The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

Bahamas Power & Light (BPL) has made “significant progress” in negotiations with Shell North America for the latter to supply New Providence’s baseload electricity needs, its chairman said yesterday.

Dr Donovan Moxey, while not providing any details, said talks on a power purchase agreement (PPA) with the multinational energy giant had reached a stage where BPL was “pretty comfortable” with progress made to-date.

He added: “The PPA, we’re still in negotiations with Shell. We made some significant progress with them and we’re continuing to make progress with them. We’re working towards getting a PPA arrangement in place and so from our standpoint, which we have said all along, is we’re negotiating the best possible deal for the Bahamian people. 

“If, at the end of the day, we don’t determine that it’s the best possible deal then we have to look at other options. But at the end of the day we’re pretty comfortable with how things are progressing. It’s not final yet, but again this is another form of remit that we’ve never done in this country, a PPA. On top of that is what we call a baseload PPA, where we’re having a third party really take care of our base load generation.” 

Dr Moxey added that there were a lot of “intricacies” and “complexities” involved in the Shell North America talks. The latter has remained at the table even though its exclusivity expired late last year, giving BPL and the government “a free hand” to negotiate the best electricity prices for New Providence with any supplier that can meet their terms.

The Shell North America deal would see the energy giant acquire from BPL some 225 megawatts (MW) of generation assets that have been built, or are due to shortly be constructed, at Clifton Pier. A liquefied natural gas (LNG) regasification terminal is to be located nearby to provide fuel to the plant, which would have sold electricity to BPL via a 20-25-year power purchase agreement (PPA).

Several sources, speaking on condition of anonymity, previously told Tribune Business that the Government felt Shell was charging BPL too high a price for the energy provided by the new power plant and wanted the rates to be lower. It was also said to believe that the talks with the energy giant were dragging out too long and wanted to explore other options.

BPL’s chairman, meanwhile, said progress on the utility’s $535m refinancing via a Rate Reduction Bond (RRB) placement now awaits parliamentary approval of legislative changes to make the issue more attractive to investors. This is unlikely to happen before September, as that is when Parliament reconvenes. 

Dr Moxey said: “What I think everybody should appreciate is that this is probably the third bite at this apple for us. We’ve been hampered by a number of items or issues that are really beyond our control, and so what we’ve done now is we’ve essentially completed all of the legislative amendments that the lawyers deemed necessary to make that particular legislation fit for purpose. 

“What people should understand is that this is the very first time that this kind of rate reduction bond is being offered in The Bahamas, and I believe in any Caribbean country. Given how our legal system is structured, if you look at North America and Canada, rate reduction bonds are done all the time and their legal structure supports that. This has never been done for us. 

“So we have taken our time with the lawyers to get this done, and we are very comfortable with the amendments that need to be made are in place.”