The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A rival Board member is accusing Bahamas Power & Light’s (BPL) ex-chairman of “making mischief where none exists” over aborted efforts to give Bahamians early relief from high energy costs.

Patrick Rollins, the utility’s now-former vice-chairman, told Tribune Business that proposals for BPL to jump-start development of New Providence’s new power plant itself by financing 100 megawatts (MW) of new generation capacity were approved by the full board - including former chairman, Darnell Osborne, and her faction.

Mr Rollins said the plan put forward by himself and BPL’s chief executive, Whitney Heastie, was intended to bridge the “three-year gap” to Shell North America’s planned 2021 completion of the new Clifton Pier-based facility.

Shell’s selection as the preferred bidder to build, own and operate the 270 MW multi-fuel plant was approved by the Minnis Cabinet in April, but the energy giant was unwilling to adjust its construction plans such that Bahamian households and businesses saw earlier relief from the burden of high power bills.

As a result, Mr Rollins and Mr Heastie suggested using some of the proceeds from BPL’s recently-concluded $100m short-term financing to fund construction of the first 100 MW of new generation capacity.

But, just as Shell’s technology and construction partners were ready to give a presentation on the plan, Mr Rollins confirmed that the BPL Board’s finance committee - made up of Mrs Osborne and her ally, Nicola Thompson - shut it down on the basis that the utility had insufficient cash flow to finance construction.

The former vice-chairman said this was accepted by all former Board members, adding that Mrs Osborne and her faction were trying to create a non-existent controversy through their Thursday night statement raising concerns over how the plan was handled.

And Mr Rollins also accused Mrs Osborne of an “extremely frustrating” failure of leadership in bringing negotiations over BPL’s Memorandum of Understanding (MoU) with Shell to completion.

Refuting claims that the Board’s technical committee, featuring himself and Mr Heastie, had failed to adequately answer MoU-related questions posed by other directors, Mr Rollins said the former chairman failed to call a meeting to address these concerns in time for the Shell agreement’s scheduled signing.

Mr Rollins described the increasingly bitter public dispute between the two former Board factions as “like an old horror movie”, comparing it to the Nightmare on Elm Street movie series featuring Freddy Krueger, the razer-gloved serial killer who frequently returns from the dead.

“It’s all about trying to make issues where there were no issues, and to make mischief where there shouldn’t be mischief,” Mr Rollins told Tribune Business. “I just wish this whole thing would stay dead. It’s like an old horror movie.

“This is going on for a second week. I’m calling this one of the scary movies Freddy [Krueger] is in. You think he’s dead and he comes back to life again.”

Mr Rollins hit back after Mrs Osborne and her former Board faction, featuring Ms Thompson and Nick Dean, last week accused himself and Mr Heastie of failing to advise them about meetings with contractors over the “early start” on New Providence’s new power plant.

“On May 4, directors Rollins and Heastie had counter-proposed to the Board that BPL enter into the consortium with Shell, and use its available funds from the interim financing to build the LNG plant and, by so doing, reduce the financing cost of the plant,” Mrs Osborne and her faction said.

“The Board had given the technical committee the approval to gather and present the information to the Board for construction of the LNG plant, so that an informed decision could be made. Directors Heastie and Rollins continued to travel and meet with contractors, without pre-advising the chair or other Board members.

“The chair and other Board members chastised them, and insisted that all prospective contractors be brought to the company to make presentations. Director Heastie seemed particularly angered when the Board refused to finalise a decision to build the plant on the insistence of chair Osborne that a tender report must be presented to the Board by the executives of the company,as is the normal protocol.

“On the day that a member of the executive made the presentation, the [Board] finance committee recommended that the cash flow could not support the construction of the plant by BPL until the Rate Reduction Bond (RRB) funding was in place.” The RRB represents BPL’s long-term financial restructuring, which is likely to be placed in 2019.

While largely confirming this version of events, Mr Rollins denied that he and Mr Heastie had conducted unauthorised meetings with power plant contractors. He disclosed that they only met with Shell’s technology and construction vendors, Wartsila and BWSC (Burmeister & Wain).

Shell North America’s proposal calls for both power generation and liquefied natural gas (LNG) regasification/bunkering facilities to be constructed at Clifton Pier, given that LNG is a key fuel source for the new plant. Shell plans to develop both “together at the same time”, rather than doing the power plant first to cause an immediate cut in light bills.

“We met with the Board and asked if we can get 100 MW to provide some relief to the Bahamian people upfront,” Mr Rollins told Tribune Business. “We met with the whole Board, and they decided it was a good idea. It was a unanimous decision.

“The finance committee called, and said the funds were available. Based on their answers we went and spoke to the two vendors Shell was speaking to, Wartsila and BWSC. We had them present proposals to the Board.

“It was at the time that proposal was presented to the Board that the finance committee said no, we don’t have the money. The finance committee reversed course and we said: ‘Ok, Shell will deal with it. When the power plant is built, it’s built’. We were trying to get some relief for the Bahamian people earlier.”

Mr Rollins then revealed that there were “certain options for BPL to be part of the whole consortium” with Shell that will own the new power plant, adding: “We would just have been advancing some monies upfront. Our investment in the power plant would be part of our investment in the consortium; that was our thinking.”

But Mrs Osborne and her group argued that using the $100m short-term BPL financing to kick-start the new power plant would have been contrary to the explanation given to lenders for why the funds were needed.

“The finance committee (of Osborne and Thompson) guided the Board to use the interim financing for the original intent,” they said. “The original earmark of funds were allocated to the [staff] VSEP settlement, Advanced Metering Infrastructure (AMI) initiative, and the many capital projects which had been languishing due to lack of funds. This approach also supported declarations which had been made to the lending syndicate.”

Mr Rollins’ comments, especially those relating to Wartsila and BWSC (Burmeister & Wain), are also likely to interest General Electric (GE). Tribune Business previously revealed how the leading multinational and electricity turbine manufacturer was complaining it “cannot get a fair hearing”, and was being shut-out of the process to supply both the new Clifton plant and short-term generation.

It is understood that GE has taken its complaints to both the US Embassy and the Trump administration’s State Department, having offered to provide 80 MW of short-term generation to BPL to “bridge the gap” between now and when the new Shell power plant comes on stream. This mirrors the Rollins/Heastie proposal.

Tribune Business also revealed that GE touted its offer as saving BPL and its customers around $75m per annum through reduced fuel costs alone. And, to sweeten the pot, GE offered a $110m funding facility to upgrade BPL’s transmission and distribution infrastructure.

But Mr Heastie, in an interview with Tribune Business last month, dismissed the GE short-term offer as “making no economic sense” because the narrow three-year timeline to the new power plant’s completion made it impossible to generate a viable investment return.

He also suggested that GE’s aeroderivative gas turbine engines do not work well in hot and humid environments such as the Bahamas - a charge GE is known to vehemently dispute, and it has provided evidence to refute Mr Heastie’s position.

Mr Rollins, meanwhile, described the Osborne faction’s account of events surrounding the Shell MoU negotiations as “a fabrication” and “absolute nonsense”. He blamed the former chairman for the delays, adding that former director Nick Dean - another of her allies - kept on asking questions for which answers had already been given.

“Shell came to the Bahamas, and negotiations were pretty much completed I would say by July 12,” Mr Rollins told Tribune Business. “At that meeting, a date was set for the signing. After, a lot of questions started to be asked about the MoU by director Dean.

“There were lots of answers going back and forth by e-mail. We were getting nowhere. We’d give an answer and the same question would come back. The chairman never tried to convene a meeting to have these issues addressed.”

Mr Rollins conceded that “it got to the point” where he asked BPL’s company secretary “to hold off” doing anything further with the Shell MoU “until we can get the chairman to have a meeting”.

“We never had a meeting to sit down and face-to-face discuss these issues,” he added. “There was no leadership to have this MoU signed. It was a total reversal of her [Mrs Osborne’s] position on July 12. It was very frustrating; extremely frustrating.”

Mrs Osborne and her group, in their statement last week, said Messrs Heastie and Rollins had been tasked with negotiating the Shell MoU as members of BPL’s technical committee. The first draft version was presented to the Board on June 28, 2018.

“Director Dean had put forward a number of questions which had been primarily ignored by the technical committee. In seeking to have all Board members’ views and the legal issues addressed, chair Osborne specifically asked that director Dean’s queries be addressed along with a few posed by her,” the statement said.

“After noticing a delay in progress, she [Mrs Osborne] sought out the manager of legal about the urgency of finalising the document, and was informed that director Rollins issued instructions to put the MoU on hold. This direction was given days before the agreed signing date with Shell, and without the knowledge of the chair and other members of the Board.

“Chair Osborne then issued an e-mail to director Rollins inquiring on what basis the Shell MoU was put on hold, to which a response was never received. A few days prior to director Rollins’ issuance of the ‘on hold’ instructions, minister Bannister issued a directive to chair Osborne via director Rollins to sign the MoU by end of the same day. Chair Osborne responded that all of the directors’ concerns and some other legal issues had not been settled, and the document was not ready.”

Mrs Osborne and her group then said Messrs Heastie and Rollins, together with attorney Ferron Bethell, gave minimal notice of their non-attendance at an August 13 Board meeting where the Shell deal was to be discussed.

The latest developments show that the Shell power plant, and hopes of more reliable, lower cost energy for Bahamian consumers, are increasingly being caught in the cross-fire of the allegations and counter-allegations between the two former Board factions.

The row over make-up bills and security cameras is effectively a sideshow, and distraction, from the real issues at BPL that have the potential to affect all Bahamians in terms of their light bill, plus the utility’s operational and financial performance, and well-being of staff.

The battle, which split the former Board in two, seems to have resulted from a power struggle between Mrs Osborne’s faction and that featuring Messrs Rollins, Heastie and Bethell. It appears to have been sparked when Mrs Osborne was not made executive chairman, and Mr Rollins instead appointed executive director at BPL.

While no longer on the Board, Messrs Heastie and Rollins remain part of BPL’s executive management as chief executive and executive director, respectively. And Mr Bethell is the only director from the old Board to be appointed to the new one. As a result, many observers believe the real objective behind the former Board’s dissolution was to remove Mrs Osborne and her allies.