The fu­ture of Ni­Quan’s gas-to-liq­uids (GTL) plant lo­cat­ed on the com­pound of moth­balled Petrotrin re­fin­ery at Pointe-a-Pierre is un­cer­tain un­less it can raise mon­ey—to the tune of hun­dreds of mil­lions—to pay off its debts (the most ur­gent be­ing for nat­ur­al gas), and re-en­gage ei­ther the Trinidad and To­ba­go Up­stream Down­stream Com­pa­ny (TTUDEO­CL) or the Na­tion­al Gas Com­pa­ny (NGC) for an­oth­er con­tract.

The plant has no con­tract for nat­ur­al gas, no per­mis­sion to op­er­ate from the Min­istry of En­er­gy and En­er­gy In­dus­tries (MEEI), and is now of­fline.

Ni­Quan’s cred­i­tors—lo­cal and in­ter­na­tion­al—are at the risk of los­ing hun­dreds of mil­lions and jobs are on the line.

Last week, Ni­Quan’s chair­man John An­drews lever­aged his cred­i­bil­i­ty and asked the Gov­ern­ment to up­hold the “sanc­ti­ty of con­tract,” re­fer­ring to the gas sales con­tract, which was ter­mi­nat­ed last month.

This week, the Sun­day Guardian ex­am­ines what un­fold­ed over the past three years from pub­lic in­for­ma­tion avail­able from in­vestors, rat­ing agen­cies, and court fil­ings, in­clud­ing sev­er­al let­ters in which the spe­cial pur­pose com­pa­ny set up to sup­ply nat­ur­al gas to Ni­Quan called on it to pay for gas sup­plied.

Asha Javeed

Lead Ed­i­tor In­ves­ti­ga­tions

asha.javeed@guardian.co.tt

On pa­per, Ni­Quan was a neat prospect—an in­no­v­a­tive plant pro­duc­ing clean fu­el, the bulk of in­fra­struc­ture al­ready built out, and in a coun­try where it can ac­cess nat­ur­al gas to sup­ply it.

In re­al­i­ty, it strug­gled with tech­ni­cal is­sues and cash flow con­straints that im­ped­ed its abil­i­ty to im­me­di­ate­ly ad­dress and erase op­er­a­tional chal­lenges.

Its mis­for­tunes were mul­ti­plied by the pan­dem­ic and two ma­jor in­ci­dents on its com­pound–an ex­plo­sion in April 2021 and the June 15 ac­ci­dent which sub­se­quent­ly led to the death of a con­trac­tor, Al­lan­lane Ramkissoon.

And what was once a key sell­ing point to in­vestors–a 15-year nat­ur­al gas sup­ply con­tract and a take-or-pay prod­uct off­take agree­ment with Paria Fu­el Trad­ing Com­pa­ny–has been scut­tled.

But why and how did the start­up stall? Es­sen­tial­ly, Ni­Quan was fi­nan­cial­ly ham­strung.

First, it was not well cap­i­talised. Ni­Quan ran on cap­i­tal it raised from bonds and to date, it has had five ex­ten­sions from its bond­hold­ers which are due.

But it lacked cash flow and the abil­i­ty to gen­er­ate it–mon­ey to pur­chase new equip­ment to re­place faulty ones and mon­ey to pay for bills in­curred es­pe­cial­ly to the TTUDECOL for nat­ur­al gas, where that debt is over US$21 mil­lion. The com­pa­ny was al­so sub­ject to cur­tail­ment is­sues which has af­fect­ed the down­stream sec­tor.

Fur­ther­more, it was un­able to meet its own dead­lines set for a Lenders Re­li­a­bil­i­ty Test (LRT)—to demon­strate to the project fi­nanciers that the plant could op­er­ate for 72 hours un­in­ter­rupt­ed and pro­duce a ca­pac­i­ty of 2,400 bar­rels a day–and an ef­fec­tive Com­mer­cial Op­er­a­tions Date (COD).

The LRT and the COD were crit­i­cal to Ni­Quan.

The LRT would have al­lowed Ni­Quan to go back to its lenders to re­fi­nance its ex­ist­ing debt. On March 16, 2023 rat­ing agency Cari­CRIS not­ed that if Ni­Quan was not able to achieve op­ti­mal pro­duc­tion by June 30, 2023, it would af­fect its abil­i­ty to re­fi­nance the ex­ist­ing notes or ob­tain ap­proval for a fur­ther ex­ten­sion by note­hold­ers by Ju­ly 31, 2023.

It not­ed that the in­abil­i­ty to achieve cer­ti­fi­ca­tion of the full name­plate ca­pac­i­ty of 2,400 bar­rels per day “ad­verse­ly im­pact­ed the com­pa­ny’s abil­i­ty to se­cure time­ly re­fi­nanc­ing.”

As for the COD, Clause 2.7 of Ni­Quan’s con­tract with TTUDECOL not­ed that if the COD was not at­tained six months af­ter Ni­Quan ad­vised, the com­pa­ny still had to pay TTUDEO­CL for 90 per cent of the Dai­ly Con­tract­ed Quan­ti­ty.

In a state­ment by An­drews, the chair­man of Ni­Quan, last week, the com­pa­ny said it did not breach its fi­nan­cial com­mit­ments to the TTUDEO­CL.

“Ni­Quan is not in breach of its fi­nan­cial con­trac­tu­al oblig­a­tions with its gas sup­pli­er. The Ni­Quan con­tract stip­u­lates that pay­ments are not due to its sup­pli­er un­til the plant achieves the Com­mer­cial Op­er­a­tions Date. Fac­tu­al­ly, Ni­Quan made nu­mer­ous at­tempts to ar­rive at an am­i­ca­ble res­o­lu­tion, but were even­tu­al­ly con­strained to seek reme­dies, some of which are cur­rent­ly be­fore the courts and there­fore be­yond fur­ther com­ment,” the state­ment said.

Ni­Quan’s le­gal bat­tle with the State was premised on the sanc­ti­ty of a con­tract.

When it filed its ap­peal of the judg­ment in its at­tempt to get an in­junc­tion com­pelling the re­sump­tion of nat­ur­al gas sup­plies, Ni­Quan told the Sun­day Guardian that, “Ni­Quan’s ac­count with Trinidad and To­ba­go Up­stream Down­stream En­er­gy Op­er­a­tions Com­pa­ny Lim­it­ed (“UD”) was ful­ly paid up to the April 6, 2023. All oth­er amounts claimed by UD are ei­ther not due and payable or oth­er­wise in dis­pute.”

Nei­ther Ni­Quan nor TTUDECOL stat­ed how much was paid in April.

Time­line to ter­mi­na­tion

A re­view of doc­u­ments shows that Ni­Quan has bro­ken com­mit­ments to its project and has been ha­bit­u­al­ly delin­quent in re­pay­ing sums owed to TTUDEO­CL for nat­ur­al gas de­liv­ered to it.

* On Sep­tem­ber 5, 2019, Ni­Quan ad­vised TTUDEO­CL that its rea­son­able es­ti­mate of the pre-start-up date was April 27, 2020, its ini­tial de­liv­ery date was Ju­ly 30, 2020, with its COD at Au­gust 30, 2020.

* By Feb­ru­ary 2021, it said that once full name­plate pro­duc­tion had been reached and sta­bilised, it would con­duct the LRT af­ter which com­mer­cial op­er­a­tions would be de­clared.

“As we had in­formed you, that would trig­ger the on­set of our abil­i­ty to treat with the in­voic­ing mat­ters you had raised,” a let­ter from its founder and chief vi­sion­ary of­fi­cer Ains­ley Gill had said.

Based on pub­licly filed court doc­u­ments, here is now the in­ter­change be­tween Ni­Quan’s Gill and TTUDEO­CL’s for­mer chair­man Richard Je­re­mie un­fold­ed:

* On April 14, 2021, TTUDEO­CL made Ni­Quan aware that de­spite the April 7, 2021 ac­ci­dent that oc­curred at the plant, it was fi­nan­cial­ly ob­lig­at­ed to meet its bills;

* On April 29, 2021, Ni­Quan pro­posed a pay­ment plan to TTUDEO­CL which it ac­cept­ed;

* On May 24, 2021, TTUDEO­CL wrote to Ni­Quan ex­plain­ing that its “fer­vent ef­forts” to se­cure the 3MM­scf/d of gas from State-owned Na­tion­al Gas Com­pa­ny (NGC) were “ren­dered fee­ble and in­ef­fec­tive” be­cause it has been un­able to pay our sup­pli­er (NGC) for the gas that was sup­plied from Ju­ly 2020 through March 2021;

* On May 25, 2021, Ni­Quan as­sured that it would pay, but in­di­cat­ed it was ex­pe­ri­enc­ing tem­po­rary cash flow con­straints. Ni­Quan not­ed that it was rais­ing fi­nanc­ing from JMMB who re­ceived “ ir­rev­o­ca­ble in­struc­tions to make that pay­ment di­rect to TTUDEO­CL from the pro­ceeds of the fi­nanc­ing ex­pect­ed”. At this time, Ni­Quan not­ed that it would not re­quire gas un­til Ju­ly 2021 for the pur­pose of re-start­ing the com­mis­sion­ing and ramp­ing up the Plant to at­tain LRT and full com­mer­cial pro­duc­tion in Au­gust 2021;

* On Ju­ly 1, 2021, TTUDEO­CL wrote to Ni­Quan on non-pay­ment of in­voic­es. “Giv­en Ni­Quan’s po­si­tion and our sub­se­quent ne­go­ti­a­tions where you pro­vid­ed a firm com­mit­ment to make pay­ments by June 30, 2021, TTUDEO­CL re­quest­ed and re­ceived an ex­ten­sion of time to make pay­ments to the NGC on or be­fore June 30, 2021. TTUDEO­CL specif­i­cal­ly ad­vised you that in the con­text of a pro­longed non-pay­ment of in­voic­es, NGC was con­sid­er­ing all op­tions avail­able to it in­clud­ing ter­mi­na­tion of the con­tract,” Je­re­mie wrote. At that point, TTUDEO­CL is­sued a no­tice of dis­pute to Ni­Quan.

* On Ju­ly 15, 2021, Ni­Quan wrote to TTUDEO­CL that it re­ceived ap­proval from Re­pub­lic Bank Ltd and all of the note­hold­ers in­vest­ed un­der its cur­rent se­nior se­cured short-term note in­stru­ment (the “Bridge Fa­cil­i­ty”), to up­size the prin­ci­pal amount and to ex­tend the re­pay­ment date to March 31, 2022.

Gill not­ed that in­vestors were cat­e­gor­i­cal­ly on­ly pre­pared to dis­burse funds for the spe­cif­ic pur­pose–the cost of re­pairs to the blown-out Hy­dro­c­rack­er Strip­per Col­umn and to im­ple­ment all oth­er plant turn­around and safe­ty fea­tures to at­tain LRT and COD.

As such, Gill re­quest­ed a mora­to­ri­um un­til the at­tain­ment of LRT and COD in a few months’ time. “How­ev­er, we would re­it­er­ate that the mora­to­ri­um is re­quired ur­gent­ly be­cause un­less we have it, fund­ing will not be pro­vid­ed for the com­ple­tion of the re­pairs, turn­around, com­mis­sion­ing, and at­tain­ment of LRT and COD. De­lays in funds, of course, have a di­rect im­pact on the sched­ule for at­tain­ing LRT and COD, and ul­ti­mate­ly the abil­i­ty of Ni­Quan to meet its pay­ment oblig­a­tions to TTUDEO­CL and Ni­Quan’s many oth­er ven­dors and con­trac­tors,” he said;

* On Ju­ly 22, 2021, Je­re­mie wrote to Gill ex­plain­ing that TTUDEO­CL was “per­plexed” by Ni­Quan’s let­ter “in which there seems to be a ca­su­al re­vo­ca­tion by Ni­Quan to meet its com­mit­ment to pay TTUDEO­CL for the gas sup­plied dur­ing the last twelve (12) months”.

“It is not the in­ten­tion of the Gas Sales Con­tract that Ni­Quan (the Buy­er) can take an un­fet­tered num­ber of years to achieve com­mer­cial op­er­a­tions of the GTL plant with­out mak­ing any pay­ments for the gas re­ceived,” said Je­re­mie. He said that TTUDEO­CL is un­able to agree to a mora­to­ri­um;

* On Au­gust 12, 2021, TTUDEO­CL wrote again to Ni­Quan seek­ing pay­ment. “We are cer­tain that you would ap­pre­ci­ate that there is a lim­it to the ac­com­mo­da­tion that TTUDEO­CL can con­tin­ue to of­fer to Ni­Quan at this time, as we have a re­spon­si­bil­i­ty to act in the best in­ter­est of our com­pa­ny, and of our share­hold­er, the Gov­ern­ment of the Re­pub­lic of Trinidad and To­ba­go,” it said.

* On Au­gust 23, 2021, Ni­Quan said that it would make pay­ments due on Sep­tem­ber 30 and Oc­to­ber 30, 2021, re­spec­tive­ly. At that time Gill ad­vised that COD was now the end of Oc­to­ber 2021;

* On Oc­to­ber 2, 2021, Ni­Quan said COD was pushed back to De­cem­ber 15, 2021;

* On De­cem­ber 1, 2021, TTUDEO­CL not­ed that pay­ments were due and al­lowances were made for the de­lay. “Fail­ure by Ni­Quan to make the sec­ond and third pay­ments in full as agreed is a breach of our Let­ter Agree­ment,” it said.

* On March 7, 2022, Ni­Quan not­ed that the LRT and COD would oc­cur by the end of April 2022 and would gen­er­ate mon­ey for the com­pa­ny;

* On May 25, 2022, nat­ur­al gas re­turned to the plant;

* On Au­gust 17, 2022, TTUDEO­CL wrote to Ni­Quan and gave no­tice of a force ma­jeure event which, "as we have been ad­vised by our sup­pli­ers, is the falling of net­work pres­sures re­sult­ing in short­ages in gas sup­ply;"

* On Au­gust 18, 2022, TTUDEO­CL sent a no­tice of late pay­ment to Ni­Quan. “From a com­mer­cial per­spec­tive, there is a lim­it to the clemen­cy for Ni­Quan that can be ac­com­mo­dat­ed by TTU DE­O­CL, as this com­pa­ny must sat­is­fy its own fi­nan­cial oblig­a­tions to its sup­pli­ers,” it said;

* By Au­gust 19, 2022, Ni­Quan said its at­ten­tion and re­sources are fo­cused on at­tain­ing LRT and COD by the end of Au­gust 2022;

*On Sep­tem­ber 2, 2022, TTUDEO­CL told Ni­Quan that arrange­ments are be­ing made to fa­cil­i­tate it with the req­ui­site vol­umes of gas to at­tain its LRT and COD start­ing from Sep­tem­ber 1 2, 2022;

* On Oc­to­ber 10, 2022, Ni­Quan not­ed that it was late on its pay­ments but that cur­tail­ment was af­fect­ing the plant;

* On Oc­to­ber 1 8, 2022, TTUDEO­CL again called on Ni­Quan to pay its bills. “TTUDEO­CL is un­fair­ly be­ing asked to await the LRT and achieve­ment of the COD for pay­ment when such a po­si­tion was not tak­en in ne­go­ti­at­ing the terms of the Let­ter Agree­ment,” it said;

* On No­vem­ber 23, 2022, TTUDEO­CL in­formed Ni­Quan that its re­quest for gas to per­form LRT while tak­ing gas be­low the re­quired 27.4mm­scf/d was be­com­ing dis­rup­tive to the NGC op­er­a­tions to sup­ply gas to its cus­tomers.

“Fur­ther, the NGC Con­trol room has re­quest­ed that the dai­ly gas re­quire­ment be made at least 24 hours in ad­vance. This has not been fol­lowed by Ni­Quan in the last weeks. TTUDEO­CL is here­by re­quest­ing that Ni­Quan pro­vide gas in­for­ma­tion as re­quest­ed. In ad­di­tion, an up­date on the start of the LRT is ur­gent­ly need­ed. As point­ed out in my last email to you, con­tin­ued de­lays in the per­for­mance of the LRT and non-pay­ment of out­stand­ing monies owed may re­sult in TTUDEO­CL gas sup­pli­er tak­ing ac­tion,” Je­re­mie said;

* On De­cem­ber 7, 2022, Ni­Quan said the LRT would be com­plet­ed on De­cem­ber 19, 2022, and re­quest­ed a grace pe­ri­od to pay bills due;

* On Jan­u­ary 6, 2023, TTUDEO­CL told Ni­Quan that NGC can­not make any com­mit­ments at this time as they are cur­rent­ly un­der cur­tail­ment. “As you are aware, TTUDEO­CL/NGC have made best ef­forts to fa­cil­i­tate Ni­Quan’s LRT in the past and it has not hap­pened,” Je­re­mie said;

* On Jan­u­ary 16, 2023, Ni­Quan paid US$1,100,000 to TTUDEO­CL. “At cur­rent we are on­ly re­ceiv­ing 5 mm­scf/d, and as a con­se­quence, this con­tin­ues to im­pact at­tain­ment of LRT and sus­tained pro­duc­tion hence our com­mer­cial vi­a­bil­i­ty is at se­ri­ous risk. We re­al­ly need TTUDEO­CL to source the req­ui­site amount of gas 24.7 mm­scf/d, hope­ful­ly to­day so that we can im­me­di­ate­ly go back in­to pro­duc­tion, achieve LRT and COD,” Gill said.

* On Feb­ru­ary 13, 2023, Ni­Quan achieved LRT but at re­duced pro­duc­tion rates (45 per cent of the name­plate ca­pac­i­ty).

“We are ex­pect­ing to in­crease the pro­duc­tion rates to around 70 per cent in the next three weeks and main­tain that pro­duc­tion un­til we re­ceive and in­stall four new spe­cial­ist mem­branes to the Plant’s Prism Sec­tion, which are in or­der from the USA and ex­pect­ed in Ju­ly 2023, at such time we will be able to at­tain 100 per cent of the name­plate and the COD,” Gill said.

* On June 15, 2023, an ac­ci­dent oc­curred at Ni­Quan’s plant which sub­se­quent­ly led to the death of a con­trac­tor at the plant.

* On Ju­ly 10, 2023, eight in­voic­es to­talling US$14,727,137.45 for gas sup­plied to Ni­Quan un­der the sub­ject Con­tract (“the Con­tract”) for the pe­ri­od May to De­cem­ber 2022 were is­sued to Ni­Quan on April 5, 2023, and three in­voic­es to­talling US$4,470,687.10 for gas sup­plied to Ni­Quan un­der the sub­ject Con­tract for the pe­ri­od Jan­u­ary 2023 to March 2023 were is­sued to Ni­Quan on May 11, 2023. No­tices of Late Pay­ment were is­sued to Ni­quan on May 19, 2023, and June 1, 2023. The com­pa­ny was in­formed that if pay­ment was not made in 30 days, the con­tract would be ter­mi­nat­ed.

* On Au­gust 7, 2023, Ni­Quan made a re­quest for a com­mer­cial sup­ply of gas from TTUDEO­CL with a com­mence­ment date of Au­gust 8, 2023.

* On Au­gust 14, 2023, TTUDEO­CL ter­mi­nat­ed the con­tract with Ni­Quan.” Ni­Quan has ma­te­ri­al­ly breached the Con­tract and has failed to rem­e­dy that breach with­in thir­ty (30) days of our 10th Ju­ly 2023 no­tice. In these cir­cum­stances, please be ad­vised that pur­suant to Ar­ti­cle 13.1 (b) of the Con­tract, we here­by ter­mi­nate the Con­tract with im­me­di­ate ef­fect,” the com­pa­ny said.

* On Au­gust 15, Ni­Quan sought in­junc­tive re­lief in the courts.

* On Au­gust 21, Jus­tice Kevin Ram­cha­ran de­nied Ni­Quan an in­junc­tion to com­pel the State to sup­ply nat­ur­al gas to the plant. Ni­Quan has since ap­pealed the mat­ter.