The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government has yet to reach a decision on the New Providence landfill operator’s request for its five-year management contract to be revised, with its recycling facility still a fortnight away from resuming operations.

Kenred Dorsett, minister of the environment and housing, told Tribune Business yesterday that the Christie administration had “made no determination one way or the other” on Renew Bahamas’ call for the terms of its deal with the Government to be altered.

The landfill operator revealed two months ago that the request was made after it had “lost millions of dollars”, which showed its original business model and financial projections were invalid.

Mr Dorsett said he expected to meet with Renew Bahamas and its senior executives this Thursday, having been informed by the Government’s own advisers that talks had reached the stage where “my intervention” was necessary.

He also confirmed Tribune Business’s previous revelation that the Government had hired the Kikivarakis & Co accounting firm to help it “better understand” Renew Bahamas’ financial model, and whether it was sustainable.

“No decision, no determination has been made one way or another on that matter,” Mr Dorsett told Tribune Business, when asked about the status of the Government’s negotiations with Renew Bahamas. “I’m expecting to sit down with them on Thursday to have discussions.”

Mr Dorsett emphasised that the Government’s technical advisers and third-party consultants had been engaged in ongoing talks with Renew Bahamas for several weeks.

He added that he now wanted to “understand” himself what was happening with the New Providence landfill, and Renew Bahamas’ materials recycling facility (MRF), which has been inoperable since its baler was damaged by fire in early April.

Explaining the Government’s decision to hire Kikivarakis & Co, the firm founded by ex-Deloitte & Touche (Bahamas) partner, Anthony Kikivarakis, Mr Dorsett said Renew Bahamas had yet to meet its contractual obligation to provide it with audited financial statements.

“By virtue of the agreement with Renew Bahamas, we expect them to provide audited statements,” the Minister said. “Those financials have not been completed for the financial year 2015 yet.

“We introduced Kikivarakis & Co to better understand the financial models, and to better understand it from a sustainability perspective, to see whether or not the financial model is working.”

Gerhard Beukes, Renew Bahamas’ chief executive and president, told Tribune Business yesterday that the company and the Government were working together to reach the best solution for all concerned.

Confirming that both sides were still talking, Mr Beukes said Thursday’s upcoming discussions were “not like a big crunch meeting”.

“We’re still working with the Government,” he added, “to ensure we come up with the best option for all the parties involved - the company, the Government and the country.

“The options are still being evaluated. There’s a very open dialogue and many moving parts. Everyone is looking to make sure the best decisions are being made.

“We want to be sure, and the Government wants to be sure, that any changes made are in the best interests of all parties involved.”

Mr Beukes told Tribune Business that Renew Bahamas had “a long list” of changes it was seeking to its management contract in order to make the landfill operation viable.

While declining to go into specifics, he added: “The biggest issue is that the country needs to change how we do things. We cannot expect a different result by doing the same thing.”

Mr Beukes explained that he was referring to the Bahamas’ culture, and attitude towards, waste collection, processing and disposal, which currently sees virtually all waste go into the New Providence landfill - something that contributes to the frequent outbreak of fires.

The Renew Bahamas principal, though, confirmed yesterday that its only revenue source - the MRF facility - was likely to be out of action for a further fortnight at least.

“We’re probably still a couple of weeks away from that,” he told Tribune Business. “We want to get that up and running, as it’s our only source of revenue.

“If we don’t sell product, we don’t get any money from any source, including the Government. The key is that we just want to have that fixed as soon as possible, as it’s the backbone of our operation.”

The recycling plant is currently inoperable because of the fire that damaged its bailer. While Renew Bahamas can still sort incoming waste streams for appropriate materials to recycle, the bailer’s absence meant there is nothing to form them into product suitable for sale and export.

Mr Beukes said the MRF had also been transforming incoming food waste, which is not suitable for recycling, into fill or aggregate that was used to compact the landfill.

In a previous interview with Tribune Business, he had estimated that Renew Bahamas could lose $750,000 - or $250,000 per month - as result of its MRF facility and bailer being inoperable, a projection that now looks reasonably accurate.

Explaining then why Renew Bahamas was seeking changes to its management contract, Mr Beukes said:” “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.”

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.

“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,” Mr Beukes said.

“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 company’s attempt to re-negotiate its contract, which runs until 2019, was an unwanted further headache for 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.