By NEIL HARTNELL
Tribune Business Editor
Bahamas Power & Light’s (BPL) top executive yesterday said “the country could not have a better partner” than Shell, with the deal’s “transformational” impact extending well beyond the energy sector.
Whitney Heastie told The Tribune that selecting Shell North America to develop New Providence’s new power plant would ensure “opportunities are wide open” for Bahamian businesses and residents, including the possibility of liquefied natural gas (LNG) being sold to individual companies.
Describing Shell as a world leader in LNG supply, Mr Heastie revealed the energy giant plans to develop a bunkering facility at Clifton Pier so it can supply cruise lines and other vessels that have converted to this fuel.
The BPL chief executive explained the additional revenue from this facility will lower Shell’s costs for shipping LNG to this nation, a benefit that would ultimately be passed on to Bahamian consumers through lower fuel and energy prices.
Emphasising that “we’re not going to be fumbling here”, Mr Heastie said Shell was the best, least-risk option to build, own and operate the 270 Mega Watt (MW) power plant that will use multiple fuels to supply the majority of New Providence’s energy needs from 2021 onwards.
While LNG prices are currently 50 percent less than the diesel fuel used by BPL’s existing Blue Hills power plant, Mr Heastie said the state-owned utility was currently unable to forecast how much energy costs will decline by once the new power plant becomes operational.
While pledging that Bahamians will see “significant savings” in fuel costs alone, the BPL chief executive said there were numerous “pieces” that had to fall into place before a final “all-in” cost of energy can be provided to the public.
He explained these “pieces” included the final cost of the Rate Reduction Bond (RRB), which will raise funds to refinance BPL’s legacy $350 million debt and other liabilities. The RRB costs will ultimately be paid by BPL customers via an additional charge added to their bills, but the state-owned utility has yet to determine how much money it needs to generate.
To maximise the savings to consumers from the new Shell power plant, Mr Heastie said BPL was now “skimming the fat” to reduce its own costs and operate more efficiently, so that Bahamians benefit fully from lower energy costs.
“I think it’s going to be transformational; I really do,” the BPL chief told The Tribune of Shell’s selection. “Opportunities are wide open to residential and commercial customers.
“You look at a complement of things when you evaluate these bids. Prices were one component, the entity’s experience is another, and in this industry safety and the environment has to be top. That has to be prime.
“When you look at Shell’s safety record, environmental record, operational record and innovation with technology around LNG, it’s just incredible. Shell is the largest entity next to a country to supply LNG. There’s no other company that supplies the volume of LNG that Shell does,” Mr Heastie continued.
“We considered all those things. For a country never engaged in this fuel market before, we could not have asked for a better partner as a country than Shell. We could not, because of all the experience they bring to the table. They operate plants around the world. We’re not going to be fumbling here. That’s very important for a country as opposed to a company.”
Mr Heastie said Shell will construct an LNG storage facility, as well as new power plant, in the Clifton Pier area. He suggested the storage facility would not benefit only BPL, but could be used to supply industries and individual businesses with the fuel, too.
“LNG has the ability to transform this country in so much,” he explained. “You’re going to have companies that set up small vaporisers at their place of business. They can put in fuelling stations, or you have a truck that comes and sells gas to merchants here. There’s so many opportunities when you bring that scale of gas on the island.”
Mr Heastie acknowledged that LNG only made economic sense when large volumes can be supplied, resulting in Shell’s plan to use its proposed Clifton Pier facilities for bunkering and supplying the fuel to ships passing through Bahamian waters.
International Maritime Organisation (IMO) directives will impose limits on ship emissions from 2020, and this is driving the cruise ship industry to use LNG as its main fuel. Some 20 per cent of ‘new builds’ are expected to use this source and, of 100 vessels in the industry ‘pipeline’, around one-third - some 30 - are destined for the Bahamas and Caribbean.
“What Shell did in their proposal was...... they can also engage in bunkering and move additional volumes of LNG,” Mr Heastie told The Tribune. “That makes the price [of energy to Bahamians] even more attractive.
“They can build infrastructure at Clifton Pier, and transshipment costs come down because of the volumes they can move and use the storage facility for bunkering. It seemed, based on their size in the LNG market, their ability to provide us with everything we needed, it just seemed like it was a good fit for the Bahamas. That’s how we got where we are.”
Mr Heastie yesterday defended the bidding process from criticism that it lacked transparency and favoured particular offers, pointing to the independent review by the Ernst & Young (EY) accounting firm which found no significant deficiencies.
“Because of some concerns after January 9, when we presented to the Cabinet, the Government decided to have EY do an independent analysis of the process,” he told The Tribune. “They said outside of one or two things, like a little bit of confusion, the process was fine. There was nothing wrong with the process.
“It related to the clarity of some of the changes, but at the end of the day they felt the changes were clear enough as we had the majority of bids still bidding on the changes we sent out.
“Certainly we have learnt from the process, but I don’t think that it lacked transparency in any form or fashion, and it was dealt with in a way that the results would not change. The results would not have changed.”