Lawmakers support $257M deal for Sasol fuel plant

08 16, 2013 by Shreveport Times

Lawmakers reversed course Thursday and backed a contract with South African energy company Sasol Ltd. to build a multibillion-dollar fuel plant in southwest Louisiana in exchange for $257 million in state incentives over a decade.

The Joint Legislative Committee on the Budget agreed to the contract without objection, a week after delaying a vote on the project because committee members said they had too little information about the potential costs to the state budget.

On Thursday, lawmakers said they had received the details they sought from Gov. Bobby Jindal's administration to be able to analyze the project and determine the fuel plant would be an economic boon to the state.

Sasol will spend at least $14.5 billion to build a complex near Lake Charles that will turn natural gas into chemicals, diesel and other fuels. The company expects to create 1,272 new jobs at the facility.

Jindal's economic development secretary, Stephen Moret, cited an LSU economic study that said the project is expected to generate $873 million in state taxes over 15 years and billions of dollars in new business sales and household earnings over the same time.

"This project is the biggest single economic development project in the history of our state," Moret said.

Moret said the company won't get the incentives from the state unless it meets certain hiring benchmarks and job requirements.

Greg Albrecht, chief economist for the Legislative Fiscal Office, disagreed with the LSU study. He said the state will pay more for the project than its treasury will receive in economic return.

"You're being asked to believe this is going to have no effect on your budget. This is going to affect your budget. It costs money to do these things," Albrecht told the committee.

State incentives include millions of dollars in tax breaks, a $20 million worker training facility and a $115 million payment to the company for land and infrastructure that will be left to a future governor's administration and lawmakers to fund.

Sen. Dan "Blade" Morrish, R-Jennings, said there would be tremendous amounts of economic activity associated with a multibillion-dollar facility, while Sen. Mike Walsworth, R-West Monroe, predicted increased local sales taxes from the construction and the job creation.

House Speaker Chuck Kleckley, R-Lake Charles, lives in the region where Sasol is building the massive project. He said the company is buying hundreds of homes, building roads and hiring large numbers of people, all of which will drive up tax income.

Albrecht said while the state treasury will lose money, that doesn't mean the project is a bad idea, just that lawmakers have to decide whether the costs are outweighed by the benefits.

"In your judgment we won't collect more money than we're paying out?" Senate President John Alario, R-Westwego, asked.

"No sir, we won't," Albrecht replied.

Also approved without objection Thursday by the committee was a smaller contractual agreement with Lockheed Martin Corp., to build fuel tanks at NASA's Michoud assembly center in eastern New Orleans. State incentives were estimated to be about $6 million over nine years, with Moret saying the company would hire at least 166 new employees.