford to pay its debts or anything. If a company goes bankrupt, you bring a receiver in. Hopefully, we can get a buyer and recover something. The receiver has to decide."
He added: "This is horrible! I think it's a disgusting thing because to own 49 per cent, put all the money to go forward and not have a say. I just don't know how anybody could go into a deal like that. We can't say that it's because of the technology because we are putting all the money forward and have no say on the matter. We own 49 per cent, they own 51 per cent and we spend $2.7 billion, which is equivalent to two airports. Those are the facts. I cannot even show a working plant. It's not even completed. If the plant was working, we could send gas to the plant and convert it to liquids and that was the premise. I don't think enough research was done to build this plant."
He said the negative impact on this deal hurt the company's bottomline 18 months ago by $159 million after the company wrote of$1 billion of taxpayers' money.
The two Petrotrin executives were speaking at a breakfast meeting hosted by the T&T Chamber of Industry and Commerce at its Westmoorings headquarters.
Hassanali said there was a second part of the arbitration to come. This first part of the issue, he said, was based on the fact that World GTL never contributed in the terms of equity of debt funding to the building of the plant.
The arbitrators have now compelled WGTL to convey shares to the value of the amount that Petrotrin had lent to them. Now, Petrotrin will be (the) 95 per cent owner rather than (a) 51 per cent owner.
"The investment has not performed. It has failed. We have US$400 million situation. We have a receiver and we are trying to sell it. This plant is a used plant. It was predicated on getting subsidised gas into the plant and it's also predicated on Petrotrin taking all of the products. Now, subsidised gas is a National Gas Company (NGC) matter. We don't do too much of that anymore," Hassanali said.
He added, "In fact, there is no agreement to supply gas at a subsidised rate. We really don't need that product because once our ultra-low sulphur diesel plant is finished next year.
"We don't need small volume of nice diesel, because we are already producing it in much conventional, less risky ventures. So from that point of view, we don't need the product. We have had engineering surveys done which suggest that there are a lot issues about the design and implementation that are of concern from a safety and operational point of view."
State-owned Petrotrin will take the lead in a compressed natural gas (CNG) project in which the company will partner with, NGC and the Ministry of Energy.
Petrotrin was tacking lead in CNG, he said, because gasoline and diesel are subsidised to the tune of $4.5 billion a year.
"Sometimes, as has happen over the last three years, whenever the price of oil is above what is in the national budget, there is insufficient subsidy to pay to Petrotrin and we are into that situation right now. Therefore, we have an interest in all of this. If we're going to reduce the subsidy, it means we wouldn't have this problem we would have had over the last few years," Hassanali said.