The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An investor group believes it was “beyond time” to re-present its $150 million Floating Power Plant proposal to the Government, and help solve what has become “a true national emergency” in the energy sector.

John Bostwick, the ex-FNM Senator who is acting as SGI Holdings’ Bahamian attorney, confirmed that the consortium had re-submitted its generation proposal to the Christie administration last week, having crafted it like “an en suite buffet”.

He argued that the proposal, which is designed to allow the Government to “pick and choose” the options it wants, was “the perfect solution” to both the Bahamas’ short and long-term energy needs.

The 272 Mega Watt (MW) power plant, which could be operational within 180 days of SGI coming to an agreement with the Government, would not only alleviate BEC’s current generation woes and load shedding, but also provide more than enough power to meet Baha Mar’s demands in time for the $3.5 billion resort’s late Spring opening.

Mr Bostwick told Tribune Business that the Floating Power Plant proposal could also be extended into a long-term agreement if the Government so chose, and complement the Bahamas Electricity Corporation (BEC) restructuring process.

Suggesting that SGI’s offer would give the winning BEC generation bidder time to assess what it wanted to do in terms of multi-million dollar plant investments, he said: “We’re beyond flexible. We’re pliant with what they [the Government] want.”

SGI first submitted the Floating Power Plant proposal to the Christie administration in September 2012, and re-presented it following a meeting with the minister ultimately responsible for BEC, Deputy Prime Minister Philip Davis, in late August.

Mr Bostwick explained that the group made a conscious decision not to enter the BEC restructuring bidding, instead electing to offer itself as an independent power producer (IPP) and monitor the reform process’s progress.

He added that the protracted process, with no winning bidders yet announced, coupled with BEC’s increasing problems and obvious need for more generation capacity, had encouraged SGI to offer a revised proposal.

“I met with him [Mr Davis] on it a month ago, August 25, and he suggested at that time we might want to re-submit it,” Mr Bostwick told Tribune Business. “We have formally re-submitted the proposal to the Government as of last week, complete with cover letter.

“We have watched very closely the progress of the [BEC] Request for Proposal, and determined when the time was right to re-present. The timing has a lot to do with the Government confirming the RFP process has not been as successful as they had hoped, and we’ve also watched the continued failures of BEC, from one disaster to the next.”

The winning BEC bidders were supposed to have taken control of the Corporation’s respective generation and transmission and distribution (T&D) businesses by May 1 this year, a date that has now been pushed back to November 2014 at earliest.

In the meantime, BEC’s problems have only become worse. Apart from an inability to produce reliable, consistent power and meet peak summer demand loads, the Corporation’s chairman, Leslie Miller, said a new $200 million power plant was needed to meet Baha Mar’s increased energy pull.

Construction of such a plant prior to the Cable Beach development’s opening is now an impossibility, and Mr Bostwick told Tribune Business the Bahamas was now “right at the edge” of an energy crisis with 12-hour load shedding a distinct possibility.

Such a development, if it occurred, would be disastrous for the Bahamas and its tourism-dependent economy. All Bahamian businesses and households would suffer in some respect.

“The concern for me as a person is overwhelming,” Mr Bostwick said, “especially as a person in a group that has an answer. It was beyond time to re-present. I remain seriously convinced this barge is the answer. The timing is 100 per cent right.”

In his letter to the Government on SGI’s behalf, the Bahamian attorney wrote: “We stand ready, willing and able to move our Bahamian people forward, upward and onward via the speedy resolution of what has now become a true national emergency regarding the provision of clean, efficient, afforsdable energy for the residents of New Providence island. All within 180 days of agreeing and preparing to do so.”

Apart from solving BEC’s generation needs in one stroke, the attorney said the peak power cost in SGI’s proposal - $0.28 per kilowatt hour (KWh) - was lower than the Corporation’s current fuel surcharge alone, not to mention the combined surcharge and base tariff.

This translates into at least a 30 per cent saving on energy costs for Bahamian consumers and households, with Mr Bostwick explaining that the latest SGI proposal had been crafted to give the Government its desired “options”.

“The Government has the ability to come to an en suite buffet, and pick and choose,” he explained. “The pie will be divided to suit whatever they put on the table.....

“We’re giving them the option to pick and choose what they want. We’re beyond flexible; we’re pliant with what they want.”

The flexibility embraces fuel type used; a potential $50 million investment by SGI to install a smart grid and enhance BEC’s T&D infrastructure; a power purchase agreement (PPA) with BEC ranging from five to 20 years; and an offer to help remediate and clean-up the existing environmental liabilities at the Blue Hills and Clifton Pier power plants.

Mr Bostwick said the Floating Power Plant could employ Compressed Natural Gas (CNG), a biodiesel blend or combination of the two as its fuel source.

“The [BEC] RFP details the Government’s desire to see a noted percentage of the energy used in the Bahamas produced using locally-sourced renewable materials,” he wrote in the cover letter to the Christie administration.

“Our proposal’s inclusion of the biodiesel production plan using locally-sourced raw materials as a fuel option achieves this objective.” No extra fuel surcharge, though, would be included in the price that the Floating Power Plant sold energy to BEC at.

While SGI’s final price would depend on whether the Government took up all, or some, of the non-generation offers it had made, Mr Bostwick said the Floating Power Plant would be located at Arawak Cay’s newly-extended port bulkhead.

Suggesting that it would appear like two large warehouses, Mr Bostwick said the SGI facility could be relocated from its current New York mooring within 180 days.

“In short, what we propose is to install and operate a fully functional, environmentally tested, New York City EPS certified power plant producing 272 MW (more power than we currently use and need), all within 180 days of coming to terms and preparing the site. No two-three year build-out period required,” he wrote to the Government.

Noting that SGI had first submitted its proposal back in September 2012, Mr Bostwick added in his letter: “It is highly uncommon for an opportunity such as this to remain open for such an extended period of time.”

“My information is that BEC’s present total load in New Providence is about 140 MW, and on peak it’s around 200 MW. With Baha Mar, they will be needing, say, an extra 40 MW. That would be 240 MW that they need now,” Mr Bostwick told Tribune Business.

“One large barge, two plants producing 272 MW, we would actually have enough to more than satisfy Baha Mar and Atlantis as well.

“Baha Mar says they’re going to be ready for late Spring, and our 180-day window is just there. It will more than solve their problems overnight. Even the hard capitalists do not want us to experience an energy crisis, but we are right at the edge of it now. The load shedding is a really bad sign for the Bahamas in general, and we can’t allow that to happen.”

Mr Bostwick said the Floating Power Plant could also run direct electricity cables to Atlantis and Baha Mar, taking them totally off the BEC grid.

And it could do the same for the cruise ships at Prince George’s Wharf, enabling them to stop running their generators in port, thereby eliminating “all the pollution produced by smoke stacking that’s going on, and is detrimental to our harbour.

“It has multi-faceted benefits all throughout our economy,” Mr Bostwick added. “Around the world, cruise ships are not allowed to burn their generators in port, and they argue they don’t want to do it here.”

Mr Bostwick confirmed that the $150 million Floating Power Plant would be fully funded by private capital, which was already “fully pledged”.

He emphasised, though, that SGI’s plan was to work with - and complement - the winning BEC bidders, suggesting the group’s proposal would both make their lives easier and strengthen the Government’s negotiating postition.

Not everyone, though, has embraced SGI’s Floating Power Plant concept. Mr Miller, BEC’s chairman, recently described it to Tribune Business as “asinine”, and suggested it would be exposed in hurricanes and tropical storms.

Mr Bostwick, though, pointing out that Arawak Cay was sheltered by the likes of Paradise Island, Blackbeard’s Cay and a host of other smaller cays, described Mr Miller’s dismissal of the proposal as “reckless”.

He pointed out that Jamaica, also in the Caribbean and hurricane belt, now employed four floating power plant barges and had been doing so since the late-1970s and early 1980s.

SGI Holdings’ main financial backer is Rwandan-based Ngali Holdings, a major investor in numerous global industries, including energy and infrastructure.

Its projects span the UK, US, Israel and the Netherlands, plus Africa and the developing world. SGI’s environmental partner is the Center for Toxicology and Environmental Health.