The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

A Cabinet minister yesterday raised fresh doubts over whether Shell North America will be involved in financing, constructing and owning New Providence’s proposed multi-fuel power plant.

Desmond Bannister, minister of works, told reporters outside the Cabinet Office yesterday that Bahamas Power & Light (BPL) will “aggressively” seek to create an opportunity for Bahamian ownership in the energy sector once its upcoming $650m bond refinancing is placed.

He implied that this would start with the new plant at Clifton Pier that Shell is supposed to develop, having been selected as the preferred bidder for the project by the government and subsequently signing a Memorandum of Understanding (MoU) for it in December 2018.

“I don’t know that we are going to have a Shell power plant,” Mr Bannister said. “You know, in the FNM’s manifesto we spoke about creating an entity that Bahamians can invest in. Now that we are able to have this bond in place, BPL is aggressively looking to create opportunities that Bahamians are going to be able to benefit from and invest in.

“So you may see some time this year there may be a wonderful opportunity for all of you, and for other Bahamians, to have a stake in a power plant in this country, as Shell and other entities may also have an opportunity.

“These are things that BPL are going to be able to announce in good time. So we anticipate, as we indicated to the Bahamian people, once we have completed that plant it is going to be managed by Wärtsilä, and we are now beginning to have reliable power to the country. So as we go into this plant that is going to be built, we anticipate that it is going to be a wonderful opportunity for everybody to invest in reliable power. So that is something that is very, very good that is coming online.”

The minister’s comments raise questions as to the ownership structure for the proposed new power plant and, indeed, whether Shell will be involved at all. The facility is seen as critical to resolving New Providence’s long-standing generation woes, providing cheaper, more reliable energy that is more environmentally-friendly.

The 222 megawatt (MW) plant was to be accompanied by marine infrastructure that can received liquefied natural gas (LNG), involving a gas pipeline to bring gas to shore and an onshore regasification terminal that would supply the fuel to the power plant.

Shell would thus act as an independent power producer (IPP), selling electricity to BPL via a power purchase agreement (PPA) over a 20-25 year period. Yet the first 132 MW for the new plant has recently been installed by Wartsila, and the government recently announced that $70m of the bond proceeds will be used to finance the remaining 90 MW installation.

This sparked the first questions, with Mr Bannister telling Tribune Business in late November that the deal for Shell’s new power plant “is very much live” despite BPL seemingly making a $70m investment on its behalf.

“The Shell deal is very much live,” he said. “I want to make sure no matter what, in any circumstances ,BPL is prepared to move ahead. I don’t want to say anything more than that.”

Tribune Business and others had queried why there was little to no mention of the much-touted Shell multi-fuel power plant in his House of Assembly presentation on BPL’s $650m bond refinancing.

The minister’s presentation showed that $70m of the $650m to be raised through the bond has been earmarked for the Phase II expansion of Clifton Pier’s “Station A” with the purchase of more generation engines from Wartsila.

This 90 MW of additional capacity, when combined with the existing 132 MW, will provide 222 MW in new generation - exactly what Shell North America is supposed to provide with its new-multi fuel power plant.

One well-placed source, speaking on condition of anonymity, told Tribune Business: “I don’t understand why they’re [BPL] funding this when Shell is supposed to be doing it. And how can you give Wartsila a contract for that amount of money when it has not gone out to tender.”

Meanwhile, Mr Bannister yesterday said of the $650m bond: :The bond is a placement process. The first stage that they go through is a ‘ratings stage’. They (BPL’s board members, along with members of the Special Purpose Vehicle placing the bond) have been in the US and they have met with all of the ratings companies.

“Then they have a quiet period. During that quiet period the ratings companies are making decisions about the kinds of ratings they are going to give BPL. From everything I have heard BPL is going to get top ratings, almost like a sovereign rating that a country can get. That means that the interest rates are going to be very, very low.

“Once that happens, and we look at the kind of interest rates that we would be able to get for BPL, then there is going to be opportunity for Bahamians, and I want everybody to appreciate that. There is going to be opportunity for Bahamians to invest in your utility for the future,” Mr Bannister added.

“If you look at utility stocks and how they operate, they are not going to go down, so there is going to be wonderful opportunity in this country for Bahamians to take some of their funds, invest in that utility and invest in the future of power generation in this country. That is going to be a really, really a good opportunity. So I want everybody to try to save a little bit of money, put a little bit of money aside. It is going to be a wonderful opportunity for you.”