The Tribune

• To take over 132 MW operated by Wartsila

• BPL chief dismisses fears staff not trained

• Move has no bearing on Shell, other deals

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamas Power & Light (BPL) is ending a deal that supplies around 50 percent of New Providence’s base load electricity generation despite concerns its own staff are not trained to operate the engines involved.

Shevonn Cambridge, BPL’s chief executive, confirmed to Tribune Business that Wartsila’s contract to operate 132 Mega Watts (MW) of generation capacity at the Clifton Pier power station and provide routine maintenance will not be renewed after it expires at year-end. The state-owned utility instead will take these responsibilities back in-house in the New Year, with Clifton Pier’s Station A “integrated” back into its own generation operations.

The BPL, chief, though dismissed concerns that the monopoly power provider’s staff lack the training to operate engines that were manufactured and supplied by Wartsila itself in early 2019 for $95m. He asserted that their operation was not complex, and that BPL has multiple mechanics - especially in the Family Islands - who are trained to operate such four-stroke, medium-speed diesel engines.

Wartsila formed its own Bahamas-based team to operate and maintain the 132 MW it provided, which was equivalent to around half New Providence’s 260 MW peak energy demand. But some BPL insiders criticised their performance in alleging that “blackouts” occurred when the contractor’s staff failed to prevent the engines tripping. They also argued it was unwise to permit an outside contractor to have control over such a large portion of BPL’s New Providence generation.

Mr Cambridge replied “that’s pretty accurate” when asked by Tribune Business if Wartsila’s Station A service and routine maintenance contract will not be renewed once it expires at year’s end. He explained that the move was driven by “technical and financial” factors, with BPL looking to save the “several million dollars” it spends annually on the arrangement, as well as generate greater efficiency and economies of scale at Clifton Pier.

“There won’t be much change,” the BPL chief executive told this newspaper. “We’ll just integrate it back into our operations in the short-term. The reason just being that we have a lot of technical and financial objectives over the next two to three years. We thought it would be best integrating Station A back into BPL’s mix....

“We looked at the numbers, we looked at making the operations a bit more efficient, utilising the economies of scale we have at Clifton Pier, and seeing it as an opportunity to keep the cost down and improve the quality of production to the consumer.” Mr Cambridge declined to confirm how much BPL will save by allowing much of its Wartsila relationship to expire, but it is understood the contract is worth several million dollars per year.

While the service/operations and routine maintenance aspects will not be renewed, the BPL chief said there will “still be a role for Wartsila” when it comes to “major overhauls” of that 132 MW. “For the major maintenance, we’ll probably for the short-term be contracting that out to Wartsila and a number of other contractors that offer that service,” Mr Cambridge explained.

“I can tell you that even on major engines at Clifton we contract a lot of maintenance out and have had those for over 20 years. When we look at the amount of engines we have, it doesn’t lend itself to having a full maintenance complement on staff because of the volume of works. It makes sense to contract that work out, but for operational purposes we have 24/7 staff and it’s just a matter of integrating those operations back into our operations.”

However, one well-placed BPL source, speaking on condition of anonymity because they were not authorised to speak publicly, said the utility would likely need to hire Wartsila’s Bahamas-based staff to keep operating the 132 MW because its own employees were not trained to run the engines.

“It seems as if they have decided not to renew the maintenance contract for Wartsila. The Wartsila contract technically expires on December 31. They want the BPL employees to run those engines, but those guys aren’t trained to run those engines,” the contact said.

“Those are very sensitive tri-fuel engines, and have very sensitive control systems. I don’t know how open Wartsila would be to training. We have guys that can come up to speed, but no BPL employee was trained on those engines; not a single one.  They formed Wartsila Bahamas, formed a local team, but they were employed by Wartsila. Is BPL going to hire them?”

Mr Cambridge confirmed BPL is “prepared to have discussions” with those Wartsila Bahamas staff that want to switch to its operations, saying “we may have some opportunities for them”, although he stopped well short of offering cast-iron promises. Tribune Business understands that up to 35 Wartsila Bahamas staff, a mix of expatriates and locals, will be impacted by the contract’s non-renewal although both parties are still discussing how their new relationship will look.

The BPL chief said there were “no concerns about” the ability of BPL staff to operate and maintain the Wartsila engines, adding: “We have a number of mechanics on our staff who are trained on that four-stroke engine, medium speed diesel. There’s not much difference between one four-stroke diesel engine to another.

“We have a number of four-stroke diesel engines in our fleet, especially in the Family Islands. You start them, put them on load, monitor the voltage frequency and that’s pretty much whether the technology is gas turbine, slow speed, medium speed. The technology doesn’t vary that much, and we have no concerns about that.”

Yet one BPL source said of the transition: “I can tell you this right now: This is going to be interesting. The Wartsila guys who were trained on it had some challenges operating those things. It’s new technology; tri-fuel technology. They were separate and apart from BPL staff.

“When the Station A project was brought on, BPL refused to take on the new jobs with Wartsila. They were offered first preference, but they chose not to do so. Wartsila built its own local team. The idea was that Wartsila would take on the liability of maintaining those engines knowing that they were going to be sold to Shell.

“The contract included all of the maintenance, all of the operations, and specified that the engines be maintained according to the manufacturer’s recommendations to preserve their value. It is an operational and maintenance risk. If BPL is doing minor maintenance, are they doing it in accordance with the manufacturer’s recommendations? That’s one of the challenges,” they continued.

“It was a pretty sizeable contract. It was several million dollars a year. It included parts, operations, labour, everything.” The source questioned whether BPL would achieve the economies of scale it is seeking from the deal’s end, given that 35 Wartsila staff have been operating 132 MW of generation capacity compared to some 100 BPL staff overseeing the remaining 70 MW at Clifton Pier.

Under the former Minnis administration, Wartsila’s 132 MW were ultimately supposed to be on-sold to Shell North America and incorporated in its proposed 220 MW multi-fuel Clifton Pier power plant intended to provide most of New Providence’s base load generation. The power plant was supposed to be accompanied by a liquefied natural gas (LNG) regasification terminal so that the plant could use a cheaper, cleaner fuel.

Mr Cambridge, though, denied that BPL’s decision to reintegrate Station A back into its own operations meant that the Shell deal - or outsourcing of base load generation - will not proceed. “That’s no indication of that,” he replied, “and has no bearing on it. The opportunities are still available for some type of management agreement or PPA (power purchase agreement). However the deal ends up being structured at the end of the day, the opportunity still exists.”

Another BPL source, also speaking on condition of anonymity, suggested that the utility will unlikely have the capacity to take on all Wartsila staff. Confirming issues with the engines, they added: “That’s why we had blackouts. The engines tripped, and Wartsila’s people did not know what to do. Our people, if they see the frequency dropping, they know what to do and make adjustments. You can’t have a separate entity controlling your generation; you can’t.”