Multi-Billion Group ‘Very Interested’ In Bahamas


Tribune Business Editor


A multi-billion dollar corporation yesterday said it was “very, very interested” in supplying liquefied natural gas (LNG) to Bahamas-based power generators, suggesting “substantial” economic and environmental benefits could result.

George Nemeth, director of business development for AES Corporation, told Tribune Business that the ability to load LNG on to smaller bulk vessels had opened the possibility for his company to supply the Bahamas and other Caribbean nations from its Dominican Republic and Panama hubs.

Acknowledging that more studies were needed to determine the economic feasibility, Mr Nemeth said the use of smaller vessels meant LNG supply could be tailored to meet the Bahamas’ energy demands.

“The key point for the Caribbean, the islands, which have smaller demand needs, is that we are able to transship from our two locations in smaller vessels that are very economical,” he explained.

“What we hope for, from the island nations and their utilities, is that they explore the alternatives with LNG.”

Mr Nemeth said the proximity of AES’s Dominican Republic LNG regasification/storage terminal to the Bahamas and other Caribbean nations meant shipping costs would be kept competitive, ensuring the fuel’s supply was economically viable.

Speaking after the former Christie administration initiated a secret, hasty search for power generation solutions to aid Bahamas Power & Light (BPL), and reduce energy costs for consumers, Mr Nemeth said AES was unlikely to be interested in constructing a new power plant in this nation itself.

Explaining that the New York Stock Exchange (NYSE) listed company, which employs 21,000 persons globally, was more interested in supplying LNG as the primary fuel, whether to BPL or another power plant operator, he added that it was “potentially the most economic solution” for this nation’s energy problems.

“Our interest in the Bahamas is more the supply of LNG,” Mr Nemeth told Tribune Business. “It’s very, very interesting for us. What creates the interest from our perspective is, number one, what is the real need for the fuel on the island, and what is the economic proposition in the Bahamas?

“It’s very high, because the Bahamas is burning diesel. Gas can compete with the existing fuels burned in the Bahamas. Even if you include the cost of the infrastructure required to burn gas, it should be more economical than diesel.”

Detailing LNG’s virtues, Mr Nemeth added: “It’s a much cleaner burning fuel. The maintenance on the engines is substantially reduced as you have less residue and by-products coming from the gas.

“You have maintenance savings, you have cleaner air, which is a huge driver for our customers, and we think it will be more economical through the whole value chain. There are substantial benefits to moving to LNG.”

Mr Nemeth said that prior to AES constructing its LNG-fired power plant and regasification/storage facility in the Dominican Republic, the island’s energy had largely been generated by fossil fuels and diesel.

He added that AES now supplied 30 per cent of the island’s energy needs, while its ability to supply LNG via trucks allows it to provide 65 manufacturers and 15,000 vehicles with the gas.

“The cost savings are in the hundreds of millions,” Mr Nemeth said, “due to the lower cost of natural gas versus the alternative.

“We hope to bring lower-priced fuels, which translates to lower priced electricity for the Bahamas and electricity users. A lot of work needs to be done to get to that point, but it is likely a big benefit environmentally and economically for the island and lower electricity users.”

AES, which has annual revenues of $15 billion, and assets worth $39 billion across 18 countries, has total installed generation capacity of 35,800 Mega Watts (MW) globally.

The company is no stranger to the Bahamas, having applied in 2002 for permission to construct a $650 million LNG regasification/storage facility on Ocean Cay,the man-made island near Bimini that will now be home to the Mediterranean Shipping Company (MSC) private cruise island.

That facility was designed to supply Florida’s energy needs, and AES even tried to ‘sweeten the deal’ by offering to supply the Bahamas Electricity Corporation (BEC) in New Providence with the fuel.

Even that was unable to secure the necessary approvals from the first Christie administration, and AES ultimately abandoned the project after being unable to obtain a decision - a move that led to criticism of the Government from then-US ambassador, John Rood.

The former Christie administration’s rationale for seeking new energy bids has yet to be explained, but it may be connected to its commitments under the Heads of Agreement with Baha Mar’s new owner.

The Christie administration has promised Chow Tai Fook Enterprises (CTFE) that it will “address reliable and consistent supply of electricity on the island of New Providence, which will include the ability to meet the requirements of the project”.

This involves the installation “of all supporting infrastructure necessary to support secure and dependable electricity supplies to the project, without the need for unusual load-shedding or other interruption in electricity supply to the project”.

This has to be completed by December 31, 2017, a deadline that the Government and BPL/BEC are unlikely to meet given that all are cash-strapped.

This leads into the other factor likely motivating the Government’s action over BPL’s generation; the need to refinance the company’s $650 million legacy liabilities, and the difficulty it is having in doing so through the preferred route of a rate reduction bond (RRB).

The RRB would raise new debt to pay out all BEC’s legacy debts, pension deficit, environmental liabilities and such like, while also removing them from BPL’s balance sheet, thus freeing the utility to invest in new and enhanced infrastructure.

Until this happens, BPL and PowerSecure’s hands are tied when it comes to moving forward, especially in achieving lower-cost energy that is more reliable, with fewer outages and blackouts.

The Government has found placing the RRB more difficult than expected, with financial institutions repeatedly telling it that the price (interest rate) being offered is too low to compensate potential investors for the risk they would be taking.

Given that RRB payments to investors would need to be financed by BPL customer payments, this would likely require an increase in electricity tariffs, which is why the Government has likely ‘kicked the can down the road’ past the 2017 general election.

However, finding a group to take over management of BPL’s existing generation assets, finance install new turbines and, eventually, pay for and construct a new power plant, would enable the Government to meet its Baha Mar commitments without going the RRB route and burdening Bahamian consumers.

In doing so, the Government would be performing a ‘u-turn’ and going ‘full circle’, back to the structure proposed in the 2013 BEC RFP, which sought to split the utility’s generation assets from the transmission and distribution (T&D) operation.


Alex_Charles 3 years ago

so once again our predicament is because of fuck ups...

we do need to diversify our energy pronto as the US cash outflow for fuel is getting ridiculous. I'd prefer renewable as it means less money long term leaves the country and our economy would be less susceptible to economic shocks arising from fluctuations in the fuel markets.

Energy is a national security concern, I look forward to seeing this addressed


K4C 3 years ago

want to see how renewable's are a doubled edged sword, just look at Ontario Canada every household is energy poor here renewable energy requires subsidies, and last time I checked the Bahamas was just about broke


killemwitdakno 3 years ago

Last time I checked subsidies were to be given for the solar panels, one being payments for supplying the grid.

Of course that won't be the only supply.


K4C 3 years ago

renewable's are not just solar


killemwitdakno 3 years ago



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