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Water Corp Can't Avoid Payout To Consolidated

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Bradley Roberts

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Water & Sewerage Corporation cannot escape negotiating a multi-million dollar price to purchase a New Providence water plant, as its chairman yesterday denied it had already decided to dump the existing BISX-listed operator.

A May 23, 2013, legal opinion sent by the Attorney General’s Office to Robert Deal, the Corporation’s assistant general manager, strongly suggests that it - and the Christie administration - have decided not to extend Consolidated Water’s Windsor reverse osmosis plant contract for another five years.

The opinion, which has been obtained by Tribune Business, described the Windsor water supply agreement as ending on May 2013, and that 
“the Corporation does not wish to renew it”.

However, Bradley Roberts, the Water & Sewerage Corporation’s chairman, last night denied that a decision to end Consolidated Water’s contract had already been taken, suggesting the Attorney General’s Office legal opinion had gone further than the actual position.

Mr Roberts told Tribune Business that the Cabinet would ultimately decide Windsor’s fate based on the ‘business case’, and recommendations made by the Corporation’s Board and management, within “the next 30 days”.

He disclosed that three other groups, besides Consolidated Water, had “expressed an interest” in taking over the Windsor plant’s operations and supplying the Corporation and its customers with water.

And, with Consolidated Water having reached the total supply volume specified in the Windsor contract earlier this month, Mr Roberts said it had agreed a two-month extension with the Corporation until the Government made a final decision.

Still, there is little doubt, based on the legal opinion provided to Mr Deal, that the Corporation’s sentiments are to find a replacement for Consolidated Water when it comes to operating the Windsor plant.

The document obtained by Tribune Business suggests that the Water & Sewerage Corporation squeeze the purchase price downwards by reminding Consolidated Water of its “17 tax free years” as a monopoly supplier of water to it

The Attorney General’s Office’s opinion indicates that the Corporation was exploring whether there was a legal means of ‘doing it on the cheap’, as it asked the Government’s law office to determine whether it or Consolidated Water owned the physical plant.

Noting its instructions, the Attorney General’s Office said the Corporation had asked it for a legal opinion “detailing the Corporation’s options at the conclusion of the contract with respect to ownership of the plant.

“Is the plant owned by the contractor [Consolidated Water] after the contract expires, and can only be obtained by Water & Sewerage Corporation at a negotiated/agreed purchase price, or does the plant revert to the ownership of the Corporation at the conclusion of the contract?”

The former situation - Consolidated Water owning the plant - would be a major obstacle to the Water & Sewerage Corporation’s plans to replace it, given the time and, especially, money that would be involved.

Given that the Corporation would need to come up with a multi-million dollar sum, and in its cash-strapped position that would almost certainly mean an increased government/taxpayer subsidy, that would more than likely force it to stick with Consolidated Water

And, setting out the background, the Attorney General’s Office gave the strongest indication that the Water & Sewerage Corporation is seeking a new operator/partner for Windsor.

It wrote: “The contract period will end in May 2013, and the Corporation does not wish to renew it.

“Instead, it would like to purchase the plant and have another party operate the plant and provide the Bahamas with desalinated water.”

Mr Roberts, though, denied that the Government had decided to dump Consolidated, although he confirmed that the document obtained by Tribune Business was genuine.

“No decision has been taken on that,” he said. “I know a legal opinion was sought as to what the rights are and so forth. We merely asked for an opinion as to what the Corporation’s rights are, and what the operator’s rights are.”

Confirming that the Cabinet would likely decide the Windsor plant’s extension within the next 30 days, Mr Roberts said the Corporation and Consolidated Water had agreed to extend the latter’s tenure to early September 2013.

“There are several companies who have expressed an interest in it, at least three,” he told Tribune Business.

The Attorney General’s Office concluded that the Water & Sewerage Corporation was not required to give Consolidated Water any notice of a decision not to renew its contract.

While the BISX-listed group was allowed a two-month ‘demobilisation’ period under the contract, the Attorney General’s Office added that it was also responsible for dealing with “any environmental damage” at the Windsor site.

Still, the Attorney General’s Office concluded that the Water & Sewerage Corporation could not escape paying Consolidated Water a purchase price for the plant equipment and facilities.

Windsor’s capital cost had initially been pegged at $10.658 million, and the Attorney General’s Office said: “The parties will have to negotiate the price for the plant in accordance with the contract.

“The contract does not prohibit negotiation. In this agreement the Corporation provided the land and the contractor provided the plant.

“In determining a price, the Corporation may seek to remind the contractor of the value of the 17 tax-free years he has had free use of the land, while being allowed to be the sold producer of desalinated water in the Bahamas for that entire period.”

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