The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A former Cabinet minister yesterday urged the new government to “fully disclose” the energy supply deal entered into by its predecessor, questioning who would finance the multi-million dollar BPL “conversion” bill.

Phenton Neymour, who had ministerial responsibility for BEC between 2007-2012, told Tribune Business that it was “unacceptable” for the former Christie administration process to have run such a secretive bidding process for so important an asset.

He questioned what the previous government “had to hide” in soliciting bids for new fuel supply for BEC’s successor entity, Bahamas Power & Light (BPL), if the agreement signed by the Christie Cabinet was as beneficial as claimed.

Mr Neymour said Perry Christie, in touting the deal during his resignation as Progressive Liberal Party (PLP) leader, raised numerous unanswered questions, including whether it was also intended to benefit Grand Bahama Power Company customers.

He added, though, that his primary concern was who would finance the multi-million dollar ‘conversion’ of BPL’s existing, aged generation units, as these were currently unable to burn the liquefied natural gas (LNG) cited by Mr Christie.

Mr Neymour also warned that the former administration’s ‘agreement’ could impede the Dr Hubert Minnis-led government’s efforts to get to grips with BPL’s financial and operational challenges, with load shedding already occurring on New Providence yesterday.

Kenred Dorsett, former minster of the environment and one of those asked by Mr Christie to disclose the agreement’s terms, yesterday told Tribune Business that ex-deputy prime minister, Philip Davis, would issue a statement on the matter.

Mr Dorsett said that while he “knew about the arrangement”, Mr Davis, as former minister with responsibility for BPL, had been more directly involved.

He added that he wanted to check the details, and co-ordinate with Mr Davis, agreeing that they should be disclosed and promising to get back to Tribune Business. He never did, and calls to Mr Dorsett’s cell phone last night were not returned.

Mr Davis did not respond to Tribune Business e-mail requests seeking comment, and details on the energy supply agreement, before press time last night. No statement was forthcoming by that time.

Mr Christie is always hard to de-code, but his resignation comments implied that the former government had entered into some kind of natural gas (LNG) supply deal with an unnamed company (New Fortress Energy), involving the construction of facilities in Freeport and New Providence.

He confirmed previous Tribune Business revelations that the deal was signed-off by his Cabinet just days before the May 10 general election, but then implied that it was non-binding on the incoming Minnis administration.

Mr Neymour, adding his voice to those expressing disquiet over the Christie administration’s seeming haste to sign a deal that could ‘tie the hands of its successor, slammed its efforts to shroud the process in secrecy.

“I am extremely disappointed that the previous government would find it fit to not even consult the Bahamian people on one of their greatest assets,” he told Tribune Business.

“The Bahamian people own BPL, and if their assets are being sold they should be consulted on this agreement, or at least be aware there is an offer on the table for consideration.

“I consider that to be unacceptable. I am calling on this agreement made under the previous administration to be fully disclosed. The Bahamian people own the assets.”

Tribune Business exclusively revealed just days before the general election that the Christie administration had secretly been soliciting bids to provide BPL with new fuel sources, and possibly even new generation assets and a power plant.

Multiple sources, including some linked to energy industry players approached, said several groups had been invited to participate in “a very weird Request for Proposal (RFP)” initiated by the Christie administration.

Tribune Business was told that the process, run directly out of Prime Minister Perry Christie’s office, set different terms and bid criteria for the various energy groups, with timelines similar to the tight deadlines involved in the New Providence landfill tender.

The leading contender was said to be New Fortress Energy, the subsidiary of a $72 billion New York-based asset manager, which signed a 2015 agreement to supply liquefied natural gas (LNG) to Jamaica Public Service Company (JPS), that Caribbean island’s energy provider.

Mr Neymour told Tribune Business: “The first question that has to be asked is: Why did the [Christie] Government enter into an agreement in secrecy?

“What did they have to hide? What did they have to fear if it was in the interests of the Bahamian people? If it was to their betterment, you’d expect it to be disclosed.”

The former minister said Mr Christie’s comments raised numerous questions yet to be answered, including whether the deal also involved supplying LNG to Grand Bahama Power Company, a private utility not owned by the Government.

However, Mr Neymour said the key issue was “the conversion of existing equipment” at BPL to enable its generation units to use LNG as their fuel source - a multi-million dollar upgrade that neither the utility nor the Government could likely afford.

“That would require some conversion of very old equipment and BPL does not have the capital for the conversion,” he added.”Who will pay for the capital for the conversion?

“That needs to be discussed with the Bahamian public. These are basis questions we have no answers to. I’m extremely concerned.”

Tribune Business previously reported that the Christie administration’s ‘deal’ would likely involve the supply of LNG fuel to BPL at a set price, providing certainty and lowering the cost of the latter’s fuel charge.

In so doing, the overall cost of electricity will be slashed for Bahamian businesses and households, and reliability improved.

This newspaper also reported that any such agreement would involve new generation units, and possibly an entirely new power plant, with the latter’s owner supplying BPL under a 25-year power purchase agreement (PPA) and eventually handing the facility over to the Government.

Energy industry sources, though, have questioned whether LNG is an appropriate fuel for the Bahamas, arguing that it only works in countries with larger populations.

“LNG is good, but is good for mass markets,” one source, speaking on condition of anonymity, told Tribune Business. “With a 300,000-400,000 population, we don’t have the capacity to make LNG an efficient fuel source for us. We don’t have the capacity to pay for it.”

The source explained that the Bahamas’ energy demand would not generate sufficient LNG volumes for the supplier, making any potential arrangement uneconomic.

They also pointed to New Fortress’s tie-up with JPS in Jamaica, suggesting that this arrangement had failed to deliver the promised benefits, and the latter was now being forced to convert all its power plants to LNG to make the deal work.

Mr Neymour, meanwhile, warned that the Christie administration’s dealings could “make the challenge even greater when it comes to turning BPL around, especially if it is bound by an agreement.

“The new administration has to get to work immediately to resolve these issues,” he added. “I have said before that the issues of Baha Mar and BPL will be two of the major issues this government has to face head on. There’s no honeymoon period with BPL, no honeymoon period.”