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Fresh Doubts On Shell Role In New Power Plant Deal

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Minister of Public Works Desmond Bannister.

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

A Cabinet minister yesterday raised fresh doubts over whether Shell North America will be involved in financing, constructing and owning New Providence’s proposed multi-fuel power plant.

Desmond Bannister, minister of works, told reporters outside the Cabinet Office yesterday that Bahamas Power & Light (BPL) will “aggressively” seek to create an opportunity for Bahamian ownership in the energy sector once its upcoming $650m bond refinancing is placed.

He implied that this would start with the new plant at Clifton Pier that Shell is supposed to develop, having been selected as the preferred bidder for the project by the government and subsequently signing a Memorandum of Understanding (MoU) for it in December 2018.

“I don’t know that we are going to have a Shell power plant,” Mr Bannister said. “You know, in the FNM’s manifesto we spoke about creating an entity that Bahamians can invest in. Now that we are able to have this bond in place, BPL is aggressively looking to create opportunities that Bahamians are going to be able to benefit from and invest in.

“So you may see some time this year there may be a wonderful opportunity for all of you, and for other Bahamians, to have a stake in a power plant in this country, as Shell and other entities may also have an opportunity.

“These are things that BPL are going to be able to announce in good time. So we anticipate, as we indicated to the Bahamian people, once we have completed that plant it is going to be managed by Wärtsilä, and we are now beginning to have reliable power to the country. So as we go into this plant that is going to be built, we anticipate that it is going to be a wonderful opportunity for everybody to invest in reliable power. So that is something that is very, very good that is coming online.”

The minister’s comments raise questions as to the ownership structure for the proposed new power plant and, indeed, whether Shell will be involved at all. The facility is seen as critical to resolving New Providence’s long-standing generation woes, providing cheaper, more reliable energy that is more environmentally-friendly.

The 222 megawatt (MW) plant was to be accompanied by marine infrastructure that can received liquefied natural gas (LNG), involving a gas pipeline to bring gas to shore and an onshore regasification terminal that would supply the fuel to the power plant.

Shell would thus act as an independent power producer (IPP), selling electricity to BPL via a power purchase agreement (PPA) over a 20-25 year period. Yet the first 132 MW for the new plant has recently been installed by Wartsila, and the government recently announced that $70m of the bond proceeds will be used to finance the remaining 90 MW installation.

This sparked the first questions, with Mr Bannister telling Tribune Business in late November that the deal for Shell’s new power plant “is very much live” despite BPL seemingly making a $70m investment on its behalf.

“The Shell deal is very much live,” he said. “I want to make sure no matter what, in any circumstances ,BPL is prepared to move ahead. I don’t want to say anything more than that.”

Tribune Business and others had queried why there was little to no mention of the much-touted Shell multi-fuel power plant in his House of Assembly presentation on BPL’s $650m bond refinancing.

The minister’s presentation showed that $70m of the $650m to be raised through the bond has been earmarked for the Phase II expansion of Clifton Pier’s “Station A” with the purchase of more generation engines from Wartsila.

This 90 MW of additional capacity, when combined with the existing 132 MW, will provide 222 MW in new generation - exactly what Shell North America is supposed to provide with its new-multi fuel power plant.

One well-placed source, speaking on condition of anonymity, told Tribune Business: “I don’t understand why they’re [BPL] funding this when Shell is supposed to be doing it. And how can you give Wartsila a contract for that amount of money when it has not gone out to tender.”

Meanwhile, Mr Bannister yesterday said of the $650m bond: :The bond is a placement process. The first stage that they go through is a ‘ratings stage’. They (BPL’s board members, along with members of the Special Purpose Vehicle placing the bond) have been in the US and they have met with all of the ratings companies.

“Then they have a quiet period. During that quiet period the ratings companies are making decisions about the kinds of ratings they are going to give BPL. From everything I have heard BPL is going to get top ratings, almost like a sovereign rating that a country can get. That means that the interest rates are going to be very, very low.

“Once that happens, and we look at the kind of interest rates that we would be able to get for BPL, then there is going to be opportunity for Bahamians, and I want everybody to appreciate that. There is going to be opportunity for Bahamians to invest in your utility for the future,” Mr Bannister added.

“If you look at utility stocks and how they operate, they are not going to go down, so there is going to be wonderful opportunity in this country for Bahamians to take some of their funds, invest in that utility and invest in the future of power generation in this country. That is going to be a really, really a good opportunity. So I want everybody to try to save a little bit of money, put a little bit of money aside. It is going to be a wonderful opportunity for you.”

Comments

concerned799 1 month, 1 week ago

Why so much focus on who will provide the power and not how can you be investing so much in fossil fuels if you are serious about climate change?

Or if you aren't serious, why aren't we being honest and pulling out of the Paris climate accord?

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Well_mudda_take_sic 1 month, 1 week ago

DESMOND BANNISTER IS AT THE EPICENTRE OF ONE OF THE LARGEST FRAUDS EVER PERPETRATED AGAINST THE BAHAMIAN PEOPLE AND HE IS THERE WITH THE FULL BLESSING OF MINNIS AND TURNQUEST. GOD HELP US ALL. The corrupt Minnis-led FNM government fully intends to "milk" the very costly refinanced BPL for all it is worth, thereby bilking us taxpayers out of mega-millions of dollars. And all because Sir Snake of Shell Bahamas decided to bite the Tweedle-Dumb Doc right in his arse!

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truetruebahamian 1 month, 1 week ago

Buy personal solar and forget about the rest.

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ColumbusPillow 1 month, 1 week ago

First go buy a lot of candles and matches for nights and cloudy days when there is no solar energy. Don't forget salt corrosion of your costly solar panels.

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Dawes 1 month, 1 week ago

Or get Batteries to store the excess energy you get when the sun is out for night time and cloudy days.

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John 1 month, 1 week ago

So Shell was selected as the preferred bidder but their role in the power plan is uncertain. So what exactly did they bid on and what exactly were they selected for ? So the debt reduction bond will be used to develop the new plant but BPL will be coming to the public to invest in its new plant (and upgrades). Two sets of financing for the same projects? There is a money hole somewhere because this ain’t adding up.

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ThisIsOurs 1 month, 1 week ago

"You know, in the FNM’s manifesto we spoke about creating an entity that Bahamians can invest in. Now that we are able to have this bond in place, BPL is aggressively looking to create opportunities that Bahamians are going to be able to benefit from and invest in."

They listen to Juan McCartney. Was thinking same as John, Juan suggested an POO as an alternative to the rate reduction bond...they're doing both...there's too many knee jerk reactions at the top

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ThisIsOurs 1 month, 1 week ago

IPO* autocorrect is the devil :-|

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Bahamianbychoice 1 month, 1 week ago

Allowing Shell NA to build the power plant as recommended by the fired Board members..senior staff and approved by Cabinet would have disallowed the corruption and kickbacks that have happened. Shell NA has been out of the picture since the former Board members were fired and Heastie and Rollins adjusted the MOU. Bannister and this present Board have just been dragging the people along down this rabbit hole. Besides the corruption you have leadership that is just dumb..totally out of their profession depth..you cannot make this stuff up! This is all treasonous in my opinion...so much damage is done that the negative impact on the GDP is irreversible. Like noted above the RRB and now coming to the public for a PPO..desperation..no plan and getting caught out!! Only a few have and will make money while the rest of us will pay higher rates and my guess still sweat it out next summer..paying for all the mistakes.

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concerned799 1 month, 1 week ago

BPL should be privatized to mean the public is not on the hook for any more of its debts and other shortcomings, a private owner would be much more vigilant with its monies.

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BahamaPundit 1 month, 1 week ago

This sounds like a mirror image of the PLP's Bluewaters sham deal. Instead of BTC it's BPL. FNM cronies will end up owning 95% of BPL. The public will be offered 5%.

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