The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The former minister of the environment asked that the Attorney General’s Office “authenticate” the 25-year water franchise agreement between the Government and New Providence Development Company (NPDevCo), Tribune Business can reveal.

A minute paper attached to the western New Providence franchise deal, a copy of which has been obtained by Tribune Business, shows that Earl Deveaux was acutely aware of the implications of signing the agreement on the May 7, 2012, general election date.

Mr Deveaux wrote: “The Cabinet approved a water franchise agreement subject to the terms and conditions being agreed between NPDevCo and the Water & Sewerage Corporation (WSC).

“The agreement attached was provided by NPDevCo and WSC. I have signed it as authorised by the Cabinet.

“However, having regard to the date of the signing and notwithstanding the authorisation, I would be grateful if this signed agreement is authenticated by the Office of the Attorney General.”

To ‘authenticate’ means to determine/verify that a document is what it says it is. Mr Deveaux, sensitive to the political implications of the signing’s timing, was attempting to ensure that the agreement was, both in perception and reality, regarded as being ‘completely above board’. There is nothing to suggest it was not, but the minister was seeking extra confirmation via the Attorney General’s Office.

The agreement was between the Government (Water & Sewerage Corporation) and NPDevCo. There is no mention anywhere in the agreement of Consolidated Water, which was investing $7 million into the $14 million joint venture as NPDevCo’s 50/50 partner - at least up until the time the Government declared the 25-year franchise agreement “null and void”.

The May 7 agreement, which has bene studied by Tribune Business, reveals that Mount Pleasant residents would have enjoyed a 41.5 per cent discount on the base price paid to the joint venture for their water supply.

Unlike customers in Old Fort Bay, Lyford Cay, Lyford Hills and Serenity, who would be charged a $20.50 per 1,000 gallons base price, Mount Pleasant households would pay just $12.50 per 1,000 gallons.

Still, Don Demeritte, the former Water & Sewerage Corporation chairman under the first Christie administration, described the fine details as “a travesty of justice” when they were read out to him by Tribune Business.

He said the base price being levied by the NPDevCo/Consolidated Water joint venture was some $5.50 per 1,000 gallons higher than the $15 per 1,000 gallons currently levied by the Water & Sewerage Corporation.

Implying that this showed just how lucrative the western New Providence water supply market was, Mr Demeritte suggested that the $1.50 per 1,000 imperial gallons royalty that the joint venture would pay the Corporation paled into insignificance when set against the $5.50 price differential.

“It’s $1.50 compared to $5.50 at the least. The very least,” Mr Demeritte told Tribune Business. “Inflation is already built in, and with energy costs, too, the price is effectively $28 per 1,000 gallons. I don’t like it.”

The agreement included a formula to allow water prices to be adjusted for inflation, based on the Bahamian Consumer Price and US Producer Price indexes.

The formula allowed for 55.5 per cent of the base price charged to western New Providence residents to be adjusted for changes in the Bahamian index, with another 16.3 per cent susceptible to changes in the US index. The remaining 28.2 per cent of the base price was carved out to keep it constant.

A similar formula that allowed prices to be adjusted for changes in electricity costs was also included.

Mr Demeritte, meanwhile, argued that his preferred solution would be for NPDevCo to supply the same franchise area - but do by purchasing bulk water from the Water & Sewerage Corporation.

That, he argued, would give the latter a greater margin than the axed agreement’s $1.50 per 1,000 gallons royalty.

“Dial it back and make sure it’s a win-win for everybody,” Mr Demeritte added.