The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Rival Bahamian groups have joined forces to form one combined bid to take over the multi-million dollar Windsor reverse osmosis plant, Tribune Business can reveal, with the Government yet to make a decision on a new operator.

Ednel Rolle, president of the Water & Sewerage Corporation’s management union, yesterday confirmed it had linked up with rival Bahamian bidder, EPS Consultants, and the line staff union to present a ‘united front’ in seeking to take over one of the two reverse osmosis plants that supplies New Providence’s water.

Mr Rolle said the various Bahamian groups had teamed “to minimise these issues of being divided. That’s why we had all parties come together”.

He added that Bahamian ownership and management of the Windsor plant was key, and an end to BISX-listed Consolidated Water’s water production monopoly on New Providence would potentially benefit Water & Sewerage Corporation customers in terms of lower prices.

Consolidated Water currently operates both New Providence’s existing reverse osmosis plants, Blue Hills and Windsor. While the BISX-listed operator would still retain the larger Blue Hills plant, Mr Rolle said that granting Windsor to another group would “at least create some competition”.

“That’s critical if we want prices to come down; we need competition,” Mr Rolle told Tribune Business.

Sorting out Windsor’s fate is vital to the security of New Providence’s water supply. Tribune Business revealed last year how Consolidated Water had warned the Government that an “urgent investment” of $3.328 million was needed to maintain its operational efficiency, with any delay potentially creating “an unsafe working environment” for its Bahamian staff.

This newspaper understands that the question of Windsor’s future operator - whether it is Consolidated Water or another entity - has now been passed to a Cabinet committee for a decision.

Consolidated Water’s contract to operate the plant came to an end in early July 2013, and it has continued running it on a month-to-month basis for the past seven months to give the Christie administration time to work out what it wants to do.

Deputy Prime Minister Philip Davis, who has ministerial responsibility for the Water & Sewerage Corporation, had initially wanted to issue a public tender for the Windsor contract, rather than take the option of extending Consolidated Water’s contract for another five years.

However, Tribune Business understands that subsequent high-level discussions, involving both Prime Minister Perry Christie and Mr Davis, were in January 2014 leaning towards giving Consolidated Water a five-year extension.

This, it is understood, would have been given in return for Consolidated Water agreeing to invest $3.3 million to immediately upgrade Windsor’s infrastructure and equipment, with the Government retaining an option to terminate the deal at any time.

In addition, the timing of any public tender or Request for Proposal (RFP) for the Windsor plant contract was being directly linked to reforms of the Bahamas Electricity Corporation (BEC) and energy sector, as this would impact water production costs.

Tribune Business, though, understands that the Water & Sewerage Corporation Board has been resistant to renewing the contract with Consolidated Water, and this helped force the matter back to the drawing board.

“The matter was referred to a Cabinet committee. It was taken away from the Board, especially as it no longer has a chairman (Bradley Roberts resigned last year),” a source said. “It’s a very fragile situation with Consolidated Water.”

Glen Laville, the Water & Sewerage Corporation’s, general manager, referred Tribune Business to the Ministry of Works when asked to clarify the Windsor situation.

Colin Higgs, the Ministry’s permanent secretary, has failed to respond to a series of questions on Windsor that were e-mailed to him two days ago.

All this suggests that Windsor’s fate has become something of a political ‘hot potato’. And the consolidation of all rival Bahamian bids into one will potentially create a thorny political dilemma for the Government given its election campaign slogan of ‘Believe in Bahamians’, and promised to put ‘Bahamians first’.

Granting a five-year extension to Consolidated Water would go against such promises, but the BISX-listed operator has already promised to stage a full initial public offering (IPO) of its local subsidiary to Bahamian investors if it retains Windsor. And it has also billed itself as the only entity with the necessary expertise and resources to operate Windsor.

“I understand it’s before Cabinet. No decision has been forthcoming,” Mr Rolle told Tribune Business yesterday of Windsor’s fate.

“I think in the end, I feel certain the Government will give it to us, but they want a certain level of comfort, and we’re unsure what that is.

“But all this running around and stuff, we’re not going to go away. We can’t afford to.”

Mr Rolle added that allowing the unions to operate Windsor would also help the Water & Sewerage Corporation to tackle a pension liability to their members that he estimated at “over $100 million”.

The Water & Sewerage Corporation’s last published accounts, for the 2011 financial year, showed a pension plan deficit of more than $70 million, with Mr Rolle hinting that this could be cut in exchange for the Windsor contract.

Both the management union and EPS Consultants, the group headed by former Water & Sewerage Corporation chairman Don Demeritte, submitted rivals bids to Consolidated Water for the Windsor contract. And it is thought that a third Bahamian bidder, PCP, together with the line staff union, have joined them.

Windsor represents an attractive top and bottom-line opportunity, the plant generating $1.8 million and $7.5 million in revenues during the three months ended March 31, 2013, and the year ended December 31, 2012, respectively for Consolidated Water.

Tribune Business previously reported that EPS Consultants had initially been the frontrunner for the Windsor contract because it offered the lowest cost per 1,000 gallons of water.

This newspaper was told that EPS Consultants offered a $5.75 per 1,000 gallons price, better than the management union’s $5.87 per 1,000 gallons and third bidder PCP’s $5.78 per 1,000 gallons.

Its bid was also significantly better than Consolidated Water’s offer, which was $8.63 per 1,000 gallons. The BISX-listed operator, though, reduced its offer in subsequent submissions sent to the Government.