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Grandstanding and grinding negotiations

Sunday, February 4, 2018

If what we have read in the newspapers on the CNC/NGC standoff is true then the Caribbean Nitrogen Company (CNC), which had shut down its ammonia plant because it couldn’t reach a price agreement with the National Gas Company, is now willing to resume negotiations. According to one report, it wants to be “transparent” with Government and the NGC and to “compromise” in finding a solution that “supports all stakeholders”. That approach should bring more productive results. Reportedly, it said shutting down operations was not a desirable outcome as the company has invested billions of US dollars in infrastructure, plants and people and has been a key driver in the development of T&T’s Petrochemical business.

Foreign investment is of value and vital importance to our economy because it brings technical expertise, increases productivity, creates jobs and generates business for local firms. The necessity for competitiveness based on a quality enabling environment rather than harmful subsidies and incentives is critical, and there should be transparency and fairness in the pursuit of profits.

If NGC cannot be profitable, then it should get out of the business. It has generated many economic and social benefits over the years, but obviously, its business model is under pressure and adjustments are necessary if it is to stay in business. It has no option but to seek terms and conditions that would facilitate a decent return on its investments and win/win results with its stakeholders.

Zero-sum games where one side gets all that it wants and the other is left to wallow in loses doesn’t serve the national interest or anyone else’s for that matter. Often in negotiations, both parties desire the same outcome, and there are also times when specific features matter to one side and not the other. Both CNC and NGC want a fair return on their investments after all, how else could they survive? No one wants job losses and it is disconcerting when one party creates the impression that it has no real commitment to its stakeholders—get what it wants or nothing. It is impertinent for CNC to demand an audit of NGC’s value chain to ascertain the profitability of its operations not because of the principle of an audit, or that one isn’t required if it hasn’t been done, but that CNC doesn’t think it too should have a similar disclosure. Show NGC your operational audits and management accounts! If NGC were a private conglomerate such a demand will be unthinkable. That kind of posturing shows how government and state enterprises are viewed—as pushovers who would cave in because they fear the political price when workers lose their jobs, investors exit and national income hangs in the balance.

Contract negotiation is a thorny and complicated process that is about current and future relationships, and the survivability of all parties. Questions recently raised by the Opposition in Parliament seemed dubious. The Government is right not to position itself in a manner that would undermine the efforts of NGC’s board and management in negotiating a commercial contract. One assumes it has NGC’s back. The Opposition members didn’t give the impression they were aware of or concerned about the larger picture of NGC’s role in a competitive global industry. They were interested in Government’s intervening to save jobs, but such meddling could compromise the Board of NGC. That doesn’t preclude the Cabinet taking decisive action in the national interest if and when necessary. What authority and suasion would NGC have with other clients if the Government intervenes and is perceived to be dictating a settlement? Evidently, there are those amongst us who need to reflect on the Government’s role with respect to state boards, the citizens’ role as owners of national assets, and the work ethic required to motivate foreign investors to continue making significant contributions to our economy.

It is clear the NGC Board is not prepared to be submissive but to act in the interest of all stakeholders.


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