The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Arawak Cay’s port operator has joined a bid to supply Bahamas Power & Light (BPL) with liquefied natural gas (LNG), as it seeks to diversify from 100 per cent reliance on cargo shipping.

Mike Maura, Arawak Port Development Company’s (APD) chief executive, confirmed to Tribune Business that it had teamed with New Fortress Energy, the company identified by the former administration as its preferred energy solution, on a “tender” to provide the utility monopoly with a new generation fuel source.

He added that, if successful, the offer would provide the Arawak Cay port with a new revenue stream to reduce its reliance on commercial shipping while also covering “a portion” of the BISX-listed operator’s expenses.

Besides the “national benefit” from reduced energy costs and a more reliable, cleaner fuel supply, Mr Maura said the bid - which also includes Bahamian financial advisory firm, CFAL - could provide “cold storage opportunities” for fisheries and agriculture producers.

“APD has remained focused on the diversification of business,” the APD chief told Tribune Business via e-mail. “In an effort to participate in the Bahamas’ energy reform, APD has partnered with New Fortress Energy and CFAL in a tender to BPL to provide natural gas-fuelled power generation.

“The group believes that the new business opportunity provides a national benefit and shareholder value. The introduction of LNG to the Nassau Container Port provides a new revenue stream for APD, and offers new cold storage opportunities for local seafood and agriculture.

“The new business will add incremental income, which will serve to cover a portion of the port’s operating expenses, while reducing the risk to APD’s 11,000 shareholders stemming from a dependence on traditional cargo throughput, and introduce new investment opportunities for all Bahamians.”

Mr Maura did not provide further details on the APD-New Fortress-CFAL offer, although it will likely involve the development of an LNG storage/regasification terminal at the Arawak Cay port location.

New Fortress, as the fuel supplier, will likely ship the LNG to APD from its facilities in Florida. From there, the gas will likely be transported by pipeline from Arawak Cay to BPL’s Blue Hills power plant, where it will be used to drive the utility’s generation equipment.

New Fortress, the subsidiary of a multi-billion dollar New York asset manager founded by its principal, Wes Edens, appears to be targeting the Bahamas as its next ‘entry point’ into the Caribbean energy market.

It has already inked an LNG supply deal with Jamaica’s electricity supplier, Jamaica Public Service Company (JPS), and in late 2017 announced a $1 billion infrastructure investment in that island that includes the construction of several power plants.

And New Fortress recently agreed an LNG supply deal with Freeport-based Polymers International, which will see the latter use the fuel to run its boilers. Greg Ebelhar, Polymers’ chief operating officer, revealed that New Fortress was also interested in establishing an LNG terminal in Grand Bahama.

New Fortress was selected by the Christie administration as its preferred partner to solve the Bahamas’ energy woes. Opposition leader, Philip Davis, said the company’s proposal called for it to supply energy to BPL via a 25-year power purchase agreement (PPA).

Outlining the terms left behind by the former administration, Mr Davis quoted two prices at which New Fortress would provide electricity.

He said it had offered to supply energy at 13.5 cents per kilowatt hour (kwh) from 120 Mega Watts (MW) of “supplemental”, or additional, generation units that would be installed at BPL’s existing Blue Hills power plant.

And, looking longer-term, Mr Davis said the price of energy supplied from a new 260 MW power plant, also fuelled by liquefied natural gas (LNG) and constructed at Blue Hills, would be 10.35 cents per kwh. “This pricing strategy will accrue significant savings on electricity to the customers of BPL,” the former deputy prime minister argued last year after the May 10 election.

However, the Minnis administration elected not to proceed with the New Fortress proposal it inherited, citing concerns over a perceived lack of transparency in the process - something that reflected more on the former government, rather than APD’s partner.

“There was no deal left behind, no commitment by the former administration to any group,” Desmond Bannister, minister of works, told Tribune Business previously. “There had been an energy committee that looked at a number of proposals, and made some recommendations

“We believe the process should have been a lot more transparent than it was, and we’re going to ensure full transparency and complete accountability in the process.”

However, he said that New Fortress and other previous bidders could “absolutely” participate in a new BPL tender exercise, some of which have been initiated.

Mr Maura, meanwhile, confirmed that APD was still looking towards the potential redevelopment of Prince George Wharf, the Bahamas’ major cruise port, as another means of income diversification.

He revealed that the Nassau Container Port operator has again teamed with CFAL on a proposal, with the two Bahamian entities joined by Global Port Holdings, the world’s largest operator of cruise ports.

“APD remains interested in participating in the development and operation of Prince George Wharf,” Mr Maura told Tribune Business. “APD, CFAL and Global Port Holdings are working to provide what we believe is an unmatched partnership that can deliver a modern, efficient and value-driven cruise port for the benefit of New Providence and the cruise industry.

“This group brings the expertise of the largest cruise port operator in the world, together with a proven Bahamian port operating company which has been ranked at the top in the Caribbean, with a Bahamian investment firm which serves to provide investment opportunities for all Bahamians.”

Mr Maura added that APD has also cleared 15 acres along its southern boundary for the proposed new Customs inspection facility, with the project having reached the design stage.

“We are in the stage of site design and will soon be travelling to the Port of Miami, along with Bahamas Customs, to meet with US Customs and tour their customs cargo inspection facility at the Miami port,” the APD chief executive told Tribune Business.

“This new facility will include the use of solar and other energy efficient equipment. We will be completing our LED retrofit within the container terminal in the next 90 days. Our 15-acre project also considers a new vehicle terminal, which will include Department of Road Traffic and Bahamas Customs, and allow for the licensing of vehicles at the port.”

The proposed facility will be equivalent to those enjoyed by US Customs, with scanners enabling Bahamas Customs to conduct scans of containers and other cargo to detect guns, drugs and smuggled goods.