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Ministers row over cheap natural gas
Friday, January 27, 2012
A virtual shouting match developed in Cabinet between former Energy Minister Carolyn Seepersad-Bachan and the man who replaced her at the Ministry of Energy Kevin Ramnarine. At issue was a Cabinet Note calling for the award of two petrochemical projects to a Saudi Arabian company, which could result in the country subsidising the firm to the sum of millions of dollars annually. Well-placed sources in the Cabinet told the Guardian that there were heated exchanges between the two and eventually the Cabinet Note had to be withdrawn by Ramnarine and was amended and brought back to the Cabinet yesterday. “I looked on in amazement at the acrimony between the two as they had it out over the deal,” a Cabinet source told the Guardian.
The controversy erupted after Ramnarine asked the Cabinet to agree to award two projects valued at US$5.3 billion (TT$34 billion) to Saudi Arabia’s state- owned company, Saudi Basic Industries Corporation (SABIC) for the construction of a methanol to olefins plant and a methanol to petrochemical complex. Seepersad-Bachan reportedly objected to the note because it proposed a natural gas price that is even lower than what the National Gas Company (NGC) pays its suppliers for the commodity. The Cabinet Note indicates that the offer that SABIC made for gas was 36 per cent below NGC’s cost price or US$0.86 per mmbtu. Contacted yesterday Ramnarine insisted that there was no agreement on gas pricing and that the process was that a project is evaluated based on the established criteria for downstream projects and a gas price agreement is only worked out after the project is signed off on. Ramnarine acknowledged that the Saudis had bid a price for natural gas that was 36 per cent below the cost price but insisted it was not the final figure. “You are damned if you do, and damned if you don’t. We just have to move forward and develop the country,” Ramnarine told the Guardian.
The Minister argued that there appeared to be an effort to discredit the work that he has been doing “because there are those out there who want my job.” But he insisted that all that he has pursued during his seven months in office has been in the interest of Trinidad and Tobago. SABIC beat out 12 other proposals for the construction of the methanol to petrochemicals complex but it was the sole bidder in the methanol to olefins after two other competitors were disqualified. It is understood that this too did not sit well with Seepersad-Bachan who questioned whether in the circumstances the methanol to olefins project ought to be put out again for bids. Ramnarine shrugged this off insisting since he has taken office no one can with any truth point a finger at him. “I don’t even meet with investors without having my public officers around because I want to ensure that not only is there always transparency but there is the appearance of it.”
SABIC is one of the world’s leading manufacturers of chemicals, fertilizers, plastics and metals and in 2010 had net income, sales revenue and total assets of US $5.5 billion, US $40.5 billion and US $84.5 billion respectively. This is the same project that Prime Minister Kamla Persad Bissessar alluded to when, on her return from India, she promised an announcement in the near future on a project that had moved from US$2 billion to over US$4 billion. The Cabinet Note puts the projects at US$5.3 billion.