The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

A Cabinet minister yesterday warned that the “slightest thing” can "derail" negotiations between the Shell North America and Bahamas Power & Light (BPL) on New Providence's new power plant.

Desmond Bannister, minister of works, said it was for this reason that he will not comment publicly on the status of talks that have lasted almost two years between the parties as they attempt to lock down an agreement intended to take The Bahamas towards a more affordable, reliable and environmentally-friendly energy future.

"I think we all have seen the statements that Shell has put out this week," Mr Bannister said, referring to the company's exclusive interview with Tribune Business. "I’m not going to speak about those negotiations, because they are at sensitive stages.

"When you are at that kind of stage, it’s only very small groups of people who ought to be involved in it because the slightest thing can cause it to be derailed. When you get to more definitive stages, make determinations, then other people can be involved in it.”

BPL-related sources, speaking on condition of anonymity, suggested yesterday to this newspaper that its interview with Shell North America's project director for the proposed multi-fuel power plant had caught the state-owned energy utility off-guard.

They added that the multinational energy giant was seeking to pressure BPL and the Government to get a move on and conclude the negotiations by going public. However, the latter two were said to feel that the Shell-controlled power plant is charging to high a price for the energy it will sell to BPL.

"Shell is pulling a trump card here," the source said. "They're trying to force BPL's hand. It caught BPL by surprise; they didn't expect it to be in the newspapers.

"Shell wants to charge too much. In the long-run it's not going to augur well for the Bahamian people. They're trying to force the Government's hand. They're playing a high stakes game and using pressure tactics to do what they need to do. The Government has to make a decision."

Gerard Van-Ginkel, Shell North America's project director, told Tribune Business on Monday that negotiations with BPL and the Government were "at the precipice" of reaching a conclusion following nearly two years of negotiations and the parties now needed to take that final step.

Signalling that all sides are close to completing a long-running, complex negotiation, he told this newspaper: "I think that we're weeks out. I think that when we last spoke we were targeting to conclude in the third quarter.

"That has just passed. Despite all the challenges caused by COVID-19 and lockdowns, I think in the next few weeks we will be in a position to see this come to a conclusion with BPL and the Government."

Dr Donovan Moxey, BPL's chairman, echoed Mr Van-Ginkel by telling this newspaper that "we have made progress" although he declined to detail the outstanding issues or give a likely completion timeline.

"We're still negotiating," Dr Moxey said of the Shell talks. "I'm not prepared to say exactly where we are, but this negotiating process has been moving forward and we have been making progress. I'm not going to give a timeline, but we have made progress from January to now and are doing everything we can to get this wrapped up as soon as we possibly can."

While the finishing line now appears to be in sight for all parties, Mr Van-Ginkel and Shell North America indicated to Tribune Business they remain eager to get there as rapidly as possible.

"There's a certain degree of urgency that needs to be recognised in delivering this project," he told this newspaper. When asked what he meant, Mr Van-Ginkel replied: "We look forward to moving this on and getting on with construction in the New Year.

"We've been at this since 2018, and now we're in the fourth quarter of 2020. We've had a tremendous amount of global change over that period. It's Shell's view that the project is at the precipice, and it is time to take the next steps and move into a conclusion.

"We've all worked hard to get to this point, and are hoping to take it the rest of the way. We believe we've put forward a compelling proposal, and it's up to the Government and BPL to decide how they want to proceed."

The key terms will be the 20-25 year power purchase agreement (PPA), setting out the price at which BPL will buy electricity from Shell's new power plant, and the asset purchase agreement detailing the price and mechanism by which the energy giant will acquire 'Station A' and 'Station D' at Clifton Pier from the state-owned energy monopoly. Those two 'stations' will form the new plant.

Mr Bannister, meanwhile, said the status of negotiations with Shell will limit how much information BPL can provide to its line staff and management unions. Kyle Wilson, the Bahamas Electrical Workers Union's (BEWU) president, had earlier this week suggested that workers have been kept "in the dark" on the deal's progress.

"The union president is an amazing young Bahamian," Mr Bannister said. "He works very closely with us, and he and I spoke yesterday morning as he called me up and indicated that he had seen a story in the newspaper.

"He said listen, you know how closely we work together. So I’m going to talk to the Board, and I said the board is going to talk to you, but negotiations are at a stage where a Board has to be very, very careful.”

Mr Bannister also addressed increased BPL electricity bills, arguing that these had resulted from persons and families spending more time at home due to COVID-19 restrictions and lockdowns.

“I think there has been a lot of increased bills, and the reason has been that people have been home and running air conditioning," he said. "But I think the critical thing for you, as the media, is to let everybody look at their bill and look at what the charges are.

"So look at the per-kilowatt charges rather than the amount of the final bill, and you will see that the per kilowatt charges are almost half of what they were. So that means that people are using electricity a whole lot more.”

“This is a pandemic, people have been home. I know that I have been using electricity maybe four times as much as I used it last year, and that’s what’s happening with a lot of people. So it’s important for us to educate them and let them look at the bill and the per-kilowatt charges, and look at how much electricity they have actually used. So the bill may have increased because you have been using three or four times more electricity."