One of T&T’s top pri­vate sec­tor ex­ec­u­tives, two econ­o­mists and and a lo­cal down­stream ex­pert have all ex­pressed con­cern about the neg­a­tive im­pact of the clo­sure of the am­mo­nia and urea op­er­a­tions on the Point Lisas In­dus­tri­al Es­tate, owned by the Cana­di­an fer­tilis­er com­pa­ny Nu­trien.

On Tues­day morn­ing, the com­pa­ny an­nounced that it had com­menced "a con­trolled shut down" of its Trinidad am­mo­nia and urea op­er­a­tions, start­ing on Thurs­day.

“This shut­down is in re­sponse to port ac­cess re­stric­tions im­posed by Trinidad and To­ba­go’s Na­tion­al En­er­gy Cor­po­ra­tion (NEC) and a lack of re­li­able and eco­nom­ic nat­ur­al gas sup­ply that has re­duced the free cash flow con­tri­bu­tion of the Trinidad ni­tro­gen (am­mo­nia and urea) op­er­a­tions over an ex­tend­ed pe­ri­od of time,” the Cana­di­an com­pa­ny said.

“Nu­trien will con­tin­ue to en­gage with stake­hold­ers and as­sess op­tions with re­spect to its op­er­a­tions in Trinidad,” the com­pa­ny added.

NEC is a whol­ly owned sub­sidiary of the Na­tion­al Gas Com­pa­ny (NGC), which is a 100 per cent state-owned com­pa­ny.

NEC blocked Nu­trien from ac­cess­ing its port fa­cil­i­ties at Savonet­ta and de­mand­ed that the fer­tilis­er com­pa­ny pay it US$28 mil­lion in port user fees. That sum is based on the new board at NEC de­cid­ing to in­crease its port user fees, which it de­scribed as "pep­per­corn" and a "sub­sidised rate that was far be­low mar­ket lev­els."

In a memo to staff on last Wednes­day night, Nu­trien de­scribed the US$28 mil­lion in port user fees de­mand­ed by NEC as be­ing "retroac­tive and uni­lat­er­al­ly im­posed," adding that those fees had not been re­scind­ed, al­though it ac­knowl­edged that NEC al­lowed it to con­tin­ue ac­cess­ing the port un­til the end of 2025.

And, in the staff memo, Nu­trien point­ed out that "the over­all vi­a­bil­i­ty of op­er­a­tions" was not ad­dressed at the meet­ing on Wednes­day, re­fer­ring to its ini­tial state­ment about "a lack of re­li­able and eco­nom­ic nat­ur­al gas sup­ply," in T&T.

NGC's re­sponse on the is­sue of vi­a­bil­i­ty was that the pro­pos­al to al­low Nu­trien to con­tin­ue us­ing the port un­til year end "was met with a de­mand by Nu­trien that NGC set­tle the is­sue of fu­ture gas sup­ply, to se­cure the over­all eco­nom­ic vi­a­bil­i­ty of Nu­trien, even though Nu­trien cur­rent­ly en­joys the ben­e­fit of an ex­ist­ing gas sup­ply con­tract! Nei­ther NGC nor Na­tion­al En­er­gy has a re­spon­si­bil­i­ty to sub­sidise the op­er­a­tions of oth­er com­pa­nies to se­cure their eco­nom­ic vi­a­bil­i­ty."

The is­sue of "vi­a­bil­i­ty of op­er­a­tions" per­tains to both the amount of nat­ur­al gas, com­pa­nies on the Point Lisas In­dus­tri­al Es­tate re­ceive and the price of that nat­ur­al gas, which is gen­er­al­ly no longer com­pet­i­tive with US nat­ur­al gas prices.

Nu­trien said last week its am­mo­nia and urea sales vol­umes from its Point Lisas Trinidad op­er­a­tions are ap­prox­i­mate­ly 85,000 per month (an av­er­age of 1,020,000 met­ric tonnes a year) and 55,000 tonnes per month (660,000 tonnes a year) re­spec­tive­ly.

"Nu­trien ex­pects to be with­in its 2025 an­nu­al ni­tro­gen sales vol­ume guid­ance range of 10.7 to 11.2 mil­lion tonnes due to the con­tin­ued strong per­for­mance of its North Amer­i­can ni­tro­gen op­er­a­tions," the com­pa­ny said.

Ac­cord­ing to in­for­ma­tion on the Min­istry of En­er­gy's web­site, Nu­trien's an­nu­al name­plate ca­pac­i­ty from its four am­mo­nia plants at Point Lisas is 1.79 mil­lion met­ric tonnes a year.

Nu­trien owns the largest of four am­mo­nia pro­duc­ers in T&T.

The oth­er pro­duc­ers are:

* Yara Trinidad (al­so known as Trin­gen), which op­er­ates two plants that have a name­plate ca­pac­i­ty of 995,000 met­ric tonnes;

* Point Lisas Ni­tro­gen Ltd (for­mer­ly Farm­land Miss­chem) op­er­ates a 650,000 met­ric tonne-a-year plant. Its own­ers, ac­cord­ing to the Min­istry of En­er­gy, are Ter­ra In­dus­tries and Koch Min­er­al Ser­vices; and

* Switzer­land-head­quar­tered Pro­man op­er­ates two am­mo­nia plants on the Point Lisas In­dus­tri­al Es­tate, with name­plate ca­pac­i­ty of 1.297 mil­lion met­ric tonnes a year.

Sun­day Busi­ness Guardian asked all four re­spon­dents for their views on the Nu­trien/NGC is­sue

A: If in fact they do stay com­mit­ted to their ex­it, we will lose a ma­jor multi­na­tion­al play­er in the coun­try. I’m not close enough to the is­sue to be able to com­ment on that. I do know that there is a down­stream chal­lenge in that many of us, ANSA McAL and our Carib Brew­ery in par­tic­u­lar, are off-tak­ers of car­bon diox­ide from Massey Gas that take the car­bon diox­ide and cleans it from Nu­trien.

I do know that the sup­pli­er, Massy Gas, is do­ing the need­ful to seek to bring an al­ter­na­tive source on­line. But in the event that that doesn’t ma­te­ri­alise, we re­al­ly could end up with a very large wide­spread im­pact, not just in Trinidad, but across the en­tire re­gion, for a very crit­i­cal in­gre­di­ent and raw ma­te­r­i­al in­put in bev­er­ages and oth­er­wise.

At­tempts are un­der­way and ef­forts are un­der­way to mit­i­gate that. I re­main con­fi­dent that we will be suc­cess­ful in do­ing so. I don’t have enough of a back­ground to com­ment. We have a well-ca­pa­ble Gov­ern­ment and lead­ers in place who can at­tend to that.

I re­al­ly can’t com­ment on what’s tak­ing place. That’s be­tween a Gov­ern­ment body and a pri­vate com­pa­ny. They’ve got their rea­sons and ra­tio­nale for it.

It’s un­for­tu­nate that if in fact they are to ex­it, it cer­tain­ly would be an un­for­tu­nate sit­u­a­tion for all. I be­lieve that’s not what our NEC would want or our Gov­ern­ment would want ei­ther. But we can’t make that de­ci­sion for them.

In terms of what has been said in the pub­lic space, there ap­pears to have been some con­flict­ing views in terms of what was owed to the NGC by Nu­trien, and Nu­trien has dis­put­ed that.

I think re­al­ly we have to wait and see and hope that Nu­trien’s tem­po­rary clo­sure of its am­mo­nia and urea com­plex doesn’t turn in­to some­thing more per­ma­nent, be­cause of course that would have an im­pact on em­ploy­ment, plus it’s al­so go­ing to have an im­pact on the cost of fer­tilis­ers and how that can then have a mul­ti­pli­er ef­fect in terms on per­sons who use fer­tilis­ers and per­haps al­so on the cost of lo­cal pro­duce that us­es fer­tilis­er.

There would al­so be an im­pact on the tax rev­enue the Gov­ern­ment col­lects and the for­eign ex­change the com­pa­ny gen­er­ates. So I think all of us are hop­ing that it is re­solved in the best in­ter­ests of both Nu­trien and the coun­try. That is be­cause now, giv­en all of our chal­lenges, we can re­al­ly ill af­ford to have an­oth­er lay­er of chal­lenges, par­tic­u­lar­ly in the area of forex, and any­thing that can im­pact on the cost of liv­ing for the av­er­age cit­i­zen of T&T.

We’re hop­ing that diplo­ma­cy will pre­vail, and that we can re­al­ly have some res­o­lu­tion to this in the in­ter­ests of both com­pa­nies, be­cause they (NGC) have to seek their in­ter­ests, but al­so more so in terms of the in­ter­ests of Trinidad and To­ba­go.

Q: What are your views on state en­ter­prise re­quest­ing a retroac­tive pay­ment of a multi­na­tion­al com­pa­ny?

A: That seemed a lit­tle un­usu­al to me, but of course I’m not fa­mil­iar with the nu­ances of the con­trac­tu­al arrange­ments be­tween NGC and Nu­trien. But it did seem a lit­tle strange to me. But hav­ing said that, I am not privy to all of the nu­ances in terms of the con­trac­tu­al oblig­a­tions and what may have been owed in the past, and what may have led to that retroac­tive re­quest. But it did seem a lit­tle strange to me.

Q: Giv­en the im­pli­ca­tions you point­ed out a minute ago, do you think the gov­ern­ment should be mak­ing stren­u­ous ef­forts to en­sure that Nu­trien and oth­ers stay in Trinidad and To­ba­go?

A: Well, I think what I’ve seen re­port­ed in the me­dia is that the NGC has es­sen­tial­ly held their hand in terms of the re­quest and press­ing for the re­quest for the retroac­tive pay­ment.

So NGC has said that we’ve had a re­think of the sit­u­a­tion. So on NGC’s side, cer­tain­ly that was what was re­port­ed. Nu­trien, as far as I have read in the me­dia, has de­cid­ed to con­tin­ue with their tem­po­rary shut­down of their plants.

Even be­fore Trinidad and To­ba­go be­gan pro­duc­ing LNG, a vi­tal con­sid­er­a­tion should have been which us­es of nat­ur­al gas pro­vide the high­est val­ue added per mol­e­cule. Analy­sis back then in­di­cat­ed that it would have been petro­chem­i­cals and po­ten­tial­ly val­ue-added ac­tiv­i­ties that use elec­tric­i­ty gen­er­at­ed from nat­ur­al gas com­bus­tion. There is no sur­prise that, from the mo­ment we de­cid­ed to en­ter the LNG sup­ply chain, we would ex­pe­ri­ence gas short­ages in the 2020s and 2030s.

News that Nu­trien might close its op­er­a­tions in Trinidad is very con­cern­ing. Al­though the head­lines in­di­cate that it is a re­sult of the T&T au­thor­i­ties want­i­ng to charge port fees retroac­tive­ly, the short­age of gas and the in­abil­i­ty to run many plants at Pt Lisas at or near full ca­pac­i­ty be­cause of re­duced gas sup­plies could be the re­al rea­sons.

The shut­down of the plant will lead to re­duced gov­ern­ment rev­enue, ap­prox­i­mate­ly 600 job loss­es, ac­cord­ing to news­pa­per re­ports, and in­di­rect costs for fam­i­lies and house­holds that de­pend on these jobs. This could al­so sig­nal a de­cline in the coun­try’s petro­chem­i­cal sec­tor, has­ten­ing its demise and lead­ing to a sense that the coun­try is not open to in­vest­ment and busi­ness, when this is pre­cise­ly what it needs.

So, Trinidad and To­ba­go is at an in­flex­ion point in its de­vel­op­ment and must con­sid­er the best use of its now scarce nat­ur­al gas mol­e­cules, with val­ue-added max­imi­sa­tion as our pri­ma­ry goal. This means that any plant clo­sure that re­duces our val­ue-added and re­sults in job loss­es must be avoid­ed or man­aged care­ful­ly. The Gov­ern­ment un­doubt­ed­ly must make dif­fi­cult de­ci­sions about how to use the coun­try’s re­main­ing nat­ur­al gas re­serves.

I would sug­gest that the Gov­ern­ment pri­ori­tise us­ing gas to boost the coun­try’s pro­duc­tive ca­pac­i­ty through re­al val­ue-added ac­tiv­i­ties that pro­duce good jobs that pay well, there­by re­duc­ing the need for trans­fers and sub­si­dies. The gov­ern­ment needs to break this neg­a­tive loop that it has found: low pro­duc­tion, not enough good jobs, there­fore high trans­fers and sub­si­dies to sup­port con­sump­tion (main­ly for­eign), and high con­tin­u­ous deficits and, hence, ris­ing debt. Let’s use the re­main­ing gas to break this cy­cle.

I cer­tain­ly don’t know the de­tails. What I can say is that it cer­tain­ly is not good for the coun­try’s rep­u­ta­tion. I do hope that there is a res­o­lu­tion soon. Rep­u­ta­tion takes a long time to build but can be lost quite quick­ly.