The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A proposed oil recovery plant has agreed to expand its footprint by 20 per cent as part of a major redevelopment of Freeport Harbour, Tribune Business can reveal.

Freeport Harbour Company’s proposal, referred to as the ‘Billy Cay Project’, is detailed in an announcement by UK-listed TXO Plc, which owns 30.17 per cent of Grand Bahama Group - the company behind the hydrocarbon recovery plant.

Grand Bahama Group, which will operate the plant via is wholly-owned subsidiary, Morgan Oil Marine (Bahamas), said in the statement published by TXO: “The Board were approached by the Freeport Harbour Company (FHC) and invited to enter discussions on the planned redevelopment of the harbour.

“Grand Bahama Group wishes to play a significant and active part in the Port, both prior to and post its redevelopment, and as a result have agreed to lease additional land lots 5A, 6A, 7A and 8A over and above existing, but amended, lots 9A, 10A, 11A and 12A.

“This increases Grand Bahama Group’s total acreage from approximately 3.5 acres to 4.2 acres, and the quayside frontage from approximately 800ft to 1,600ft.”

No specifics were given on the redevelopment or what the ‘Billy Cay Project’ might be, TXO and Grand Bahama Group merely adding: “Freeport Harbour Company will announce full details of the Billy Cay Project in due course.”

Freeport Harbour Company is owned 50/50 by Hong Kong-based conglomerate, Hutchison Whampoa, and the Grand Bahama Port Authority’s affiliate, Port Group Ltd.

Hutchison Whampoa controls Freeport Harbour Company’s management, and is likely to be holding the expansion plans close to its chest. Sherry Brookes, its corporate affairs executive, did not return a Tribune Business phone message seeking comment last night.

It is likely, though, that the ‘Billy Cay project’ will have been one of the topics, along with the long-awaited Freeport Container Port expansion and Reef Village re-opening, discussed between Prime Minister Perry Christie and senior Hutchison executives and the GBPA’s owners in London recently.

Still, Tribune Business contacts confirmed that Billy Cay was a man-made island, situated in the middle of Freeport Harbour, that is often blamed for causing hurricane-related flooding on Grand Bahama’s north shore.

“It’s a big piece of land,” one source said. Another suggested that the ‘Billy Cay project’ might involve excavating and dredging the island to remediate the flooding issue.

This, they added, could also become part of the Freeport Container Port expansion by freeing up more land for dockage and storage, while also freeing up more space for Grand Bahama Group.

The company, in its announcement via TXO, said the decision to lease more land had delayed both the completion of its final Environmental Impact Assessment (EIA) and start of construction on the oil recovery plant.

“This land represents the last free land available within the harbour for the next 15 to 20 years, and is therefore viewed to be of even greater value,” Grand Bahama Group said of its new real estate.

“The new plans were agreed and received on October 8, 2013, and the EIA will be finalised and submitted upon Grand Bahama Group entering into a new lease that is currently being prepared by both parties’ respective lawyers.”

Grand Bahama Group’s project is to construct an oil recovery and recycling facility, taking waste oil and slop from ships calling on/visiting the island for repairs and other purposes and converting it to heavy fuel oil that could be used by Grand Bahama Power Company and others.

TXO/Grand Bahama Group said EIA approval should be received before year-end, a development that would initiate construction work at the site.

And they added that they were in talks with a Bahamian group to carry out this work in exchange for either cash or an equity stake in the oil recovery plant.

“Works will include ground works, an injection well, berms, pads, tanks, a dock, car parking, laboratory, offices and warehousing,” the statement said.

“Grand Bahama Group and TXO are in final negotiations with a major Bahamian consortium that have expressed and interest in carrying out such works in exchange for cash and/or equity in Morgan Oil Marine.”

Grand Bahama Group said the first construction phase would be funded from retained earnings, and be fully operational by the 2014 first quarter, “with an ability to process up to 800 gallons per minute”.

“Further phases such as a Bilge Water treatment facility, Marine Gas Oil refinery and Ultra Low Sulfur Diesel Plant will be funded partly out of retained profits and/or debt finance as soon as the volumes collected warrant the same,” the company added.

Tim Baldwin, TXO’s chairman, said: “TXO is pleased that Grand Bahama Group as a whole has now started to generate positive cash flows, and is delighted with the increased opportunity afforded by the additional land in Freeport. The delay in commencing construction is offset by the improved commercial plan being put in place and the appointment of Ian Roos.

“Shareholders are reminded that the investment agreement with Grand Bahama Group provides all the customary minority protection rights, and provides for a dividend policy where a minimum 60 per cent of net distributable profits have to be distributed by way of dividend,” he added.

“That said, with on-going investment into its own development, it is unlikely that Grand Bahama Group will be able to declare a full dividend until after the financial year ending December 2014.

“There has been increasing levels of interest from Bahamian investors, and the Board is continuing discussions in this regard. Further updates in respect of Grand Bahama Group will be posted throughout the coming financial year as and when the situation allows.”