Opinion
- Editorial
BG View:
Can’t we own PowerGen?
Last week, US electricity generator Mirant announced
that it planned to sell its shares in four Caribbean
power companies.
Mirant
owns 80 per cent of the Jamaican power company,
55 per cent of the Bahamas power company, a 25.5
per cent interest in Curacao and a 39 per cent stake
in PowerGen, T&T’s power generator which
is majority owned by T&TEC.
Let
me put on record the fact that I opposed the hiving-off
of T&TEC’s generating capacity and the
establishment of PowerGen as I am not convinced
that the foreign shareholders (unlike the local
managers) bring much value to the undertaking.
But
it is also clear that to allow Mirant’s 39
per cent stake in PowerGen to slip into new foreign
hands would be a grave injustice and counter-productive
to the national interest.
At
the end of the day, the outcome that best meets
the national interest would be for the Government
to arrange for PowerGen to become a publicly traded
company, listed on the T&T stock market.
This
can be done by the State valuing its 51 per cent
stake in PowerGen, offering those shares to T&T
investors in an initial public offering and then
inviting Mirant and BP—which owns ten per
cent—to sell their shares on the local market.
The
re-creation of PowerGen into an entity that is owned
by thousands of individual T&T investors, credit
unions, mutual funds, the utility’s workers
and the T&TEC pension plan will contribute to
solving several of the problems that plague T&T:
n
A PowerGen owned by the widest cross-section of
citizens will create a perfect TT dollar investment
opportunity at a time when TT dollar investments
have dried up. Local investment opportunities have
dried up because of the retreat of the local stock
market and the fact that the rate of inflation is
now higher than the return on money market funds.
n
The re-creation of PowerGen, therefore, is likely
to renew interest in local stocks by providing an
avenue for individuals, who know they should not
be spending all of their hard-earned income on imported
goods and leisure, but now have a dearth of TT dollar
investment alternatives.
n
The public ownership of PowerGen will also divert
the attention of investors away from the US dollar
market—including US dollar mutual funds—thereby
lessening the pressure on the foreign exchange market.
n
By offering PowerGen to national investors, the
T&T Government will also go a long way to address
the liquidity issues that keep Central Bank Governor
Ewart Williams and Finance Minister Conrad Enill
awake at nights.
And
the great thing about PowerGen is that, given the
power purchase agreements it has, it is one of the
safest investments possible.
PowerGen
receives “free” natural gas from NGC
and is paid by T&TEC to convert it into electricity.
It receives a cheque from T&TEC every month
and its profits, while not spectacular, are very
predictable and virtually risk free.
And
I really don’t see why our ambitions for PowerGen
should stop at T&T. Can’t we so arrange
ourselves that T&T investors buy all of Mirant’s
regional assets—Jamaica, The Bahamas and Curacao—and
list them on the local market.
The
acquisition of Mirant’s regional assets can
be financed by the proposed Unit Trust energy fund,
by the FCB energy fund and by the state-owned National
Gas Company (NGC).
I
mention NGC as a possible financier of the acquisition
of the three power companies because NGC is in the
business of selling T&T’s natural gas—and
what’s a better market to sell to than a monopoly
electricity company.
There
would then be T&T-owned power generators in
Jamaica, The Bahamas and Curacao which can then
be retrofit to operate on natural gas to be supplied
by NGC from the LNG facility at Point Fortin.
T&T
ownership of JPSCo, the Jamaican utility, would
be stoutly resisted by Jamaicans who already think
that Trinidadians own “their” cement
company and much of “their” financial
sector.
The
ownership of JPSCo by T&T capital should be
used by the Manning administration as a quid pro
quo for T&T supplying Jamaica with subsidised
LNG which will be used by a T&T-owned JPSCo
to reduce the cost of electricity to Jamaicans.
I
don’t see that the Jamaican government is
in the financial position to be able to afford to
buy JPSCo and while Michael Lee Chin—the AIC
billionaire—may have the cash, he certainly
does not have access to a tranche of LNG and the
ability to sell it at a subsidised price.
So,
if the Government moves quickly and smartly, it
can arrange its business so that PowerGen is owned
locally thereby addressing problems of the local
stock market, excess TT dollar liquidity and demand
for US dollars.
And
it can tie up the Jamaica, Bahamas and Curacao power
generators and list them on the local market, ensuring
a ready market for T&T’s natural gas,
a steady and profitable stream of US dollar revenues
from the sale of gas and its conversion into electricity
and profitable shareholding opportunities for T&T
investors way into the future.
Simple,
elegant, opportunistic and rewarding for T&T
investors.
Over
to you Michael Alexander, Larry Howai, Frank Look
Kin and Conrad Enill.
The
nation’s financial future may depend on the
four of you.
BG View is
the Trinidad Guardian Business Magazine - Business
Guardian, editor's position on an issue.
Petroleumworld not necessarily share these views.
Editor's
Note: This commentary was published by The
Trinidad Guardian,
on
July 20th 2006 , Petroleumworld reprint this article
in the interest of our readers.
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07 23 06
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