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Govt Not Proceeding With New Fortress Deal

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Christie administration’s energy reform process “should have been a lot more transparent”, a Cabinet minister yesterday confirming the Government will not proceed with the proposal it left behind.

Desmond Bannister, minister of works, told Tribune Business that the Minnis administration would not be moving forward with the offer submitted by New Fortress Energy.

He added that New Fortress, together with all potential bidders offering solutions to the Bahamas’ energy generation woes, would be invited to participate in a new Request for Proposal (RFP) exercise to be overseen by Bahamas Power & Light’s (BPL) new Board.

“There was no deal left behind, no commitment by the former administration to any group,” Mr Bannister replied, when asked about the fate of New Fortress’s offer. “There had been an energy committee that looked at a number of proposals, and made some recommendations.”

The Minister, who has Cabinet responsibility for BPL, then criticised the energy reform process run by the former Christie government during its final months in office.

“We believe the process should have been a lot more transparent than it was,” Mr Bannister told Tribune Business, “and we’re going to ensure full transparency and complete accountability in the process.”

He added that New Fortress and other previous bidders could “absolutely” participate in a new tender exercise, and this message had been conveyed to all who have approached the Minnis administration.

“Any group that is interested, and there are a number of groups that have shown an interest, including New Fortress, we have indicated that to every one of them,” Mr Bannister said.

“That there’s going to be a fair and transparent process, and they will have an opportunity to put proposals on the table. We will have qualified experts look at them, and then make a decision in the best interests of the Bahamian people with no political interference.”

Mr Bannister said he and the Government would set the boundaries and objectives, then leave the newly-appointed Board to do what was necessary in putting together and running an RFP exercise.

Emphasising that he will take a ‘hands-off’ role to minimise any suggestion of political interference in energy reform decision-making, he added: “I’m going to give some directions to the Board when they meet on Wednesday [today], and see how quickly they can put an RFP out.

“I’m not going to interfere in what they do. We have a very high quality Board, staffed with very qualified persons, and we will look to see the outcome of their work.

“We’ve selected professional people in very many fields, and it would be wrong for politicians to get in the middle of it and make political decisions. That would be wrong, and that’s not going to happen.”

Mr Bannister’s comments indicate that the new Government is not taking the former Christie administration’s advice to pick up, approve and complete the deal that it left with New Fortress.

Tribune Business had revealed the Christie administration’s secretive energy Request for Proposal (RFP), and talks with New Fortress, just prior to the May 10 general election. Both BPL and its manager, PowerSecure, had been ‘kept in the dark’ on the discussions despite the direct impact on themselves as potential customers of the electricity generated.

Sources had described the Christie administration’s energy RFP, which was run out of the Prime Minister’s Office, as “very weird” and lacking in transparency, with different bid terms and criteria for different groups.

The multi-billion dollar AES Corporation described the process as “non-transparent” and “not what we are used to” in other central American and Caribbean markets where it has competed on LNG supply and power generation deals.

But members of the former Christie administration urged the Government to act swiftly and move ahead with the New Fortress, arguing that it would deliver significant energy cost savings and economic benefits for the Bahamian people. These ‘benefits’, though, were never quantified in terms of dollars and percentages.

Now-Opposition leader, Philip Davis, said the proposed 25-year power purchase agreement (PPA) with New Fortress would result in fuel cost savings via the switch from ‘Bunker C’ and heavy fuel oil to LNG, while also upgrading New Providence’s electricity generation capacity to avoid the now-frequent summer power outages.

He added that New Fortress had offered to supply energy at 13.5 cents per kilowatt hour (kwh) from 120 Mega Watts (MW) of “supplemental”, or additional, generation units that would be installed at BPL’s existing Blue Hills power plant.

And, looking longer-term, Mr Davis said the price of energy supplied from a new 260 MW power plant, also fuelled by liquefied natural gas (LNG) and constructed at Blue Hills, would be 10.35 cents per kwh.

Mr Bannister, meanwhile, told Tribune Business that the Minnis administration planned to move forward with the Rate Reduction Bond (RRB) intended to refinance the Bahamas Electricity Corporation’s (BEC) legacy debts.

BEC’s existing bank and bond debt, together with pension and environmental liabilities and other legacy issues, are estimated at around $600-$650 million. Until these liabilities are refinanced through the RRB, and moved ‘off balance sheet’, BPL’s hands are tied financially - and it is unable to invest in new equipment to upgrade its generation facilities and transmission and distribution (T&D) infrastructure.

Mr Bannister told Tribune Business that the Christie administration seemed to have “abandoned” the RRB refinancing plan, adding: “That’s my impression.”

He said: “The intention is to seek to move ahead with the policy in relation to the RRB. The former administration started the process, but didn’t complete it.

“We are going to look at this issue to see how best we can serve the public. This RRB is a fairly good idea, but we have to look at all the implications and make the best decision.”

Mr Bannister suggested the Government would again be guided by BPL’s new Board on the RRB, acknowledging its importance to resolving the utility’s financial woes and placing it on a sounder footing.

“The legacy debt remains a difficult issue for BPL and is something that has to be addressed,” he told Tribune Business. “It’s an absolute need that we do something to modernise the electricity infrastructure.

“With the current equipment we have, there’s certainly many, many concerns. That equipment does not permit is to do the things we need to do, and service customers the way we’d like to service them. The staff at BPL, I’m sure, are as frustrated as I am, as they want to give wonderful service and are being prevented from doing so.”

The Minister added: “What we are going through this summer, I don’t want to see ever again in this country. Abaco has had a nightmare, Inagua has had a nightmare. This summer the electricity goes off every day in my Carmichael constituency.

“Many customers are feeling it. As a country we can do much better, and we want to do what’s best for the Bahamian people.”

Comments

ohdrap4 2 years, 1 month ago

no matter how you cut it, it cannot be cheaper

the energy rate for bpl this monthe are 10.98,11.95, 14.95 c

the fuel surcharge is 15.5

so this energy at 13.5 c is not cheaper at all, and whoever has a propane generator knows it is much more expensive to run than gasoline.

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