By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The number of bidders for the Bahamas Electricity Corporation (BEC) has been cut by one-third, the Government yesterday announcing that just six groups have been put through to the pricing round.
But, while the field may have been trimmed from the nine groups who submitted proposals in the ‘technical round’, a key government adviser yesterday indicated the tender process emphasised quality over quantity.
Simon Townend, a KPMG (Bahamas) partner and managing director of its corporate finance arm in the Caribbean, told Tribune Business that it was anticipating “some fairly robust bids” when the so-called ‘pricing round’ came to an end on November 15.
Adding that the remaining six bidders were all “high quality, credible groups”, Mr Townend said some were focusing on just one aspect of BEC’s business – either its generation or transmission/distribution assets – while others were looking at both.
He added that the three rejected bids were turned down because they did not meet “the criteria” the Government had specified in the Request for Proposal (RFP) document for a BEC partner(s).
“I think we’re on schedule,” Mr Townend told Tribune Business. “Hopefully, at the end of that [pricing] period, they will submit some fairly robust bids. We forge ahead.”
“Our view is that the bidders going through are highly qualified, credible bids that are going to be spending a lot of time on this for six weeks. We wanted to make it serious, qualified bidders who, hopefully, at the end of the day have a good result.”
The bidder field has been whittled dow n by more than half since the initial BEC RFP was launched in mid-August, some 13 groups paying their $25,000 to obtai n the bid document. Of those, only nine submitted formal proposals by the September 13 ‘technical round’ deadline.
Explaining why three bids were rejected, Mr Townend told Tribune Business: “There was quite an extensive range of criteria required in the first round, and it was felt the ones that met the criteria were the ones put through.
“I’m not saying the ones rejected weren’t quality groups; they just failed to meet the criteria the Government was looking for. There were some great concepts and good groups, but they did not address what the Government was looking for, technical or otherwise.”
Tribune Business can reveal that the nine bidders – the six that were successful, and the three that were not – were all notified of their fate by the Government yesterday. One bidder even called this newspaper to ask if it knew what was happening, one source close to it adding: “We’re waiting, we’re waiting, we’re waiting with bated breath.”
Mr Townend declined to identify those behind the six bidders who successfully navigated the first stage. However, among those considered likely to bid were Genting’s energy arm and the consortium featuring BISX-listed FOCOL Holdings and its partners, Grand Bahama Power Company majority shareholder, Emera, and generation plant manufacturer, Wartsila.
Another strong contender understood to have bid, and be in the mix, is the Caribbean Power Partners consortium headed by Texas-based investor, Taylor Cheek.
That group includes Fluor Corporation, which has extensive Bahamian and Caribbean experience, as the developer of its planned new power plant, plus ProEnergy Services as the operator and maintenance provider.
KPMG Advisory Services was hired by the Government to structure and oversee the tender process for BEC reform, plus evaluate the bidders and provide recommendations to the Government. It is working alongside DNV Kema, “one of the leading” energy, technical, and business consultants, and the Government’s US law firm, Hogan Lovells.
The six successful bidders will now be able to conduct more intense due diligence on BEC and the Bahamian energy sector. They will be able to make site visits on BEC’s headquarters and facilities, including its power plants, and interview/interact with BEC’s management and attend presentations.
The Government’s plans to reform BEC could see the electricity monopoly split into two. A joint venture partner is being sought for its generation assets, along with a management contract with a private sector firm for its transmission and distribution assets.
In the ‘pricing round’, bidders for the transmission/distribution management contract will have to submit a proposal detailing the fees they would charge, and what these will be based upon. The Government is looking for a proposal that sets out cost reductions, and a series of performance- based incentives the management company must hit, and which will be directly linked to its remuneration.
On the generation side, the Government is looking for a proposal that deals with the management and operation of BEC’s existing power plant assets, plus power purchase agreements for both existing and future facilities.
Other elements sought by the Government include minimizing fuel costs, and how the bidder will mitigate fuel price volatility, plus how it will improve the management of BEC’s Family Island power plants.
Once the pricing round is completed, Tribune Business understands the Government will select its preferred bidders (bidders), with negotiations targeted for completion before year-end.
The necessary legislative and regulatory reforms are supposed to be completed by March 2014, with the ‘hand over’ of BEC’s assets to the respective (or single) bid winner occurring on May 1.
The now-completed ‘technical’ stage had two main goals – getting to know the bidders and who they were, plus what they were proposing and how they would handle “the transition” from the ‘old BEC’ to the new arrangements.
Among the information sought in the first round were details on the make-up of the various consortia; the identities of the principals involved; and their financial details. Iinformation was sought on beneficial ownership plus financial wherewithal.
Other details requested were information on any Bahamian partners or participation; a bidding group’s specific areas of expertise and technology it could “bring to the table”; the geographic areas they already operated in; and existing relationships with regulators and consumers.
Comments
Reality_Check 11 years, 2 months ago
A foreign group with a longtime well established track record having both the expertise and financial resources is what's needed here; one without dead weight costly baggage added to it by our government in the form of Bahamian frontmen with political ties such as Snake and his cronies. Also, given the monopoly situation that will exist, it is absolutely vital that URCA be able to play a key regulatory role in the rate setting process for electricity sold to Bahamian consumers.
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