Walking The Energy Talk

RBTT and Guardian  Holdings (GHL) will pump about US$12 billion into the energy sector over the next five years, to try and keep energy projects and profits in local hands. Called the Prometheus Energy Partnership, the two local financial titans have committed US$50 million each in private equity capital to the local energy industry. An estimated pool of US$1 billion will be accessible to local financial equity investors such as GHL and RBTT, executives from both companies say. It means that ordinary citizens will now have a greater opportunity to participate in  Trinidad and Tobago’s energy sector. The name Prometheus was taken from a figure in Greek mythology who took what was once considered sacred to the gods and used it as a catalyst for the empowerment of the people.

GHL CEO Peter Ganteaume said while the benefits of Prometheus will initially accrue to the respective shareholders of GHL and RBTT, it will ultimately redound to the benefit of the wider population since the Unit Trust Corporation and the National Insurance Board are major shareholders within both companies. Referring to problems encountered by CL Financial Limited when it attempted to launch an energy fund, Ganteaume explained that Prometheus is not a mutual fund but  a mechanism to provide the energy sector with local capital and ownership. RBTT Financial Holdings Ltd CEO Jerome Sooklal shared Ganteaume’s views, saying that  Prometheus was not an energy fund and would not encounter any problems with the Securities and Exchange Commission. Both men were speaking at the launch of Prometheus at Club Zen in Port-of-Spain on Monday.

RBTT managing director Lyndon Guiseppi said Prometheus will provide a medium and a mechanism through which ordinary citizens can participate in the energy sector. Guiseppi said most people are aware of the energy sector being the backbone of the TT economy contributing substantially to Gross Domestic Product (40 percent), foreign exchange and taxes. However he said, there is “very little evidence of this sector in the daily lives of ordinary Trinbagonians.” He also observed that none of the major energy firms in the country were listed on the TT Stock Exchange. “The first time I visited an oil platform was in my 30’s and I believe I am not alone in this regard. There are many of us who live in this country, who have never see the way in which the major resource of this country is produced and distributed,” Guiseppi told guests..

He said close examination of the loan portfolios of TT’s major banks show that there was “very little evidence of lending to this sector” and there were “very legitimate reasons for the lack of participation and financing of energy sector projects.” Those reasons, he said, included the project scope being too large for the capital base of most banks, the local US dollar deposit base was not large enough to accommodate the energy sector and the regulatory framework did not support investment in this sector. Guiseppi said the only meaningful way in which local financial institutions and the public at large could participate in the energy sector is through the establishment of an equity fund, “specifically targetted at the energy sector.” GHL and RBTT, he said,  have crossed the rubicon with the launch of Prometheus. (See page 4)

He said Prometheus must be seen as part of an ongoing process to provide “for greater local sector participation in energy sector by developing wealth distribution channels to the benefit of the wider population of TT.” Guiseppi suggested that Government could greatly assist in this process by making the necessary amendments to the Insurance and Pension Fund Acts to release some of an estimated $25 billion in assets under administration “to invest directly in energy sector via equity stakes in both the upstream and downstream sectors of this economy.” Synchem Ltd chairman Kerston Coombs hailed the launch of Prometheus as timely given the new wave of energy expansion in TT and was particularly pleased with Prometheus’ focus on increased local content in the energy sector.

Noting that TT was a significant recipient of foreign direct investment, especially in the energy sector, Coombs said Government must balance the equation by creating the right type of environment for the local private sector to finance developments within the energy sector. He suggested that Govern-ment consider helping the private sector with energy-sector financing until they are able to do so on their own. He suggested that some of the estimated US$680 million which is expected to accumulate in the Interim Revenue Stabilisation Fund (IRSF) by September, be used for this purpose. Coombs added that many of the South-East Asian economic success stories were founded upon a combination of foreign direct investment and local investment.