The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

and NEIL HARTNELL

Tribune Business Editor

Renew Bahamas yesterday confirmed it is in “active’ talks with the Government to alter the terms of its five-year landfill management contract, after “substantial” losses showed its original financial projections were invalid.

Gerhard Beukes, Renew Bahamas’ chief executive and president, told Tribune Business that change was essential if the New Providence landfill manager was to have a viable business going forward, as it had “lost millions of dollars” to-date.

Mr Beukes also revealed to this newspaper that the company could lose up to $750,000 in revenue as a result of the latest landfill fire, which had damaged a key component of its materials recycling operation.

Predicting that this facility could be out of action for six to eight weeks, the Renew Bahamas chief said it now had “a better understanding” of what a viable landfill management operation requires.

However, the company’s attempt to re-negotiate its contract, which runs until 2019, is likely to be a further blow to the Christie administration, which is already under immense public pressure over the recurring landfill fires - and the associated environmental, health and economic impact on nearby communities and businesses.

The Government placed much faith in Renew Bahamas to solve the landfill’s woes, and is likely to be unhappy that the firm is seeking to alter the deals financial terms just two years in.

Mr Beukes, though, while confirming that the company is trying to re-negotiate its management contract, said it had not laid-off any of its 124 employees.

“Yes, we have been in discussions with the Government. We haven’t laid-off anyone that; has not happened,” he told Tribune Business.

“What we are asking government to consider is to change the financial terms of our arrangement. We have lost millions of dollars. Our financial situation is not good.

“What we are trying to do is change the profile of the contract, which means that we would be a viable business going forward. There are some ideas we are working on to ensure that a significant piece of ownership is transferred to Bahamians.”

While not disclosing any figures, Mr Beukes described Renew Bahamas’ losses to-date as “substantial”.

He described the landfill management contract as “a classic frontier investment”, and said there had been numerous “unknowns” that Renew Bahamas was now aware of, but which it had not allowed for in its original business plan and projections.

“The phrase I like to use is: ‘I don’t know what I don’t know’,” Mr Beukes explained. “There were a lot of unknowns taken on with a project like this.

“It’s a classic frontier investment, given the state of solid waste management and recycling compared to other countries. The revenue, and the costs associated with this project, were very difficult for anybody to project.

“There were multiple unknowns, and as we developed the project we realised what the unknowns are, and were able to quantify them. A lot of it you can see, but a lot of it you can’t. We have a better understanding of what a viable project is.”

The latest issue plaguing the New Providence landfill was exposed after the Free National Movement (FNM) yesterday revealed an e-mail sent by Renew Bahamas to one of its vendors, informing them that it was unable to make payment in full for services rendered until there was a “resolution” to the discussions with the Christie administration.

The e-mail, sent on Tuesday this week to James McPhee, of EJ’s Trucking and Heavy Duty Equipment, said: “We can make an interim payment today on this invoice, with another one to follow as soon as we get resolution from the Government.

“Please know that we are not in a position to settle in full today; this is the case across all our suppliers, while we wait for the Government.”

The e-mail, sent by Sarah Beukes, was copied to numerous other Renew Bahamas executives, including Mr Beukes; Michael Cox, its chief operating officer; and Andrew Knowles, its head of communications.

The FNM described the e-mail as “extremely troubling”, given the landfill’s frequent fires and other problems, and urged the Government to “come clean” and fully disclose the original contract with Renew Bahamas.

Mr Beukes, in response, expressed disappointment that Mr McPhee had chosen to leak the e-mail to the FNM and Bahamian media.

“We sent one e-mail on Tuesday to a supplier saying that we were willing to make a small payment, and we were not able to make the full payment,” he said.

“It was a private business-to-business e-mail sent in good faith to show that we are trying to work with everyone, and we are very disappointed that that particular supplier decide to go this route.”

Mr Beukes added: “All of our suppliers work with us; they are our partners, and they understand that if we can do this for a long period it will mean more work for them - we can expand and we can do more work with them.

“I think people understand. We have lost some suppliers over the years and months, but still there others who believe in the project.”

Renew Bahamas’ material recycling operation at the landfill is likely to have been negatively impacted by the fall in global commodity prices, which will hit revenue earnings on the products it exports.

And Mr Beukes confirmed yesterday that its recycling plan is currently inoperable, as it is “still undergoing repairs following the recent fire that damaged its bailer.

“It was a very sophisticated bailer that we purchased, and it will probably take six to eight weeks to get back into full production,” he told Tribune Business.

While Renew Bahamas can still sort incoming waste streams for appropriate materials to recycle, Mr Beukes said the bailer’s absence meant there was nothing to form them into product suitable for sale and export.

“The revenue loss could be about $750,000,” he added, disclosing that this was based on Renew Bahamas’ average monthly top-line of $250,000.

Kenred Dorsett, minister of the environment, was sent a copy of the FNM statement by Tribune Business as he arrived in New York for the UN’s latest Climate Change summit. However, he never contacted this newspaper back for comment.

Yet Mr Beukes reiterated: “We are in very active discussions with the Government as to what we can do, and what we can’t, with regard to the potential changes.”

Tribune Business contacts familiar with developments, though, revealed the Government and its agencies have been reaching out to previous landfill bidders who were rejected in favour of Renew Bahamas.

This suggests the Government may be exploring its options, and seeking alternatives, in case it is either unable to reach a satisfactory agreement with Renew Bahamas, or the company proves unable to tackle the recurring fires.

The frequent blazes are a political liability for the Government, which is approaching a general election year, and the situation has already resulted in public protests and negative media coverage.

Among those likely to be watching the latest developments are the Waste Resources Development Group (WRDG), the Bahamian consortium of waste service providers, which submitted a landfill management plan ultimately rejected by the Christie administration in 2013-2014. They have since submitted a wood/green waste recycling plan that would take out around 25 per cent of the material going into the landfill currently.

The same applies to Stellar Energy, the firm at the centre of the so-called ‘Letter of Intent’ (LOI) controversy, which has its own designs on the landfill. Both itself and WRDG had submitted waste-to-energy proposals.

Much has changed since Mr Beukes acknowledged to Tribune Business last year that Renew Bahamas was facing a tight ‘break even’ goal over its original business plan.

He added that the company would have to export 10-12 containers of recycled materials daily to “break even” and recoup its $8 million investment, but said it was comfortable with the risk despite incoming waste streams being unlikely to support “much more than that”.

Mr Beukes then expressed optimism that Renew Bahamas would “hit” at least $8-$9 million in annual revenues from its recycling efforts, and disclosed that the Government’s share was based on a “sliding scale” capped at 50 per cent.

He that it was “unlikely” that the Government’s share would reach the 50 per cent mark, given that this only kicked in when Renew Bahamas’ annual recycling revenues hit around the $12-$14 million mark - a sum higher than his $8-$9 million estimate.