by Asha Javeed

Lead Ed­i­tor In­ves­ti­ga­tions

asha.javeed@guardian.co.tt

Ni­Quan En­er­gy is fac­ing a cash crunch chal­lenge.

As it stands, the com­pa­ny has more than US$250 mil­lion (TT$1.7 bil­lion) in debt and it is strug­gling to meet pay­ments to the tune of mil­lions owed to con­trac­tors, in­clud­ing Ju­nior Sam­my and Massy En­er­gy En­gi­neered So­lu­tions Lim­it­ed (MEES).

While in some in­stances it has been able to work out pay­ment plans, like with T&T Up­stream Down­stream En­er­gy Op­er­a­tions Com­pa­ny Lim­it­ed (TTUDEO­CL), a spe­cial pur­pose com­pa­ny in the Min­istry of En­er­gy and En­er­gy In­dus­tries set up to ne­go­ti­ate its gas agree­ment, oth­er con­trac­tors told the Sun­day Guardian they are still await­ing pay­ments.

Ni­Quan was set to re­fi­nance its bonds to the tune of US$300 mil­lion (TT$2 bil­lion) by Ju­ly 31 but the ac­ci­dent at its plant on June 15, which led to the death of 35-year-old pipe fit­ter Al­lan­lane Ramkissoon, set it back.

The com­pa­ny’s founder and chief vi­sion­ary of­fi­cer Ains­ley Gill has been hold­ing talks with fi­nanciers and up­dat­ing in­vestors in an ef­fort to raise sums, even short-term from high worth in­vestors, as it was able to do be­fore af­ter the April 2021 ac­ci­dent.

Gill, a for­mer US-based lob­by­ist in Wash­ing­ton DC un­der the Man­ning ad­min­is­tra­tion, bought and in­vest­ed in the aban­doned plant with the goal to turn it in­to the West­ern Hemi­sphere’s first gas-to-liq­uids plant.

The com­pa­ny has been hold­ing talks with fi­nanciers and up­dat­ing in­vestors in an ef­fort to raise sums, even short-term, from high net in­vestors, as it was able to do be­fore af­ter the April 2021 ac­ci­dent.

A re­port done by re­gion­al rat­ing agency, Cari­CRIS in March not­ed that at De­cem­ber 2022, Ni­Quan’s to­tal debt stood at US$218.7 mil­lion, a 416.6 per cent in­crease from 2018 and is pro­ject­ed to fur­ther in­crease to US$312 mil­lion as at De­cem­ber 2023.

“In our view, this has re­duced the Com­pa­ny’s fi­nan­cial flex­i­bil­i­ty and this, along­side de­layed pay­ments to TTUDEO­CL, has re­sult­ed in our low­er­ing of the cash flow ad­e­qua­cy and fi­nan­cial flex­i­bil­i­ty rat­ing pa­ra­me­ter of Ni­Quan En­er­gy,” Cari­CRIS said.

Lo­cal in­vestors

To fund its op­er­a­tions, Ni­Quan raised mon­ey on the in­ter­na­tion­al bond mar­ket, loans and sums from lo­cal in­vestors.

Lo­cal in­vestors, ac­cord­ing to the com­pa­ny’s fil­ings dat­ed June 5, 2023 in­clude:

1. Banks- Re­pub­lic Bank Lim­it­ed and RBC Trust (Trinidad and To­ba­go) Lim­it­ed,

2. In­sur­ance com­pa­ny -Bea­con In­sur­ance Com­pa­ny,

3. In­vest­ment com­pa­nies- First­line Se­cu­ri­ties, Prime Cap­i­tal Lim­it­ed, JMMB Se­cu­ri­ties Lim­it­ed, Wa­ter­loo Cap­i­tal Ad­vi­sors, KCL Cap­i­tal Mar­ket Bro­kers Lim­it­ed, In­shal­lah In­vest­ments.

4. Firms - Farm Chem En­gi­neer­ing Man­age­ment Lim­it­ed, GM Homes Lim­it­ed, M&J Ser­vices Lim­it­ed, Cen­tral Fi­nance Fa­cil­i­ty Co­op­er­a­tive So­ci­ety of Trinidad and To­ba­go Lim­it­ed, Petrotrin and Wash­ing­ton DC reg­is­tered, Ni­quan En­er­gy LLC (the com­pa­ny’s largest share­hold­er-10,702,216 or­di­nary shares)

5. In­di­vid­ual in­vestors which in­clude Ni­quan’s board mem­bers and for­mer per­ma­nent sec­re­tary in the Min­istry of Fi­nance, Al­i­son Lewis, Nicholas Galt and Ni­quan’s chair­man John An­drews.

While some in­vestors are con­cerned about whether they will be re­paid, oth­ers have ex­pressed con­fi­dence in Gill’s abil­i­ty to make Ni­Quan’s gas to liq­uids plant suc­cess­ful and re­ward its in­vestors.

Ni­Quan has had five ex­ten­sions to re­pay its first bond. The com­pa­ny met with chal­lenges try­ing to get the plant, which at one point was rel­e­gat­ed to scrap met­al, up and op­er­a­tional. Those chal­lenges were ex­ac­er­bat­ed by the COVID-19 pan­dem­ic.

Nat­ur­al gas chal­lenge

For the com­pa­ny to ac­cess in­sur­ance mon­ey of US$94 mil­lion from the first ac­ci­dent in April 2021, it has to show that it has been pro­duc­ing prod­uct - ide­al­ly up to 2,640 bar­rels per day (bpd) for a con­sis­tent four-month pe­ri­od.

While it has pro­duced small amounts for on­ward sale to Paria Trad­ing it hasn’t yet reached that ca­pac­i­ty. Fol­low­ing the first ac­ci­dent, it on­ly re­ceived ap­proval from the MEEI in Sep­tem­ber 2022 to restart.

One of its chal­lenges has been its in­abil­i­ty to se­cure a steady sup­ply of nat­ur­al gas.

Ni­Quan’s con­tract with the TTUDEO­CL is for 31 mil­lion stan­dard cu­bic feet per day (mm­scf/d) or less than one per cent (ap­prox­i­mate­ly 0.8 per cent) of T&T’s dai­ly gas sup­ply. TTUDEO­CL sources nat­ur­al gas from the Na­tion­al Gas Com­pa­ny (NGC).

In­dus­try sources told the Sun­day Guardian that Ni­Quan owed TTUDEO­CL sig­nif­i­cant sums and be­cause of that debt, gas was stopped at the plant. In turn, TTUDEO­CL owes more than US$10 mil­lion to the NGC.

While a pay­ment plan was agreed for Ni­Quan to pay TTUDECOL, the com­pa­ny is still chal­lenged for nat­ur­al gas.

At present, four plants on the Point Lisas In­dus­tri­al Es­tate are down as a re­sult of a nat­ur­al gas short­age in the coun­try fol­low­ing a safe­ty in­ci­dent at Wood­side En­er­gy. Nei­ther the MEEI nor the NGC can say when the is­sue will be re­solved.

The Sun­day Guardian was told that Ni­Quan is con­sid­er­ing le­gal ac­tion against the MEEI for their con­tract­ed gas.

An in­dus­try source ex­plained that the com­pa­ny is in a chal­leng­ing po­si­tion as if it does not get gas, it can’t op­er­ate and push the plant for pro­duc­tion. Fur­ther, the com­pa­ny’s cash strapped po­si­tion makes it in­flex­i­ble to con­tin­ue op­er­at­ing un­til it gets in­jec­tions.

Rais­ing mon­ey

Cari­CRIS not­ed that if Ni­Quan was not able to achieve op­ti­mal pro­duc­tion by June 30, it would af­fect its abil­i­ty to re­fi­nance the ex­ist­ing notes or ob­tain ap­proval for a fur­ther ex­ten­sion by note­hold­ers by Ju­ly 31.

The in­abil­i­ty to achieve cer­ti­fi­ca­tion of full name­plate ca­pac­i­ty of 2,400 bar­rels per day “ad­verse­ly im­pact­ed the Com­pa­ny’s abil­i­ty to se­cure time­ly re­fi­nanc­ing.”

“While an ex­ten­sion by note­hold­ers was grant­ed re­sult­ing in a re­vised ma­tu­ri­ty date of De­cem­ber 2022, the Com­pa­ny is cur­rent­ly await­ing ap­provals from its se­nior se­cured note­hold­ers to fur­ther ex­tend the short-term note in­stru­ment (STNI) to the end of Ju­ly 2023; its fifth con­sec­u­tive ex­ten­sion in re­fi­nanc­ing. The con­tin­u­ous de­lays in re­fi­nanc­ing which in­cludes the cap­i­tal­i­sa­tion of in­ter­est and con­sent fees, have re­sult­ed in an in­creas­ing lev­el of debt year-on-year (y-o-y) since 2018. As a re­sult, the Com­pa­ny is now seek­ing to is­sue a ten-year US$300 mil­lion bond by Ju­ly 2023, up from US$200 mil­lion pre­vi­ous­ly, there­by neg­a­tive­ly im­pact­ing its fi­nan­cial risk pro­file as key pro­ject­ed debt ser­vic­ing met­rics weak­ened from our last re­port,” the re­port said.

Cari­CRIS said two of the com­pa­ny’s key risks were “con­sis­tent­ly high and ris­ing debt lev­els over the past few years thus con­strain­ing fi­nan­cial flex­i­bil­i­ty and re­ecur­rent op­er­a­tional chal­lenges re­sult­ing in the in­abil­i­ty of the GTL plant to achieve name­plate ca­pac­i­ty at 2,400 bpd in a time­ly man­ner.”

“These op­er­a­tional chal­lenges hin­dered NETL’s abil­i­ty to col­lect rev­enue and make re­quired time­ly pay­ments for its gas sup­ply and debt oblig­a­tions as planned,” it said.

Ni­Quan’s re­sponse

The Sun­day Guardian sent ques­tions to Ni­quan on Ju­ly 21 and on Ju­ly 29.

On be­half of Ni­Quan, Al­fred Agui­ton, chair­man of Am­ple said: “Ni­Quan En­er­gy Trinidad Lim­it­ed re­mains com­mit­ted to be­ing as trans­par­ent as is legal­ly per­mis­si­ble and com­mer­cial­ly sen­si­ble, but re­gret­tably is un­able to di­vulge in­for­ma­tion on con­fi­den­tial cor­po­rate fi­nan­cial mat­ters per your sub­mis­sion to­day (Fri 21/7/23).

“Ni­Quan wel­comes the in­ter­est of the Me­dia—and vic­ar­i­ous­ly the gen­er­al pub­lic—in all its op­er­a­tions, but is re­quired to ob­serve ap­plic­a­ble con­fi­den­tial­i­ty, con­trac­tu­al and le­gal bound­aries on such dis­clo­sure. We ap­pre­ci­ate all on­go­ing com­mu­ni­ca­tion which will be of mu­tu­al ben­e­fit”