Cur­tis Williams

cur­tis.williams@guardian.co.tt

The Na­tion­al Gas Com­pa­ny of Trinidad and To­ba­go (NGC) has been down­grad­ed by Caribbean In­for­ma­tion and Cred­it Rat­ing Ser­vices Lim­it­ed (Cari­CRIS).

Cari­Cris low­ered the rat­ings on the NGC’s USD 400 mil­lion debt is­sue to Cari­AA (For­eign and Lo­cal Cur­ren­cy) on the re­gion­al rat­ing scale, and ttAA on the Trinidad and To­ba­go (T&T) na­tion­al rat­ing scale from Cari­AA+ (For­eign and Lo­cal Cur­ren­cy) on the re­gion­al rat­ing scale and ttAA+ (Lo­cal Cur­ren­cy Rat­ing) on the na­tion­al rat­ing scale. Ac­cord­ing to Cari­Cris the down­grade is dri­ven by the high­er cost of gas from up­stream sup­pli­ers and his­tor­i­cal­ly low in­ter­na­tion­al com­mod­i­ty prices, which have re­sult­ed in com­pressed prof­itabil­i­ty mar­gins, ad­verse­ly im­pact­ed fi­nan­cial per­for­mance, and con­strained debt ser­vice met­rics.

The down­grade comes as last year the NGC record­ed its first loss in its his­to­ry and its ac­counts have shown that the com­pa­ny has been burn­ing cash.

Its Chair­man Con­rad Enill told Guardian Me­dia that the State En­ter­prise is try­ing its best in the face of dif­fi­cult in­ter­na­tion­al con­di­tions for com­modi­ties.

The NGC’s ma­jor busi­ness is the pur­chase of nat­ur­al gas from up­stream com­pa­nies and then sell­ing it for a prof­it to the petro­chem­i­cal pro­duc­ers. How­ev­er with the col­lapse of methanol and am­mo­nia prices and the high ac­qui­si­tion costs of nat­ur­al gas from lo­cal pro­duc­ers it has left the NGC and the petro­chem­i­cal com­pa­nies in dif­fi­cul­ties.

On Thurs­day Methanex Cor­po­ra­tion an­nounced that it was shut­ting in­def­i­nite­ly its Ti­tan methanol plant in T&T say­ing it has not been able to reach an agree­ment with the NGC.

Cari­Cris al­so as­signed a neg­a­tive out­look on the low­ered rat­ings. The neg­a­tive out­look it said is pred­i­cat­ed on the un­cer­tain­ties in the glob­al eco­nom­ic en­vi­ron­ment to­geth­er with the chang­ing busi­ness mod­el that is char­ac­terised by ris­ing nat­ur­al gas sup­ply costs and sub­stan­tial­ly re­duced in­ter­na­tion­al en­er­gy com­mod­i­ty prices, which are like­ly to have ad­verse im­pacts on NGC’s fi­nan­cial per­for­mance and debt pro­tec­tion met­rics go­ing for­ward.

“NGC’s cred­it­wor­thi­ness con­tin­ues to re­flect the Com­pa­ny’s strate­gic im­por­tance to the do­mes­tic en­er­gy sec­tor and the Gov­ern­ment of the Re­pub­lic of Trinidad and To­ba­go (GoRTT) as well as the sta­bil­i­sa­tion in gas sup­ply with con­tin­ued ex­plo­ration and de­vel­op­ment ac­tiv­i­ty.” the re­lease read.

Cari­Cris not­ed that de­spite the down­grade the NGC’s low gear­ing and good debt pro­tec­tion met­rics, though re­duced from pri­or years sup­ports the rat­ings.

“These rat­ing strengths are tem­pered by the Com­pa­ny’s sig­nif­i­cant­ly re­duced earn­ings and prof­itabil­i­ty due to falling com­mod­i­ty prices and its high vul­ner­a­bil­i­ty to a chang­ing en­er­gy land­scape, char­ac­terised by com­pressed mar­gins on ac­count of falling en­er­gy prices and high­er up­stream prices.” Cari­Cris not­ed.