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‘Crunch Meeting’ For Bpl’S Manager Today

UPDATE: BPL and PowerSecure have ended their business relationship - full story HERE

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamas Power & Light’s (BPL) Board will hold a ‘crunch meeting’ with PowerSecure today, with the outcome likely critical in deciding whether the latter remains as manager.

Multiple Tribune Business sources yesterday confirmed that the US utility operator is quite willing to “walk away” from its maximum $25 million, five-year BPL management contract if the Board and Minnis administration wish it to go.

The meeting, which will be attended by PowerSecure executives and their attorneys from the US, is viewed as key to determining whether the two sides will ‘kiss and make up’ or separate.

“PowerSecure’s position is that if they don’t want us, we’ll go,” one well-placed source, speaking on condition of anonymity, told this newspaper. “They’re happy to go, but will not come in and say that. If they [the BPL Board] don’t want them, find an amicable way for them to separate.”

Another well-connected contact, also speaking on condition of anonymity, added: “They may be bringing the management contract to an end. It depends on how they [the Board and the Government] want things to progress in getting to that point.” Both sources emphasised that no final decision had been taken.

Darnell Osborne, BPL’s chairman, did not return Tribune Business calls seeking comment on the meeting or the status of the Board’s relationship with PowerSecure.

Desmond Bannister, minister of works, said he was unaware of today’s meeting when contacted by Tribune Business, although it is understood he is not due to be present.

The minister, in a messaged reply to this newspaper, said he would “address a number of critical issues at Parliament” today - likely a reference to the promised tabling of PowerSecure’s management services agreement (MSA) and $900,000 BPL business plan.

However, sources close to the Board suggested its members were expecting PowerSecure to “walk away” as early as today from its management contract.

There is little doubt that the already-fractured relationship between BPL Board and PowerSecure is now coming to ‘a head’, following last month’s near-total breakdown triggered by the firing of former chief executive, Pam Hill.

The Board also demanded that PowerSecure fully reimburse BPL for the $1.9 million lost as a result of the much-publicised fraudulent cheque scheme, and ordered the US operator to “cure all deficiencies and/or breaches” under its contract within a 30-day period that expires in mid-September.

That deadline has now been reached, and Tribune Business understands that the US utility operator is due to respond to the Board’s concerns imminently, rejecting its criticisms and demands.

As previously reported by this newspaper, PowerSecure was especially dumbfounded that the Government and Board were seeking to hold it financially accountable for the vendor fraud scheme when it was the management company that had requested the Ernst & Young forensic audit, having detected that something was amiss.

And it was also questioning the legality of Ms Hill’s termination, believing that its Management Services Agreement (MSA) gives the BPL Board the ability to request a change - but not to fire - the chief executive.

Tribune Business’s sources said today’s meeting will also seek to “bring clarity”, and find common ground, between the two sides over the MSA, especially their different obligations and what PowerSecure is obligated to do as BPL’s management company.

“PowerSecure’s position is: ‘If you want us here, we’ll stay. These are our terms to stay, and this is the plan to get you where you need to go’,” one source said. “‘If you have a contrary viewpoint, we’ll hear you out and see what we can do’.”

They added that the US utility operator was concerned about the increasing ‘reputational risk’ from the BPL contract, with the Board perceived to be leaking information to the media to justify its action and portray PowerSecure negatively.

The minimum $10 million, and maximum $25 million, that PowerSecure can earn pales alongside the $60 billion in revenues that can be earned annually by its parent, Southern Company.

“They’re really trying to figure out why they’re getting so much heartache over such a small contract,” one contact added of PowerSecure.

Tribune Business sources yesterday said PowerSecure had encountered political interference from virtually the moment it signed the MSA agreement with the former Christie administration in March 2016.

Suggesting that the previous government continued to “micro manage” BPL despite the presence of its new operator, one contact said: “They [PowerSecure] should have walked away then, but they tried to stick it out. They tried to be patient, and wait for the politics and the general election to go away.”

The management contract was then inherited by the Minnis administration and new Board, who were deeply suspicious of the commercial arrangements and transactions inherited from the Progressive Liberal Party (PLP).

And there were plenty of signs PowerSecure would be unable to run BPL as a proper business from the get-go. The former Christie administration rejected PowerSecure’s request for an increase in BPL’s base tariff rate, which would have boosted cash flow and ended its practice of selling electricity ‘below cost’ - freeing up funds for much-needed maintenance.

And the previous government’s failure to refinance the Bahamas Electricity Corporation’s (BEC) $650 million-plus in legacy debts and environmental liabilities via the promised Rate Reduction Bond (RRB) has also left PowerSecure and BPL’s hands tied financially.

If PowerSecure does depart, it is unclear how the BPL Board and Minnis administration plan to move the stricken energy monopoly forward, as it will have no replacement leadership or management team in place.

Comments

TalRussell 1 year, 8 months ago

Comrades! As a child of God tell me, didn't PowerSecure and Bahamaland Power and Light ((BPL) not already agreed to ‘amicably’ sever their business relationship as of Monday, September 18, 2017?

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John 1 year, 8 months ago

This was a management agreement that made no sense in the first instance. And BPL is leaving BEC in a worse condition than it met the corporation in. Nothing has been accomplished along the lines of improving the company and BPL shouldbe made to return some of the revenue it 'garnished' from BEC, including the millions that were allegedly stolen.

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concerned799 1 year, 8 months ago

SELL BEC. Why is this so difficult?

I remember I posted outsourcing management would never work when this all started with PowerSecure way back when, and the issue of the monies paid out wrongly proves this. Management can not be seperated from ownership!

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Reality_Check 1 year, 8 months ago

Faced with the looming risk of Federal charges being filed under the U.S. Foreign Corrupt Practices Act against PowerSecure and its parent company (including their senior officials involved) for de facto bribery of certain elected officials of a foreign government (our government), it is no small wonder PowerSecure is now walking away from its contractual obligations and undertakings to BPL under the terms of the five-year management agreement. The current Board of BPL should be looking at BPL's legal options for pursuing claims for damages against PowerSecure and the previous directors of BPL who had to be involved in this de facto bribery scandal.

It is now quite clear that key senior officials of PowerSecure were engaged in serious illegal acts to the extent the secret list of "do not disconnect" elites has on it Bahamas government officials responsible for negotiating, entering into and later varying the terms of the BPL/BEC management contract. PowerSecure's misconduct in this matter is tantamount to having bribed various officials of a foreign government by wrongfully and illegally granting them outrageously generous credit and other privileges they should not have received under the terms of the contractual relationship. The quid pro quo was PowerSecure's ability to maintain and occasionally vary for its benefit its highly lucrative contractual relations with BPL/BEC. Carl Bethel as our Attorney General should be filing a formal complaint under the Foreign Corrupt Practices Act with appropriate officials of the U.S. Government - The Department of State and the Office of the U.S. Attorney General . It is unfathomable that any reputable U.S. corporation in its dealings with a foreign government would allow such a "secret list of elite", largely comprised of politically exposed persons, to be kept.

Bottom line: PowerSecure effectively had day-to-day operational control of BPL through the terms of its contractual arrangements with BPL and the Bahamas government. PowerSecure did nothing to do away with the "do not disconnect" list because it did not want to jeopardize its lucrative contractual relationship. It seems PowerSecure knowingly participated in the wrongful and illegal granting of financial favours to officials of a foreign government via BPL, an entity that it managed, in order secure and maintain that lucrative business relationship. Under U.S. law, that could be a big problem for the officials concerned at both PowerSecure and its ultimate parent company.

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Socrates 1 year, 7 months ago

you have to be a complete idiot to do business with any 3rd world gov't ... they only seek these people out to pass the buck for responsibility and blame.. no 3rd world gov't ever gives authority to anyone, thats why they remain 3rd world. i don't know what powersecure was thinking... never a chance they would suceed.. no job cuts, no rate increase, no outstanding bill collection, nothing...

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