Saturday, December 16, 2017

T&TEC $2.5b in debt


CURRENT MATTERS: Courtney Mark, right, T&TEC assistant general manager of engineering, speaks to Rene Austin, general manager (distribution), during yesterday’s sitting of the Public Accounts Committee into the affairs of T&TEC at Parliament Building, Tower D, International Waterfront Centre, Port of Spain. —Photo courtesy The Parliament of Trinidad and Tobago.

Mark Fraser

Trinidad and Tobago Electricity Commission (T&TEC) is running at what has been described as a chronic deficit and owes close to $2.5 billion to both National Gas Company (NGC) and Trinidad Generation Company Limited (TGU) because of old and inefficient equipment.

The State-owned company’s level of indebtedness was revealed at yesterday’s Public Accounts Committee Meeting into the affairs of T&TEC at  Parliament Building, Tower D, International Waterfront Centre, Port of Spain.

 T&TEC’s financial woes were initially pointed out by committee member Dr  Dhanayshar Mahabir, who also asked what was T&TEC’s overall stock of debt owed to all creditors. 

“The two main outstanding debts will be NGC $885 million and $600 million to the TGU. so the total indebtedness you could say is $1.6 billion,” said T&TEC general manager Kelvin Ramsook.

However, later on, when asked by chairman of the committee Colm Imbert about a non-redeemable bond taken by T&TEC, Ramsook said: “It is an item in our debt and we also have one other loan that is valued at $300 million at this point.” 

This put the total debt at $2.5 billion.

The committee also learnt that on a monthly basis T&TEC has a deficit of $136 million as of December 2013. So, on an annual basis, T&TEC is running a deficit of some $1 billion per annum.

Asked why this was so, Ramsook, who at first said it was because their expenditure had increased while their income had not changed, eventually admitted after being prodded by Imbert that it was because the current equipment being used by T&TEC was not as effective or modern as the TGU equipment, which would make T&TEC’s generation costs a lot lower once the TGU plant comes fully on stream. 

Assistant general manager of engineering Courtney Mark, who explained in detail what Ramsook meant, said: “The cost of production of electricity from the older plant in Port of Spain, together with fuel, is 26 cents; the other newer Powergen plant is 19 cents, Trinity plant is 22 cents, TGU plant has the potential to produce at 18.25 cents per kilowatt. 

“What you have to do from a business standpoint is reduce the dependency on the older vintage plants and take that capacity from the more efficient newer plants,” he added.

 Mark told the committee that generation represents 60 per cent of the expenditure at T&TEC, while the other 40 per cent is administrative—salary and wages.

Ramsook added that a Cabinet-appointed committee was reviewing the generation expansion plans, which are a combination of gas infrastructure and the positioning of new plants to meet the demographics of Trinidad and Tobago. 

“We, T&TEC, have proposed the phasing out of older plants, the incorporation of new plants and the appropriation of new technologies for  Trinidad and Tobago to meet the medium and long-term needs of the country,” he said.

Ramsook explained to the committee: “In 2011 there  was a settlement of an outstanding balance of $2.1 billion, we had an arrangement  with the Government and there was a loan  arrangement with the settlement of $2.1 billion where the NGC would pay the Government, the Government would send the money to us and we in turn pay the  NGC...that loan agreement is over a seven-year period at  three per cent interest effective from 2011.”

He said in 2011 they paid their entire NGC bill, in 2012 they also  paid the entire NGC bill, but in 2013 they have a deficit of $292 million. 

He said the main reason was the company’s cash flow situation and whenever they fall short they hold back on paying NGC.

Asked what provisions are made on an annual basis for the maintenance of plant equipment and whether there was a deficit on plant material, Ramsook said T&TEC’s maintenance is not affected by this arrangement. 

“Reliability takes urgent and critical priority at T&TEC and therefore we don’t compromise on maintenance at all, hence the reason why sometimes when we are unable to follow through  in terms of paying NGC, that money is diverted in terms of the maintenance/major construction,” Ramsook said.

Ramsook added that T&TEC had applied for a rate review, but had received no positive response on the request to date.