The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Opposition’s deputy leader yesterday described plans by the ‘new BEC’s’ manager to use Family Island Crown Land for solar farms as “a slap in the face to the Bahamian people”, while questioning the absence of a long-term business plan.

K P Turnquest told Tribune Business that based on its executives’ initial comments, PowerSecure appeared to be offering nothing that the former BEC’s Bahamian management - or local investors - could do.

And he again reiterated concerns that the five-year management contract granted to the Carolinas-based company provided it with an incentive to focus on meeting short-term performance targets, so it could earn an additional $3 million per year, rather than the long-term sustainability of Bahamas Power & Light (BPL), the new BEC operating subsidiary.

“Nothing has been offered in terms of a creditable and long term plan for our $900,000 investment,” Mr Turnquest told this newspaper, referring to the Transition Services Agreement (TSA) that PowerSecure signed with the Government back in July 2015.

He added “that nothing particularly novel or innovative has been offered”, and suggested that the Government’s decision to outsource BPL’s management to a foreign firm was contrary to its ‘Believe in Bahamians’ campaign slogan.

However, a source close to the BEC and energy reform process, speaking on condition of anonymity, said PowerSecure had developed “a very comprehensive” plan for BPL, which had been presented to both the Board and the Government.

Refuting Mr Turnquest’s assertions, the source said “the plan actually goes out 20 years”, with a focus on both the first five-year and 10-year intervals.

They suggested that something may have been ‘lost in translation’ at Monday’s press conference, when Ronnie Brannen, PowerSecure’s president of utility and infrastructure, said it had submitted 30-day, 60-day and 90-day plans to BPL’s Board.

The source said while these short-term timeframes were contained in the plan, they merely set out PowerSecure’s immediate priorities for BPL, and what it will seek to address within the first three months as it gets to grips with all aspects of the energy monopoly.

“Within the plan there are 30-day, 60-day and 90-day timeframes,” they told Tribune Business. “You have project planning, prioritising what you’re going to do.

“The plan is very comprehensive, very complex and very detailed, and it’s something you can take to an investment bank.”

PowerSecure’s business plan for BPL has to be extensive if the company, and the Government, are to have any hope of refinancing BEC’s existing $400 million legacy debt, plus associated pension, environmental and other liabilities.

The plan must be credible for investors to buy into the proposed $600 million Rate Reduction Bond, which will be placed in the Bahamian and international capital markets to help clean up BEC’s financial mess.

Without the successful completion of that refinancing, PowerSecure’s and BPL’s hands will be tied in terms of their ability to finance, and invest in, much needed upgrades to generation plant and infrastructure that the Deputy Prime Minister has suggested will cost $450 million over a five-year period.

“That’s a big transaction,” the source said of the Rate Reduction Bond. “That’s the next big step on the financial side.

“It’s being actively pursued. Discussions are ongoing. There’s no formal decision just yet, but it’s likely that it will be relatively imminent.”

Mr Turnquest, though, hit out at PowerSecure’s eagerness to exploit Crown Land in the Family Islands for renewable energy projects, questioning whether this would be provided to BPL at no cost.

“The solar farm use of Crown Land is another slap in the face of the Bahamian management and staff, as well as the Bahamian people,” he told Tribune Business.

“Not only do we have to suck up the legacy debt through a bond charge, thus giving PowerSecure a clean slate from which to start, now they are proposing to add free Crown Land to the mix.”

Mr Turnquest also questioned whether Bahamian electricity bills would be burdened with an extra charge to pay for PowerSecure’s plans to bring in temporary generation units to supplement BPL’s existing capacity.

Mr Brannen yesterday suggested that the temporary generation assets would enable BPL to focus on maintenance and upgrades to its existing generation plant, ensuring a consistent and reliable electricity supply while those units were taken off-line,

“What will be the additional charge necessary to fund temporary generators this summer (nothing new there), and what will be the additional cost to recover the investment needed to upgrade the generation capacity,” the FNM’s deputy leader asked.

“What is the fuel mix they propose? What is the new technology they propose? How many people will be released, and when? What prevented BEC’s previous Board and management from doing the same? Was it politics?”

Mr Turnquest again expressed concern that the $3 million performance bonus, and five-year contract, gave PowerSecure” the incentive to cut corners in the short-term at the expense of long term benefit”.