By NEIL HARTNELL
Tribune Business Editor
THE developer of Baha Mar's $102.3 million Seawater District Cooling (SDC) system has pledged that Bahamian labour would perform 75 per cent of the construction work, accounting for a collective 80,000 man hours.
But, while welcoming the promise by Ocean Thermal Energy Corporation (OTEC) and its engineering/construction partner, DCO Energy, as "a good deal" on the face of it, Godfrey Forbes, the Bahamian Contractors Association's (BCA) president, told Tribune Business yesterday that more information was required to determine whether the project would be truly beneficial for the industry and its workers.
He reiterated that major foreign direct investment (FDI) projects often worked "to the detriment" of Bahamian contractors, as the developer and their foreign construction partners often cherry-picked the best employees from local companies, rather than hire the latter.
The Environmental Impact Assessment (EIA) for the proposed Baha Mar SDC, which OTEC and DCO Energy will construct under a build/own/operate arrangement and 30-year energy supply contract, said: "Construction of the SDC system would rely heavily on the Bahamian workforce.
"Local construction contractors would be used as much as possible. It is anticipated that approximately 80,000 man-hours of local labour would be used during construction of the system, representing approximately 75 per cent of all labour expected for the project."
Giving a cautious welcome to the pledge, Mr Forbes said the BCA - and wider Bahamian construction industry - needed more detail as to what was meant by using Bahamian contractors "as much as possible". He also questioned what the "75 per cent" referred to, and whether this was tens or hundreds of workers.
"That is always good," he said of the OTEC/DCO Energy pledge, "yet at the same time we need to find out a bit more; as to whether that means Bahamian contractors.
"We speak a lot when foreign investors come in and deal with development, and they do go ahead and create jobs. But, in some cases, that is to the detriment of the local contractor.
"Rather than go ahead and seek to hire local contractors who have these persons already employed, they seek to attract and hire those people away from those contractors. As a result, local contractors are left with the short end of the stick, as they lose their qualified, trained labour force they have trained up."
Mr Forbes added: "That is always a concern that we as local contractors have.
As much as we would like to embrace these opportunities for work, and more capital spent in the local economy, we'd like there to be more effort where Bahamian contractors are given the opportunity to play a major role in these developments.
"If we can go ahead and get more Bahamian contractors involved, and if there is a need for foreign contractors to come in, we must have legitimate joint ventures, so the technology and knowledge is transferred and, when the project is completed, local contractors have that information they can utilise for future projects."
The OTEC/DCO Energy SDC plant, which involves construction of a 12,000 tonne system that will provide Baha Mar's $2.6 billion development with its air conditioning needs, via chilling capacity from deep sea water, is certainly a specialised project that could provide Bahamian contractors with valuable intellectual property for the future.
This is especially significant, given that the Baha Mar SDC project could, if successful, pave the way for other Bahamian hotel properties to invest in and adopt similar systems and other renewable energy technology.
Meanwhile, noting that OTEC/DCO Energy's 75 per cent labour pledge was "within itself, a good deal", given the need to create Bahamian jobs, Mr Forbes told Tribune Business: "That will be a boost, but it's a percentage of what? It maybe 50 persons, it maybe less. It could be significant as well as trivial.
"The amount of jobs it creates determines the significance of the impact on unemployment levels in the country."
Meanwhile, the OTEC EIA revealed that the proposed SDC system would also supply all the air conditioning needs for Baha Mar's existing Wyndham and Sheraton resorts, eliminating their existing cooling towers and "seven electric compressor-driven refrigeration systems". This is significant, given that air conditioning is estimated to account for more than 50 per cent of a typical Bahamian hotel's electricity consumption.
OTEC added that its SDC plant would reduce Baha Mar's air conditioning-related electricity demands by almost 90 per cent, from 42,837 Mega Watt hours (MWh) per year to 4,512 MWh - a drop of 38,325 MWh.
Referring to its Bahamian subsidiary, OTE BM, OTEC said: "OTE BM Ltd. has estimated that the conventional cooling system would require 42,837 MWh of electricity per year to generate the 12,000 tons of air conditioning that the Baha Mar Resort and the existing Sheraton and Wyndham resorts would require.
"The use of the SDC system instead of the originally planned centrifugal compressor systems and their associated cooling towers would allow the Baha Mar resort to reduce its electricity for chiller-related cooling requirements by almost 90 per cent........
"The savings of electricity realized by operating the SDC system instead of a conventional chilling system is referred to herein as avoided electricity use. Calculations of the SDC system's avoided ton-hours of electricity, less the pumping load required to operate the system, result in a reduction of 38,325 MWh of electricity annually (from approximately 42,837 MWh to 4,512 MWh)."
Other benefits noted by the OTEC EIA were that Baha Mar would also "significantly reduce" the use of refrigerants commonly deployed in a conventional cooling system, and drop emissions of associated greenhouse gases.
"The US Department of Energy and the US Environmental Protection Agency estimate that the current emissions rate of CO2 from the generation of electricity from petroleum is 1.9 pounds of CO2 per kWh [Kilowatt hour]," the EIA said.
"Based on these data, operation of the SDC system would avoid 36,408 tons of CO2 emissions each year. Additionally, assuming 9,750 British thermal units (Btus) of oil are required to generate 1 kWh of electricity, and large commercial engines have an efficiency of 35 per cent, the purchase and consumption of 59,312 oil barrels (2.5 million gallons or 9.4 million litres) per year would be avoided on New Providence Island during operation of the SDC system."
Noting that SDC systems were a proven technology, the OTEC EIA said the Baha Mar proposal would help push the Bahamas down the renewable energy route, and result in considerable foreign exchange savings on oil imports, plus reduce the demand on BEC.
"The use of renewable energy would improve the Bahamas' energy security position by allowing the nation to diversify its power generation mix," the OTEC EIA said, quoting from the 2010 National Energy Policy (NEP).
"The SDC system would have substantial, long-term, beneficial impacts on electricity generation in the Bahamas."
Adding that the proposed SDC system required just 10.5 per cent of the electricity consumption associated with a conventional chiller system, the EIA added: "In consideration of the percentage of funds generated from tourism-related revenue and repatriated to purchase oil for local consumption (an increase from 16.6 to 26.7 per cent between 2001 and 2008), any decrease in oil consumption in the Bahamas would have a very beneficial impact on the economy and the economic independence of the islands.
"The total amount of money that would flow back into the local economy from both construction and operation of the SDC system is anticipated to be in the tens of millions of dollars .
"Overall, short-term impacts on the economy from construction-related labour increases and miscellaneous expenditures associated with the SDC system would be moderate and beneficial.
"Once operational, the long-term impacts on the economy from diversifying power generation sources on the Bahamas, coupled with the avoided consumption of large quantities of oil, would be very beneficial."
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