NGC to mark 50 years amid scrutiny

IN THE YEAR 2025, the National Gas Company (NGC) will mark 50 years since it began operations.

But that golden anniversary will come amid considerable scrutiny.

The disclosure, on December 12, that the company recorded a $1.3 billion loss for 2023 has triggered a volley of responses.

At a political event, UNC deputy leader David Lee on December 16 alleged Energy Minister Stuart Young and the Prime Minister have “broken NGC,” and suggested the country should “keep an eye on” NGC chairman Joseph Ishmael Khan, who replaced Conrad Enill in 2022.

Mr Young has fired back, saying the loss has nothing to do with the current government or NGC management. Instead, he has pointed fingers at the People’s Partnership.

“The losses of 2023 are solely attributable to a transaction in 2013, the acquisition of the shares of Phoenix Park Gas Processors Ltd (PPGPL),” he said on December 19 at an energy press conference.

He also identified a separate matter, a 2015 contract involving the Japanese-based Mitsubishi Corporation, as one which attracted “red ink” from civil servants, who reportedly warned “the deal was not good.”

Mr Lee has retorted, “Then are the profits of the NGC for 2016, 2017, 2018, 2019, 2021 and 2022 due to the UNC?”

These exchanges are not surprising.

Since 1975, the NGC has been a significant buttress for the Treasury. It has earned an accumulated $49 billion in net profits. When adjusted for inflation, that contribution is even higher. NGC has also supported T&TEC substantially.

It is not the first time the entity has recorded a loss or seen its revenues decline. Losses were recorded in 2020 amid the covid19 pandemic and in 1985 during a commodity price crash.

Net profit significantly declined in 1998 during the Asian market crisis and in 2009 during the global financial crisis.

Like a phoenix, the company has always bounced back.

The backdrop to the 2023 loss, however, does not appear to be any distinct crisis, though a sharp reduction in prices has been cited alongside the one-time, non-cash impairment.

NGC officials have indicated the company was on track to make a profit but for this impairment of about $1.5 billion, tied to PPGPL.

The company’s previous 2022 annual report refers to a goodwill value of $1.6 billion.

An accompanying note links this figure to PPGPL and assures, “The goodwill was tested for impairment as at 31 December 2022.”

When the step acquisition of PPGPL occurred in 2013, a goodwill figure of $2.3 billion was first added to the accounts in that year’s report, as NGC recorded its biggest-ever profit of $6.5 billion.

Mr Young, even as he criticised the PP transactions, said, “PPGPL remains a very good company.”

No doubt further details and explanations will be aired in coming weeks, notwithstanding the paucity of disclosure as it relates to the commercial arrangements of state enterprises generally.

A general election is due in 2025. Separately, NGC has a role in energy arrangements with Venezuela.

The company will be centre stage, politically and economically, for some time yet.

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