The Tribune

BY NEIL HARTNELL

TRIBUNE Business Editor

nhartnell@tribunemedia.net

A BAHAMAS Grid Company bond holder says the “main risk” for New Providence’s electricity network operator is the absence of a new “strategic partner” to replace Island Grid Solutions and Eric Pike rather than the delayed transfer of grid assets.

Gowon Bowe, chief executive of Fidelity Bank (Bahamas), which last year invested a net $7.5m in bonds issued by Bahamas Grid Company and other private sector entities involved in the Government’s energy reforms, told Tribune Business it was vital that New Providence’s grid owner ally with larger energy industry players to secure access to essential supplies and equipment.

Failing to find a new partner, he warned, would leave Bahamas Grid Company outmatched and lacking the “gravity and presence” to compete with bigger overseas energy operators enjoying greater scale, purchasing power and better contacts for obtaining assets vital to the smooth functioning of Nassau’s power grid.

Mr Bowe told this newspaper that the inability, to-date, to replace Mr Pike, Island Grid and Pike Electrical, the US utility that was hired to perform the now-completed $130m in “foundational” grid upgrades, represents a greater threat to both Bahamas Grid Company and New Providence’s energy supply than the failure to transfer all grid assets from Bahamas Power & Light (BPL).

Under Bahamas Grid Company’s June 3, 2024, Heads of Agreement with the Government, all the New Providence grid assets were supposed to be transferred to it from BPL. However, the Fidelity Bank (Bahamas) chief described concerns that the inability to complete this switch has deprived bond holders of collateral security for their collective $111m investment as “a tempest in a tea cup”.

He explained that these concerns are lessened because neither BPL, nor Bahamas Grid Company, have thus far defaulted on their respective obligations and the interest payments due to bond holders. And Mr Bowe said there was unlikely to be competition for collateral assets with the Government as the latter is unable to deliver the promised energy reforms in its own.

He spoke out before yesterday’s joint press conference on the recent power outages, during which it was confirmed that New Providence’s transmission and distribution (T&D) grid assets have yet to be transferred from Bahamas Power & Light (BPL) to Bahamas Grid Company, leaving a key element of the Government’s energy reform deal unfulfilled.

BPL’s 40 percent equity ownership in Bahamas Grid Company was also supposed to have been financed by this asset transfer, meaning that due consideration for an interest valued at $100m has not been paid. Anthony Ferguson, CFAL’s principal and Bahamas Grid Company’s chairman, earlier this year conceded that the switch had been delayed by legal issues surrounding pre-existing liens and charges secured on grid assets, which had been placed “in escrow” until the matter was solved.

Bahamas Grid Company executives yesterday also confirmed they are seeking to address Mr Bowe’s concerns by seeking out new energy industry partners in the US and Canada following the departure of Mr Pike and his Island Grid Solutions vehicle.

“If you really look at this, what is the principle risk facing Bahamas Grid Company, and it’s one that I shared with my Board, it is who is their strategic partner going to be?” the Fidelity Bank (Bahamas) chief told Tribune Business. “As an entity, it’s too small and lacks gravitas and presence to match competing demands for energy.

“The absence of Pike is not so much in on-the-ground activity, but securing and procuring equipment and energy supplies. That is the biggest one because if The Bahamas, with 400,000 people, is competing for the same equipment with Florida Power & Light (FPL), we know where we stand in the game.

“What’s more important is that Bahamas Grid Company articulate clearly who they are going to align with strategically to give them an avenue to critical equipment and energy supplies,” Mr Bowe added. “Purchasing power and strategic alliances. My concern is not that we don’t have them on the grid and people on the grid.

“My concern is who will be the strategic partner to put us in a room that we are not normally invited into because we don’t have scale and mass.” Mr Bowe added that he and BISX-listed Fidelity Bank (Bahamas) have fewer concerns over the delayed asset transfer to Bahamas Grid Company because there is no competition for assets that will give some security for the bond holders’ investments.

Besides the absence of any default risk, he added: “The bond holders are not competing with anyone over collateral and, in reality, the outcome is the Government has to succeed because it is not in a position to deliver on its own…

“The Government, I don’t believe, will be competing with Bahamian shareholders and investors for transmission and distribution assets because the Government of The Bahamas will bear the cost in any event. That’s not a zero risk, but has a lower risk element.”

However, Mr Bowe slammed as “a major failing” the lack of “consistent and transparent” communications by Bahamas Grid Company and those responsible for structuring the special purpose vehicle (SPV) and the New Providence grid reforms. Though he called no names, he was clearly referring to CFAL, the investment advisory firm that placed both the $111m in bonds and $30m equity investment in Bahamas Grid Company, as well as the Government.

Calling on the Government to “take its thumb out and not treat The Bahamas” as if if was the 1990s, when public companies were reluctant to disclose material events to shareholders, he called on Bahamas Grid Company and its creators/owners to “release news in an efficient manner” to avoid causing panic and information vacuums.

Describing the New Providence grid operator as “one of the biggest public interest entities” in The Bahamas, given the combined $141m worth of investor capital it has received, its energy reform role and BPL’s 40 percent ownership interest, Mr Bowe suggested it needed to behave like a publicly-listed and traded company that releases profit and loss warnings, plus material event disclosures, when required.

“That’s a major failing given who the principals are who structured the deal and their standing in the community as investment brokers,” the Fidelity Bank (Bahamas) chief executive said. “Certainly, when the prospectus was put out, there was much fanfare as to what the support and guarantee of the Government meant, what Pike meant, and what Bahamian ownership meant.”

Fidelity Bank (Bahamas), in its recently-released 2025 annual report, said the net $7.5m increase in its investments in corporate debt securities last year is part of a strategy to deploy surplus cash in higher-yielding, but low-risk, assets and thus generate greater returns for investors and more shareholder value.

“Investments in debt securities issued by corporate entities focused on entities that have an integral role in the national development of The Bahamas, and the growth of its economy through their involvement in providing critical infrastructure in The Bahamas, namely energy,” the BISX-listed institution explained.

“The corporate entities have no history of defaults and have strategic partners with either domestic or international track records in the provision of the respective utility services. Further, the corporate entities have either direct financial support and/or guarantees from the Government of The Bahamas, or monopolies on the provision of the utility services, but the financial forecasts indicate that these are not critical determining factors in their creditworthiness but rather credit enhancers.”

Fidelity Bank (Bahamas) added that the 20-year nature of these corporate debt investments also help better match assets with long-term liabilities. Besides Bahamas Grid Company, Mr Bowe said the 2025 investments also include Island Power Producers, the company that will supply liquefied natural gas (LNG) fuelled-energy to cruise ships docked in Nassau Cruise Port, plus EA Energy, which will supply solar and LNG energy to Abaco and Eleuthera.

Disclosing that Fidelity Bank (Bahamas) also rolled over its investment in the Aliv mobile operator’s preference shares, Mr Bowe said: “The long-term investment strategy is using some of the cash flow for investments that are income-producing over a long period as opposed to just Treasury management.

“We’re looking at it from the perspective of, no matter how you skin and dice it, The Bahamas must go through energy reform. Whether there’s full confidence or not in Bahamas Grid Company at this point, they are the ones signed up. The bottom line is it will happen.

“EA Energy is in Eleuthera, which is on the verge of significant prosperity, and Island Power Producers has a monopoly on the power supply to the cruise ships that will be in port. These align with the long-term investment strategy.”