The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Inviting bids to provide 100 Mega Watts (MW) of extra power to the Bahamas Electricity Corporation (BEC) was yesterday proposed as “the fastest way out” of this nation’s energy crisis, which a former chairman said is now “past the 11th hour”.

Michael Moss, who headed the Corporation under the Ingraham administration, told Tribune Business that awarding such a supply contract would give the Government much-needed breathing space to complete BEC’s restructuring.

He recommended that the contract to supply BEC with 100 MW of power be awarded to the bidder able to install such generation capacity at the lowest cost, and in the shortest possible timeframe.

While acknowledging that such an arrangement could impact BEC’s attractions in any privatisation/outsourcing process, Mr Moss said the energy sector needed to follow its communications counterpart and be opened up to generation competition.

Despite BEC’s ever-deepening problems, the latest being a generation capacity shortfall likely to result in week-long load shedding, the Government has still to announce a management/operating partner for the Corporation.

Well-placed Tribune Business sources, speaking on condition of anonymity, said Prime Minister Perry Christie was last week scheduled to have a conference call with the US commerce secretary, Penny Pritzker, in a bid to move the BEC process forward.

This newspaper was told Mr Christie is seeking additional guarantees from the Obama administration regarding the integrity of Power Secure, the company that the Government favours as BEC’s management partner.

Power Secure is currently facing two class action lawsuits in the US over securities fraud allegations, and the Prime Minister is keen to ensure his selection is seen as beyond reproach.

The issue of further guarantees is understood to have been raised at the early April Jamaica summit that was attended by President Barack Obama.

However, given that the Government already possesses Power Secure-related certifications from other senior US government personnel, especially secretary of state John Kerry, the need for more seems questionable.

Mr Moss yesterday told Tribune Business it was “critical” that the BEC restructuring process be completed, given the worsening situation at the monopoly energy provider.

“To me, it’s past the 11th hour,” he said. “BEC is in a critical stage of load shedding with Baha Mar coming on stream.

“To me, perhaps, the fastest way out of this problem would be for the Government to invite bids for the installation of 100 MW of power that would be sold to BEC.”

Mr Moss said that the installation of such generation capacity would “take at a minimum 12 months if you’re lucky”, and likely closer to 18 months.

He suggested that the winning bidder be the one offering the lowest power costs in the shortest possible time, adding that such a move would give the Government more time to determine how BEC should be reformed.

“While the Government muddles through the privatisation process, it can begin privatisation without having to touch BEC,” Mr Moss said.

And both itself and BEC would have access to increased generation capacity without having to finance it.

The former executive chairman, though, acknowledged that his suggested solution might “erode the value in BEC” unless the 100 MW contract winner and the Corporation’s ultimate private sector partner were the same entity.

If the two were different, Mr Moss said BEC might be locked into a power supply contract with an entity its new manager did not like.

He likened this to “having a monkey on your back that you are not able to get rid of”, but added that such an outcome was “not too bad” in the context of the Government’s wider energy sector goals.

“What happened in the communications sector needs to take place in the power generation sector,” Mr Moss told Tribune Business. “There ultimately needs to be competition in the generation sector.”

He added that it was impossible to accurately assess BEC’s financial position, given that its financial statements had not been tabled in Parliament - as required by law - for almost five years.

The last financials posted on BEC’s website are for the year to end-September 2010. Mr Moss, when he stepped down in May 2012, had returned the Corporation to a more solid financial footing, the effects of hurricane repairs preventing it from building on the $1,000 profit achieved in 2010 under his watch.

Since then, Mr Moss’s successor as executive chairman, Leslie Miller, has repeatedly warned that BEC has incurred annual losses in the $20-$30 million range.

Mr Moss yesterday implied that it was ironic that BEC was now having to hire 40 MW of temporary rental generation capacity, given that he had been heavily criticised for doing the same by the-then Opposition Progressive Liberal Party (PLP).

“When I had to take the step of having to bring in 40 MW of temporary generation while we dealt with the backlog of outstanding maintenance, I was heavily criticised by the Opposition party,” Mr Moss told Tribune Business.

“I smile because their failure to carry on with the plans I left in my stead means they are having to bring in 40 MW of temporary generation, and the chairman said that may not be enough.”

Mr Moss said that while the 24 MW gas turbine contracted for under his watch had been commissioned, there was a 30 MW generation shortfall as a result of the current administration failing to follow through on what else his Board left in place.

These included a Heat Recovery Steam Generator (HRSG), which captures the exhaust gases from gas turbines and converts them to steam. The HRSG would have combined with a steam turbine generator to produce 12 MW, and plans were also made to add an 18 MW slow speed diesel generator at Clifton Pier.

Mr Moss yesterday said BEC was likely to be “stuck” with its latest temporary generators for 12 months.

Yet he added that the extra 60 MW produced by these units, and the gas turbine he contracted for, meant BEC should be able to meet Baha Mar’s power needs provided the Clifton Pier and Blue Hills plants were fully operational and properly maintained.