In part two of Guardian Me­dia’s Lead Ed­i­tor Busi­ness, Cur­tis Williams Ti­tans of Busi­ness in­ter­view with the Group CEO of Massy Ger­vase Warn­er and its Chief Fi­nan­cial Of­fi­cer Ian Chi­napoo we hear their views on the econ­o­my, on T&T be­com­ing com­pet­i­tive, and if Massy and oth­er in­vestors mis­led the coun­try on the na­ture of their methanol in­vest­ment.

Warn­er al­so re­veals his time­line for re­tire­ment.

Q: While your prof­its have grown I have no­ticed a re­duc­tion in the amount of tax­es you have paid?

Chi­napoo: You would re­alise that tax­es are as­sessed on what your pre­vi­ous year’s earn­ings are. So what would have hap­pened in 2021, we ac­tu­al­ly paid in 2020 based on 2019 lev­els. So when 2021 came around we had some tax cred­its and so on. But more than that, that tax num­ber is ac­tu­al­ly across the en­tire re­gion, so you would have had changes in tax rates. For ex­am­ple, you are aware at the be­gin­ning of Jan­u­ary 2020 Bar­ba­dos ac­tu­al­ly re­duced its cor­po­rate in their whole move in the OECD (Or­gan­i­sa­tion for Eco­nom­ic Co-op­er­a­tion and De­vel­op­ment) to move away from their off­shore sec­tor and on­shore sec­tor, they brought every­thing on­shore. So the off­shore sec­tor was ze­ro per cent, the on­shore sec­tor was 25/30 per cent, they brought every­body to five per cent. So op­er­a­tions in Bar­ba­dos in the first year, we ac­tu­al­ly en­coun­tered a sit­u­a­tion where we had a de­ferred tax as­set that we had to write off. The sec­ond year we got the full ben­e­fit of not hav­ing to pay 25 per cent but now hav­ing a 5 per cent tax rate.

So when we look at our tax­es across the re­gion, ex­cept for those ex­tra­or­di­nary events, our ef­fec­tive tax rate was 31 per cent. So that’s why you will see this year a big change be­cause we would have had tax cred­its that we ap­plied and we would have had the ben­e­fit of a low­er tax regime in a mar­ket where we have 21 per cent of our rev­enue.

How many com­pa­nies would you have had to wean off where the WACC was more than the re­turns?

Warn­er: I think the num­ber is eight or 10 that we have had to.

Chi­napoo: Well, we had some small­er ones.

Warn­er: We had three se­cu­ri­ty com­pa­nies, we had Robert’s Man­u­fac­tur­ing, Sea­well Air Ser­vices, Massy Press T Con.

Chi­napoo in­ter­jects: Well the ICT group was a num­ber of com­pa­nies.

Warn­er: The ICT group was three com­pa­nies right, Bar­ba­dos, An­tigua…ok well maybe a dozen (he chuck­les).

So you ac­tu­al­ly have a small­er num­ber of com­pa­nies and larg­er prof­its?

Warn­er: Yes.

You talk about not be­ing afraid. How do you see the T&T econ­o­my in the short to medi­um term? And sec­ond­ly, you talk about cross-list­ing in Ja­maica and that you have been in the coun­try for so long. But I looked at your fig­ures and Ja­maica is just four per cent of your rev­enue. Do you see re­al op­por­tu­ni­ties in Ja­maica or are the op­por­tu­ni­ties re­al­ly in South Amer­i­ca, Colom­bia and Guyana?

Warn­er: You asked about the T&T econ­o­my and how do we see it in the im­me­di­ate fu­ture. So I think I read yes­ter­day that oil prices got to US $85 a bar­rel. When­ev­er oil and gas prices are high T&T gets a bonus, we get more for­eign ex­change, gov­ern­ment gets more rev­enue, that helps our econ­o­my. I think that is short-lived, we can’t live in a world where we ex­pect that is go­ing to con­tin­ue. Some of the wor­ry­ing signs are the in­creas­ing debt lev­els which of course means you have to then spend more of your an­nu­al bud­get pay­ing in­ter­est and that puts a squeeze, and it is a vi­cious cir­cle. You have to bor­row to then fund the ex­pen­di­ture and so if we are not able to in­ter­rupt that cy­cle we will find our­selves with a very heavy debt bur­den and will have to go through some form of ma­jor re­struc­tur­ing. So we will en­joy what we have hap­pen­ing in Trinidad in 2022 at this point in time, but we cer­tain­ly are not think­ing that this is go­ing to be long-lived. We have a fun­da­men­tal struc­tur­al chal­lenge in T&T that at some point in time we are go­ing to have to take on. That hav­ing been said, peo­ple need gas for their car­bon­at­ed bev­er­ages, peo­ple need oxy­gen for hos­pi­tals, peo­ple need to eat food, we will prob­a­bly see few­er mo­tor ve­hi­cles, but peo­ple need to ser­vice their ve­hi­cles, peo­ple need ac­ces­sories for their ve­hi­cles. We will con­tin­ue to op­er­ate and in­vest in T&T through­out this pe­ri­od. There are go­ing to be op­por­tu­ni­ties for con­sol­i­da­tion, etc. So we are still very op­ti­mistic for our own prospects in T&T de­spite the fact in the medi­um term we can see some sig­nif­i­cant ad­just­ments that need to take place here. But we are quite ex­cit­ed about a num­ber of oth­er places. Guyana and the boom that is hap­pen­ing in Guyana, Colom­bia is a huge, huge mar­ket, we have a very small share but an in­creas­ing share. It is a whole ter­ri­to­ry in which we have been suc­cess­ful in the car busi­ness as well as in the gas busi­ness so that of­fers lots of op­por­tu­ni­ties and we are ex­plor­ing oth­er coun­tries. Ian men­tioned it, based on the suc­cess we have had in Colom­bia and oth­er places we ac­tu­al­ly think this group with its mo­tors and ma­chines port­fo­lio, its gas prod­ucts port­fo­lio and in­te­grat­ed re­tail port­fo­lio could com­pete any­where in the world and it is just up to us to de­cide which coun­tries are go­ing to be next and don’t nec­es­sar­i­ly re­strict our­selves as the vi­sion says to the Caribbean basin. We are go­ing to start look­ing be­yond the Caribbean basin.

How does T&T be­come more com­pet­i­tive in Massy’s view?

Warn­er: Well I think if you looked at the coun­try and you said coun­tries com­pete with one an­oth­er, com­pete for tal­ent, they com­pete for in­vest­ment, they com­pete for cap­i­tal then how will you want to go about mak­ing your coun­try more com­pet­i­tive? Like com­pa­nies you have to be more pro­duc­tive, you have to put more out than you are spend­ing and you have to do that by hav­ing an in­tel­li­gent work­force, by hav­ing peo­ple to in­vest in tech­nol­o­gy, you have to cer­tain­ly man­age the af­fairs to en­sure it is an at­trac­tive place to in­vest, I think these are some fun­da­men­tals you would have to do to make T&T more com­pet­i­tive. Per­son­al­ly, I have a lot more con­fi­dence and op­ti­mism about the peo­ple of T&T and their abil­i­ty to be cre­ative. I think there is a frus­tra­tion on how you are able to do busi­ness in T&T. It is dif­fi­cult. If we could make it eas­i­er for en­tre­pre­neurs to suc­ceed.

One of the rea­sons we cre­at­ed Nudge Caribbean was to help en­tre­pre­neurs and small busi­ness­es suc­ceed, bring­ing them through our re­tail out­lets, al­though you say we are traders and that’s a bad thing, but you know we are try­ing to pro­mote eco­nom­ic ac­tiv­i­ty. Not just in Trinidad but in Bar­ba­dos, Guyana, St Lu­cia and we think that is re­al­ly im­por­tant. How can we en­cour­age more en­tre­pre­neur­ial ac­tiv­i­ty in our econ­o­my and get many small busi­ness­es? Think of di­ver­si­fi­ca­tion, if you let the 1.3 mil­lion peo­ple loose on fig­ur­ing out things they could do well we would be far bet­ter off in di­ver­si­fy­ing our­selves rather than the state try­ing to choose it.

So one of the lessons we have learnt at Massy is when we de­volved more au­ton­o­my in­to our busi­ness­es, we get bet­ter an­swers be­cause peo­ple are clos­er to the ground, they know what the ac­tion is and they are much clos­er to the needs the cus­tomers have. So if you have a sys­tem that ac­tu­al­ly sup­ports them, kin­da in­vert the pyra­mid, you sup­port them, I think that is a big part of what I think would be an im­por­tant way for us to turn T&T around and be­come more com­pet­i­tive.

You pushed very hard for the methanol project at La Brea. How is that project go­ing? Methanol prices are pret­ty de­cent at the mo­ment. Gas con­tracts from all re­ports are favourable?

Warn­er: Yes we are get­ting gas. It is re­al­ly in­ter­est­ing be­cause I do think we take some heat about this project and the terms un­der which it was ini­ti­at­ed. You have to re­mem­ber that this project dates back to 2013, this project has been long in com­ing and at that point in time if you want to at­tract a Japan­ese in­vestor or a group of Japan­ese in­vestors who have nev­er been to Trinidad to spend US $1 bil­lion on a plant in the most dif­fi­cult part of T&T to build a plant, both phys­i­cal­ly as well a from the ecosys­tem of con­trac­tors and every­thing that’s avail­able in that area, you are go­ing to have to as­sure them that they will have gas sup­ply, help them cre­ate terms and con­di­tions that will be at­trac­tive to that in­vest­ment and yes we were part of that. Lis­ten we are a 10 per cent share­hold­er if you think some­one was ask­ing for stuff it would be the Japan­ese in­vestors. So we have what we have. Over US$1 bil­lion spent to build the plant, a lot of em­ploy­ment gen­er­at­ed, con­tin­u­ous em­ploy­ment, an­oth­er form of for­eign ex­change, a very ef­fi­cient plant, the newest methanol plant in T&T.

And that’s the point it is a methanol plant.

Warn­er: Yes.

You see when this project was first pro­mot­ed you talked about it be­ing more than a methanol plant. What has hap­pened to the oth­er promised spin-off?

Warn­er: So it is a methanol and DME plant. There is a whole ecosys­tem around DME that was be­ing con­sid­ered. DME for ve­hi­cles, DME for pow­er­ing oth­er ma­chin­ery and stuff like that, that was nine years ago, tech­nol­o­gy has moved, we are now look­ing at elec­tric so the DME off take in terms of all of the mar­kets that were be­ing con­sid­ered that has shift­ed and a part of the chal­lenge we have had is how long it took to build the plant. There was a lot of chal­lenges as­so­ci­at­ed with build­ing a plant in La Brea.

But you would see why peo­ple would look at this and say Massy Group and the NHC and so on came and said we will have a methanol to DME plant and we had al­ready a num­ber of methanol plants.

Warn­er: But no­body had a pro­pos­al for an­oth­er methanol plant. It was the first methanol plant built in 10 years so we had stopped at­tract­ing in­vest­ment

But you promised this would be a DME plant?

Warn­er: Ab­solute­ly and the Japan­ese have not giv­en up on down­stream right. So they con­tin­ue to look at oth­er op­por­tu­ni­ties to take methanol to oth­er petro­chem­i­cal prod­ucts and di­ver­si­fy fur­ther down­stream. It is still part of their man­date and still part of what they are look­ing at. To be hon­est the biggest part was get­ting the plant up and run­ning and now that we are near­ing the end of that and we are look­ing at get­ting the point of get­ting the sign off from the bank and the plant is run­ning that will be the next wave of con­sid­er­a­tion you will have from that op­er­a­tion. So it is not like that is aban­doned, I think that is still some­thing that will def­i­nite­ly be worked up­on.

Any thought of re­tire­ment any time soon?

Warn­er: Re­tire­ment at the Massy Group is at age 60, I’m 56.

So you will give it four more years?

Warn­er: About that.

Any plans be­yond that?

Warn­er: Lots of op­tions.