The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Opposition’s deputy leader yesterday said he was “sure” it would ask questions about BEC’s executive chairman seemingly running his own bidding process for the Corporation, describing the situation as “highly, highly irregular”.

K P Turnquest questioned how Leslie Miller could encourage an energy group that was kicked out of the official BEC tender process to submit a revised proposal, given that he was not in charge of the bidding.

Tribune Business exclusively revealed yesterday how Mr Miller reached out to the Bahamas Power Management (BPM) group after they were removed from the official BEC bid process at the first hurdle, and sought “to gauge their interest in proposing once again through a different framework”.

“While I don’t have the facts, if it is true, it certainly is very unfortunate and highly, highly irregular,” Mr Turnquest said of this newspaper’s revelations.

“That you have a sitting chairman doing this. How could that happen? He didn’t have control of that situation [bid process], so how could he open up the process to a company that had been thrown out? It’s highly, highly suspect.”

Mr Turnquest added that any potential investor bidding on future government tenders would be concerned by the situation, as it created “the appearance” that certain groups were being favoured through being given an inside track and provided with inside information.

Mr Miller initially denied having any dealings with the BPM group, although he later conceded that its Bahamian partner, Glenn Lowe, president of Treasure Coast Development and Construction Company, had contacted him several times in relation to BEC.

He also denied knowing what BPM meant when it referred to “certain incongruities with Mr Miller” in its March 6, 2015, letter to Prime Minister Perry Christie, which revealed how the group switched to dealing with Deputy Prime Minister Philip Davis.

Mr Turnquest, meanwhile, said the Free National Movement (FNM) would also be paying close attention to the terms of the five-year management contract that the Government is trying to seal with preferred BEC bidder, PowerSecure International.

He expressed concern that the proposed BEC refinancing, which might cost up to $750 million, would burden Bahamians with even higher electricity prices before PowerSecure is able to reduce the Corporation’s costs. This is because the debt refinancing will be secured by BEC customers’ monthly light bill payments.

“We will certainly be watching the evolution of this whole entire deal very closely,” Mr Turnquest told Tribune Business. “We would want to understand how the deal with PowerSecure is structured, how it was conceived, to ensure it’s the best deal for the Bahamian people.”

He added that the selection of a management company for BEC “doesn’t make a lot of sense”, as it would be something that Bahamians could do themselves.

Mr Turnquest also questioned why the proposed ‘rate reduction bond’ to refinance BEC had not been implemented previously, as this would ensure PowerSecure does not have to concern itself with the Corporation’s balance sheet woes.

The bond proposal would see all BEC’s legacy debt, bonds, payables, pension fund deficit and environmental liabilities transferred off its balance sheet into a special purpose vehicle (SPV).

This SPV will then issue new bonds to investors to refinance BEC’s legacy debt and liabilities, and the investors will be repaid by monies generated from an additional charge added to Bahamians’ light bills.

“We need to understand at the end of the day what it means to Bahamian electricity consumers in terms of additional service costs,” Mr Turnquest added.

“From what I’m reading it’s not a slight increase; it’s a significant increase. Two cents per kilowatt hour can add up very quickly. Unless they come up with real cost reductions, either through generation or transmission and distribution, we’re going to end up with even higher bills than we have currently.”

Prime Minister Perry Christie previously suggested some $460 million needs to be refinanced, but some have suggested the total amount is really nearer to $750 million.

Elsewhere, observers intimately familiar with BEC suggested that PowerSecure would have to recommend even deeper cuts than the 200 job losses proposed to-date if it was to hit its energy cost reduction targets.

One observer suggested that a modern New Providence generation plant could be run by 50 persons, as opposed to the 300 that BEC currently has in this segment of its business.

And they suggested that many of the 279 staff BEC has in the Family Islands, split between transmission and distribution, may also not be needed. BEC’s current workforce numbers between 1,100-1,200.