TGU plans switch to ‘alternative fuel’

“As we are always seeking new ways to improve our processes and produce more efficiently, we have been in discussions with stakeholders about an opportunity to invest in a more cost-effective alternative fuel. If implemented, this fuel will replace the natural gas currently used by the six gas turbines for power generation. The company is mindful that the savings in natural gas can fuel two petrochemical plants similar to the new Mitsubishi plant next door to its facility at the La Brea Industrial Estate.

“The company is also looking toward the use of this alternative fuel as it seeks out opportunities in the Caribbean region because we are certain that based on new technology, this will be a cheaper source of fuel than most countries in the Caribbean are currently using.” D’Andrade made the announcement while speaking at the recently held annual general meeting of the Union Estate Electricity Generation Company Limited; the 100 percent owner of TGU.

Located at the La Brea Union Estate, La Brea, TGU intends to install an advanced model industrial wind turbine this year at its subsidiary power plant site in La Brea.

D’Andrade said this would be done “as a pilot project to study and develop an appropriate interface between the intermittent power of wind turbines and stand-alone but unique electrical system that is available in Trinidad and Tobago (TT).” “Though solar panels are now at their cheapest and battery storage technology is greatly improved, this form of electricity generation is currently more expensive than the country’s power generation cost. The company anticipates that, once the regulatory framework for renewable energy is established, it will be well-prepared to be an active participant in the development of this sector of the power industry.” As part of its financing initiative, TGU was required to have its operations, maintenance and financial model reviewed by an independent engineer. The Bookrunner banks, Scotia Capital of New York, Credit Suisse and RBC Capital of New York, together with their attorneys, Milbank, agreed to retain the international engineering company, Black and Veatch Management Consulting LLC (Black and Veatch).

D’Andrade said, “after completing their due diligence and review, Black and Veatch reported, ‘TGU’s Equivalent Availability Factor has averaged approximately 94 percent from 2012 to 2015 which is higher than the industry average of 88 percent...for power plants in the United States region. The significance of this endorsement will be better understood when I demonstrate the many opportunities for growth which TGU has created without returning to GORTT for any financial support whatsoever.” The chairman later expanded on this, noting that “TGU has repaid its ultimate shareholder, GORTT, all the advances incurred as the debt for the construction of the power facility totalling US $554 million or TT $3.8 billion via a series of short-term loan facilities.” TGU did so by securing several short-term loans, “some in record-breaking time, to meet the repayment of GORTT’s advances, as requested.” The company accessed a TT$960 million or US $150 million short-term secured loan facility from First Citizens Bank, following which TGU then accessed a US$150 million or TT$960 million short-term secured loan facility from Credit Suisse Bank, subsequently followed by a US$600 million or approximately TT$4 billion short-term secured loan facility to retire the previous two short-term secured loan facilities and complete the repayment of GORTT’s advances in the time required.

“TGU has also paid dividends to GORTT totalling approximately US$222 million or TT$1.4 billion. It is with pleasure that I can announce for the year 2016, TGU will pay indirectly to GORTT an interim dividend of US$15 million or approximately TT$102 million. In effect, the Company has already repaid GORTT more than the total it advanced for the construction of the 720MW Power Facility,” D’Andrade said.

Looking at TGU’s growth and expansion plans, D’Andrade said the company’s operations in 2016 “created the ideal opportunity for increased growth as it remains a strong asset on the balance sheet of TT.” “The company now has expanded opportunities for continued contribution to GDP and GORTT’s revenues without any further injections of capital (advances) from GORTT. The company can now invest in operations and maintenance (O&M) and IPP capital expansion initiatives which can generate (or retain at home) foreign exchange as it creates additional high valued jobs for nationals of TT. The company is currently exploring opportunities within TT and the wider Caribbean area as a first step.” D’Andrade pointed out though that “these opportunities would not be possible” if TGU was not an owner of an Independent Power Producer (IPP).

He later warned that if the GORTT and the people of TT were to lose ownership of the company and/or TGU “there will be crucial consequences.”