By NATARIO McKENZIE
Tribune Business Reporter
nmckenzie@tribunemedia.net
Some eight companies have submitted bids to joint venture with the Government and take over the Bahamas Electricity Corporation’s (BEC) operations, a Cabinet minister revealing yesterday that the Government was targeting a mid-2014 handover.
Speaking at a luncheon hosted yesterday by the Bahamas Chamber of Commerce and Employer’s Confederation (BCCEC), Kenred Dorsett, minister of the environment and housing, said the Government would move into the second phase of the bidding process around October 1.
Tribune Business understands that those parties invited to enter the second phase will have until October 30 to submit detailed pricing information on their bid – namely the price at which they would sell electricity to BEC’s transmission and distribution arm.
The Government will then select the preferred bidder, or bidders, by November 1, and is aiming to conclude negotiations with them by December 2013. With new legislation and regulations for the energy sector scheduled to be completed by March 2014, the Government is targeting a May 1 handover date to the private sector,
“With respect to the RFP process, we are pleased with the response to the RFP. Based on the information we have to date, we see a number of quality companies and consortia that have registered, and we look forward to receiving technical bid submissions by September 13,” Mr Dorsett said.
“We expect to move into a second stage of the bidding process around October 1, inviting qualified bidders to undertake detailed due diligence and submit detailed commercial proposals. Qualified bidders will be those which we believe are technically qualified, and which propose an approach that we believe is executable and makes sense for t6he Bahamas.
“Evaluation of the proposals will, in the first instance, be made by our advisors, including KPMG Advisory Services, DNV Kema, and Hogan Lovells, with recommendations being made to the Government. An evaluation committee is being established by the Government in this regard,”
Mr Dorsett added: “September 13, two days from now, will be the deadline for all registrants as a part of the process, and so as of Friday we will know who many persons have registered and who will be moving ahead with this RFP process.
“We’ll then be able to speak to it in greater detail in terms of the companies that have actually registered and the players we have in the process. But what we hope to achieve is that, by the end of the year, if we have come to some conclusion and agreement with the way forward and we’re satisfied with the proposals before the Government, and if they make sense, then we will be able to bring certain recommendations.
“Our timeline for concluding the RFP process is the end of December, and if we are satisfied with what’s before us it will enable us to begin the discussion with that service provider in the first quarter of 2014 to ensure that they will be able to takeover by mid-2014. The last time I had a discussion with KPMG, there were over eight companies that have registered, there were a few that they said were pending, so like I said, the 13th is only a short way away, and we’ll find out what the final count is on that date.”
The Government plans to create two new BEC entities into which the Corporation’s assets, liabilities and operations will be transferred: The first is a new transmission and distribution company (NewCo), which will be wholly-owned by BEC. This company will be responsible for the operation, maintenance, repair and expansion of NewCo’s electricity transmission and distribution systems, and for billing, collection and customer services.
The second company will be a new generation services company. This will be responsible for the operation, maintenance, repair and financing of BEC’s current electricity generation facilities located across the Bahamas, as well as the development of new power generation plant. It will enter into a Power Purchase Agreement with Newco.
Mr Dorsett noted that part of the Government’s commitment to energy sector reform is the introduction of renewable energy in the generation mix.
“We plan to complete the regulatory framework by early 2014. We also hope to have a Residential Energy Self-Generation Programme in place by mid-2014. By the year 2030 we would like for at least 30 per cent of our energy to be generated from renewable energy sources,” said Mr Dorsett.
Comments
Reality_Check 10 years, 7 months ago
All of the proposals thus far put to Government are quite glaring in terms of the greed of the investors behind them as evidenced by their keen desire not to acquire BEC through a Government supported privatization initiative. The investors behind each of the proposals received to date would love a "sweet profiteering" arrangement that leaves BEC and Bahamian taxpayers on the hook for the high cost of the country's electrical transmission and distribution system (covering many islands), BEC's unfunded pension liabilities, etc. etc. The eventual outcome of putting only the electrical generating plants in the hands of these investors, with a "sweet deal" contract on the back of an already financially troubled BEC, is all too obvious: BEC would soon go belly-up leaving Bahamian taxpayers saddled with funding its unsettled liabilities, and the less costly parts of its electrical transmission and distribution system would be picked up at a fire sale price by the private power plant owners. Rumour has it there are confidential internal emails from the PM’s Office floating around that show Christie has already approved a “sweet monopoly deal” for his favoured cronies to supply electrical generating capacity to BEC.
There is also the problem of the assumptions behind KPMG’s “split” model being fundamentally flawed in many respects. Just look at the arrangement between Water & Sewerage Corp and Consolidated Water; this is a classic example of why these types of deals fail.
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