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Davis: Albany missed energy reply deadline

By NATARIO McKENZIE

Tribune Business Reporter

and NEIL HARTNELL

Tribune Business Editor

The Opposition’s leader yesterday said the Albany developers’ proposal to rescue Bahamas Power & Light (BPL) did not proceed after they failed to meet a key deadline.

Philip Davis, who had ministerial responsibility for BPL and its parent, the Bahamas Electricity Corporation (BEC), said Joe Lewis and his Tavistock Group investment vehicle failed to submit the necessary responses to questions posed by the Christie administration’s energy Task Force.

Albany’s managing partner, Christopher Anand, on Tuesday said the $1.5 billion project’s developers offered the former government $700 million to “fix the issues” at BPL and the New Providence landfill. However, for “some reason” the offer was never accepted, and Mr Anand said the developers felt “jerked around” by the former government.

But Mr Davis told Tribune Business yesterday: “I am not aware of a proposal related to the dumpsite. I am aware of a proposal with respect to providing funding for a generation plant which would have assisted in dealing with the challenges at BEC.

“The Government had received a number of unsolicited proposals from various entities. As a result of this, the Government had decided to appoint a Task Force to look at those various proposals.”

Mr Davis added: “The Task Force reported that it had not found sufficient common denominators between the various proposals. They had a challenge undertaking a comparative analysis.

“What they did was they then invited the various entities, including Albany, to respond to questions which would have achieved that objective. Albany may have responded to those questions, but their response came after the timeframe which had been fixed for responses. My recollection is that they did not respond in time.”

Mr Davis’s recollection was backed by a former high-level official in the Christie administration who, speaking on condition of anonymity, said the Opposition leader and Deepak Bhatnagar, who is still on the BPL Board, had primary responsibility for the initiative.

“There was a deadline issue,” the source said. “There was no standard RFP that had been issued. There were a bunch of unsolicited proposals, of which Albany was one.

“To try and rationalise it, they sent out a list of questions and everyone had a timeframe to respond. I don’t know if Albany responded in time.”

However, another contact intimately familiar with the Christie administration’s energy reform efforts provided a different explanation for why the Albany developers’ offer was rejected.

They explained that Albany’s proposal was structured such that it would finance the construction of a brand new, modern power plant for New Providence that would provide reliable energy at a cheaper price - in total contrast to what Bahamians now get from BPL.

The power plant would have sold its electricity to BPL via a 20 or 25-year power purchase agreement (PPA), a standard industry contract, with the revenues generated used to provide a return on Albany’s capital and subsequently repay its principal.

“Albany didn’t have a vested interest in the build-out,” the source said, “they just wanted to finance the project and provide the finance. But it was way too expensive in terms of the PPA, and the length of time it would have taken to pay them back under the PPA.

“The then-government looked at it, reviewed it, did some real analysis of the deal, and concluded the deal was not in their best interests.”

They added: “Albany did quite a bit of research in terms of the best solution, and looked at a combined fuel operation, starting with burning heavy fuel oil (HFO) and transferring to liquefied natural gas (LNG).

“They did their research, did their homework, but long-term the price they were asking was way above what anybody thought was reasonable.” They suggested that Albany’s proposal priced the energy the plant would sell at 17-18 cents per kilowatt hour, when rivals were offering production prices of 9-10 cents per kilowatt hour.

Tribune Business understands that Albany’s proposal was especially active in late 2015 and early 2016, around the time that PowerSecure signed its five-year management contract to operate BPL.

This newspaper was informed that Albany and PowerSecure discussed the former’s proposal, and that it was quite happy for the US company to remain as BPL’s managing operator.

“They reached out to PowerSecure initially, had a few meetings, but government didn’t have the appetite for it at the time,” a source said, “having just signed on with PowerSecure.

“The Government did bring independent analysis to the table, and no common ground was to be found.”

Mr Anand declined to comment further when contacted by Tribune Business yesterday, but this newspaper understands he feels the main point he was trying to make became lost by the focus on Albany’s offer.

His remarks were intended to emphasise the desperate need for the Minnis administration to solve the Bahamas’ energy crisis as rapidly as possible, given that the supply of high-cost, unreliable electricity is retarding both economic growth and household disposable income.

They were also designed to illustrate the ‘opportunity cost’ of the former Christie government’s five-year failure to properly resolve the problem, regardless of whether it selected Albany or any other proposal as the solution. Albany’s offer was designed to benefit the wider Bahamas, not itself, given that it has its own generator capacity for when BPL power is out.

Tribune Business understands that Albany feels its proposal was ultimately pushed aside by the Christie administration in favour of a “very weird” Request for Proposal (RFP) that saw New Fortress Energy selected as the preferred bidder - a deal exclusively revealed by Tribune Business.

Sources had described the Christie administration’s energy RFP, which was run out of the Prime Minister’s Office, as “very weird” and lacking in transparency, with different bid terms and criteria for different groups.

The multi-billion dollar AES Corporation described the process as “non-transparent” and “not what we are used to” in other central American and Caribbean markets where it has competed on LNG supply and power generation deals.

But members of the former Christie administration urged the Government to act swiftly and move ahead with the New Fortress, arguing that it would deliver significant energy cost savings and economic benefits for the Bahamian people. These ‘benefits’, though, were never quantified in terms of dollars and percentages.

Desmond Bannister, minister of works, told Tribune Business earlier this month that the Minnis administration would not be moving forward with the offer submitted by New Fortress Energy. He added that New Fortress, together with all potential bidders offering solutions to the Bahamas’ energy generation woes, would be invited to participate in a new Request for Proposal (RFP) exercise to be overseen by Bahamas Power & Light’s (BPL) new Board.

Mr Anand had urged the Minnis administration to “work with them” to solve the problems plaguing the electricity sector as well as the consistent fires at the New Providence Landfill. He made the remarks during a tour of Albany with Prime Minister Dr Hubert Minnis and members of his Cabinet on Tuesday.

Comments

Well_mudda_take_sic 7 years, 4 months ago

Minnis needs to remove Deepak Bhatnagar from the board of BPL asap. This subservient civil servant is completely incapable of thinking for himself and only does what he perceives to be his paymaster's bidding no matter who is paymaster may be. His sole concern is self-preservation and protection of his government pay cheque and health and pension benefits. He is very much ill-equipped to serve the interests of the Bahamian people!

sheeprunner12 7 years, 4 months ago

Why is a Coolie sitting on a Bahamian Board?????? ...... Whose interests is he protecting??????

The_Oracle 7 years, 4 months ago

Meaning a check wasn't cut in time to be considered the primary candidate for ministerial consideration for favorable "in pocket" lubrication!

sealice 7 years, 4 months ago

The PLP didn't want anything to do with this because Albany's deal was structured to tight = the PLP coudn't control it and bleed it dry of money so they looked for someone that it would have been easier to steal from ...

Alex_Charles 7 years, 4 months ago

probably didn't offer to pay someone $250,000 under that table. Gold ain't no different from Red in this case. The 'trust' in Bahamian government institutions is gone, and not solely because of Davis & Co., but because of multiple administrations doing foolishness.

Davis' position now of defending the previous administration's constant failures should be a cautionary tale to the Minnis administration.

sheeprunner12 7 years, 4 months ago

Yep ......... from what we are seeing ....... No kickbacks were offered to the PLP Cabinet

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