The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A trade union is threatening legal action over the Water & Sewerage Corporation’s $8.9 million water plant deal with a BISX-listed company, amid an outcry that Bahamian groups were not given a proper chance to bid.

Ednol Rolle, the Water and Sewerage Management Union’s (WSMU) president, told Tribune Business that the agreement to give Consolidated Water a new 15-year contract to operate the Windsor reverse osmosis plant breached its own industrial agreement with the Corporation.

Promising that the union will challenge the deal, Mr Rolle confirmed that it would “most likely” result in legal action, as this was the only method to overturn the contract award.

The Corporation’s decision to renew its relationship with Consolidated Water also angered a rival Bahamian investor group, which questioned why the Windsor plant contract had not been the subject of a proper public tendering process that was open to rival bidders.

Don Demeritte, principal of the EPS Consultants’ consortium, told Tribune Business that the Corporation’s decision “flies in the face of everything that speaks to empowerment of Bahamians and entrepreneurial development for Bahamians”.

Tribune Business revealed last month that Consolidated Water, which has local ownership via Bahamian Depository Receipts (BDRs) that are traded on BISX, had agreed a new 15-year deal to supply the Corporation and its thousands of New Providence customers with water from the Windsor plant.

Leslie Miller, the Corporation’s chairman, suggested then that the deal would produce annual savings of up to $4 million per year, and was “in the best interests of the Bahamian people”.

No further confirmation or information was forthcoming, though, until a Consolidated Water regulatory filing with the Securities & Exchange Commission (SEC) on December 19, 2016, said it had signed a deal with the Corporation (WSC) six days before.

While Consolidated Water now has a secure, long-term 15-year agreement to own and operate the Windsor plant, the Corporation and its customers in return will be supplied with 14 million gallons at an 18 per cent discount to the current price.

The BISX-listed company also has to invest $8.9 million in upgrading Windsor, one of two reverse osmosis plants that supply the Corporation’s New Providence customers, to ensure it meets performance targets.

“On December 13, 2016, the company and the WSC executed a Letter of Acceptance, pursuant to which the WSC accepted the company’s proposal to extend the water supply agreement for 15 years on a take-or-pay basis for a minimum of 14 million gallons per week,” Consolidated Water said.

“Pursuant to the Letter of Acceptance, the company will be required to complete capital improvements to the Windsor plant, which the company estimates will cost approximately $8.9 million, to ensure that the plant can meet its performance guarantees.

“The per gallon price for the water to be supplied under the extended agreement, excluding the pass-through energy component, is approximately 18 per cent less than the current price. The remaining terms of the extension are substantially consistent with those of the original agreement.”

Consolidated Water had been operating the Windsor plant for three-and-a-half years on a month-to-month basis, following the July 2013 expiration of its previous supply contract.

The Christie administration had seemingly been unable to make a decision on whether to renew the relationship or find another operator, but Consolidated Water’s SEC filing said it submitted a new proposal in August 2016.

The Windsor plant generated $4 million in revenues during the nine months to end-September 2016, but the new agreement will likely increase that.

“The company and the WSC intend to execute a formal amendment to the water supply agreement, until which point the Letter of Acceptance, together with the company’s proposal, will serve as a binding agreement,” Consolidated Water said.

Mr Rolle, though, argued that the Consolidated Water deal would breach his union’s industrial agreement with the Corporation.

This requires that WSMU members be given ‘first shot’ at all Corporation outsourcing contracts - a position that was upheld by the Supreme Court in January 2016.

Then-Acting Justice Brian Moree QC held that the Corporation had previously violated provisions giving union members a ‘90-day exclusivity’ period on two Family Island projects, rejecting its argument that the relevant industrial agreement section - Article 29 - only applied if WSMU members were made redundant.

Mr Rolle expressed surprise upon learning from Tribune Business that the Consolidated Water agreement had been completed, having initially said: “That deal ain’t finalised.”

He added that he had written to Mr Miller, following Tribune Business’s November article, to discover the status of negotiations with Consolidated Water, but received no reply.

“We’re going to challenge it,” Mr Rolle said of the Consolidated Water deal. When asked whether this meant legal action, he replied: “Most likely. That’s the only way we can challenge it.’

Mr Rolle then added: “It can’t be good based on their [Consolidated Water’s] prior history. It can’t be a good deal.

“I don’t know if they modified the contract to deal with some of the issues under the old contract. The big issue is the water quality issue. That will be part of the legal side.

“We’re very concerned based on the fact we had water quality issues with them that were never corrected, and the Corporation is planning for them to continue.”

With Consolidated Water also operating the other Nassau-based reverse osmosis plant, Blue Hills, the Windsor contract effectively confirms its status as the monopoly wholesale supplier on New Providence to the Corporation and its customers.

Mr Demeritte, the former Corporation chairman who headed the rival EPS Consultants group in its bid to take over Windsor, said he was “extremely disappointed” by Consolidated Water’s new contract.

He added that both EPS and the union had offered the same terms and proposal to the Corporation, and said: “At the very least, in this economic climate, you’d expect that they would have put this out to tender.

“It flies in the face of everything that speaks to the empowerment of Bahamians and entrepreneurial development for Bahamians.”

Mr Miller, though, previously told Tribune Business that a deal with EPS Consultants or any other rival bidder “makes no sense”, as they would have to build “a brand new plant” due to terms previously agreed with the BISX-listed company.

Once Consolidated Water hit the Windsor water production target set by its last contract in July 2013, the Water & Sewerage Corporation could either agree a five-year extension or take one of two other options.

These were to either acquire the Windsor plant, and all associated materials and equipment, from Consolidated Water at an agreed price, or for the latter to effectively dismantle the facility and remove all assets.

Given the cash-strapped position that the Water & Sewerage Corporation and the Government find themselves in, these terms could be viewed as amounting to a ‘poison pill’ that favoured a new contract for Consolidated Water over any rival buyers.