The Tribune

By KHRISNA VIRGIL

Deputy Chief Reporter

kvirgil@tribunemedia.net

FORMER Environment Minister Kenred Dorsett said he was uncertain whether the previous Christie administration finalised an agreement with New Fortress Energy to improve electricity generation, but confirmed that there was a “heads of terms,” which included a $10m investment from the company in a smart grid power management system to aid the country among other things.

In admitting that he did not know the status of the deal that was initiated by the government in which he served, the former Southern Shores MP went on to urge the newly elected Minnis administration to closely review what was supposedly left on the table. He suggested it was in the best interest of Bahamians.

Former Prime Minister Perry Christie on Monday night revealed that “four or five days” before the May 10 general election, his Cabinet approved agreements with a company that would make electricity “more affordable” and “reliable” while enabling the government to earn significant revenue. The company, New Fortress Energy, is a liquefied natural gas (LNG) supplier with assets and interests in both Florida and Jamaica.

The revelation raised eyebrows throughout the country and led newly appointed Deputy Prime Minister K Peter Turnquest and union chief Paul Maynard to cast doubt over whether the deal was concrete. While Mr Turnquest said the former prime minister needed to address the public on the matter, Mr Maynard said if the deal was not brought before the union, then it was “not happening”.

Many further suggested that the Christie administration had been acting in secret to execute the deal and that it was approved as an election ploy just days before thousands headed to the polls.

However, Mr Dorsett rejected both suggestions.

He told The Tribune that an energy committee, which was established to review New Fortress’ proposal and others, had been at work for several months. The former MP added that it was known that the former government had been looking for ways to improve the current electricity situation, especially with Baha Mar now open and the summer months ahead, which are usually plagued by constant power cuts.

“New Fortress Energy was selected as a preferred proponent for negotiations with the government for affordable clean and sustainable energy,” the former minister said. “That was approved by the Cabinet of the Bahamas.

“I do know that heads of terms were negotiated and I believe settled. But I just don’t know whether or not the actual heads of terms would have been executed or not.

“But the public should be minded that when it comes to energy, when we advanced the electricity reform, including the new legislation, we made provision for independent power producers to co-exist along with Bahamas Power and Light Ltd (BPL).”

He also said: “I don’t know whether or not it was a secret deal. For those of us in the government we knew that there was an established energy committee represented by public servants and we knew that they were reviewing several proposals and that committee then made a recommendation to the government and we considered it.

“And so it was a body of public servants who were appointed to examine these proposals. Because going into summer season and beyond and Baha Mar now open we knew there was a need not only for additional capacity of BPL, but we also were aware of the fact that we had to change the infrastructure for a number of our plants.

“There was no secret that the government was looking for options in terms of funding the rate reduction bond and so in the context of the energy committee reviewing what was before the government, they came with this recommendation of this particular proponent and we favourably considered the recommendations and then the terms were negotiated.

“We do know that the energy committee was at work for several months and then its report came to the government. I cannot remember when. It may have been a week or two before the elections were called where we were able to indicate that we thought that what was being recommended was in the best interest of the people of the Bahamas. So it wasn’t something that just popped up over night. There was a process.

“At all material times we knew that it would be something for a new administration whether it was us or the now government.,” Mr Dorsett continued.

The deal

According to Mr Dorsett, under the heads of terms it was agreed that New Fortress would provide supplemental power generation of up to 120 megawatts for New Providence at the Baillou Hills Power Station.

There was also to be a long-term construct of a new 260-megawatt gas power generation facility also at Baillou Hills, Mr Dorsett said.

“So this would have been done under a power purchase agreement which would have allowed for the supplemental power to be provided at about 13 cents per kilowatt hour and for the 260 megawatt on the long-term it would have been provided at 10 cents per kilowatt hour. This would have obviously assisted us in bringing the price of electricity down, particularly from the generation side by a considerable amount.

“Under the heads of terms, BPL would have only been obligated for up to 60 megawatts of generation if available and any in excess of the 60 megawatts would only be paid for if in fact it was used. So this would have helped BPL considerably with Baha Mar coming on stream and the other projects to ensure that it met its short-term power demands.

“In addition to those particular issues, we had negotiated with New Fortress energy that they would invest $10m in a smart grid power management system for the entire Bahamas so that we could really unleash the potential of renewables and that was to be paid through the rate reduction bond issuance.

“They were also to construct new LNG terminals in Arawak Cay and in Freeport. The deal also spoke to New Fortress or one of its affiliates leading and arranging the rate reduction bond offering up to $600m, which you know we had been talking about for a long time and it would also convert existing oil fuel power generation facilities on Bimini, Abaco, Eleuthera and the Exumas, so also ensuring that we live up to our commitment of reducing our reliance on fossil fuels and moving towards cleaner sources of fuels for our generating stations,” Mr Dorsett said.

Mr Christie revealed this deal a week after Tribune Business reported that the Christie administration had quietly been soliciting bids to provide Bahamas Power & Light (BPL) with improved generation capacity, reportedly without the knowledge of either the company itself or its manager, PowerSecure.

Mr Christie referred to the matter as he gave a lengthy resignation speech at a National General Council meeting at PLP headquarters Monday night.

He said it was up to the new government to review the proposals and decide if it wanted to go forward with it. He also assigned former Minister of Works Philip “Brave” Davis and Mr Dorsett the job of explaining the details of the proposals to the public.