The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Dr Hubert Minnis says Bahamas Power & Light’s (BPL) chief executive has vindicated his administration’s $90m Wartsila investment as he queried whether the utility is increasingly reliant on rental generation once again.

The former prime minister said Shevonn Cambridge’s comments at last Thursday’s media briefing by the Prime Minister’s Office not only backed the acquisition of the seven engines but also refuted assertions by Philip Davis KC that “the smell is rotten” surrounding the deal.

And, having reduced BPL’s rental generation requirements from a peak of 115 to 56 Mega Watts (MW) by the time his administration was voted out of office, he alleged that this had risen once again to the point where the state-owned utility monopoly is presently leasing 113 MW from a combination of Aggreko and Sun Oil.

Calling on the Government to disclose how much BPL is paying per kilowatt hour (KWh) for this rental generation, Dr Minnis told this newspaper he has “absolutely no concern” over promises by the Prime Minister and Alfred Sears KC, minister of works and utilities, to disclose documents and a “forensic analysis” that they implied will reflect poorly on his administration’s management of the power provider.

Mr Cambridge could not be contacted for comment on Dr Minnis’ assertions regarding BPL’s rental generation capacity demands and the associated costs, despite voice and text messages being sent. However, the former prime minister said his administration secured a contract with Wartsila that required the latter to pay compensation to the Government if it failed to meet set power production thresholds and costs.

Disclosing that the engine manufacturer had to pay $2m in 2021 after it failed to meet production targets, Dr Minnis said: “We were very happy with the Wartsila engines. You must remember that Wartsila is number one in the medium speed engines in the world, and has 90 percent of the market share in the Caribbean. The question you have to ask is: If Wartsila is so bad, why is Sun Oil using four Wartsila engines at BPL’s Blue Hills plant?

“As part of our contract with Wartsila we had a pre-production guarantee which meant they had to produce a certain amount of power at a certain cost. If that was not achieved, they had to pay. In 2021, they did not achieve the production they said they were going to do, so they had to pay liquidated compensatory fees of about $2m.”

Mr Davis, in a House of Assembly exchange with Dr Minnis last week, suggested that despite being billed as “tri-fuel” - meaning they could run on either liquefied natural gas (LNG), heavy fuel oil (HFO) or light fuel oil (diesel) - the seven Wartsila engines, representing 132 MW of generation capacity, were incapable of using all three.

However, well-placed Tribune Business sources, speaking on condition of anonymity, said the seven engines were specifically configured to burn HFO - which is cheaper than diesel - simply because LNG as a fuel source would not be available for some years until the proposed Shell North America regasification terminal at Clifton Pier was constructed and became operational.

They added that, once LNG became available, BPL had a schedule mapped out to modify the engines so that they would be capable of using the third fuel sources. Another contact, meanwhile, revealed that once the Wartsila engines were installed there were issues with the “purity” of the fuel that was supplied by BPL.

The engines were managed and operated by Wartsila, and this newspaper was told: “The problem they had was the quality of fuel coming into ‘Station A’. BPL was responsible for the fuel supply and providing it to the station, which Wartsila managed. One of the problems they had early on was the purity of the fuel. They had to invest $3-$4m in a new fuel purifier because the existing purifier was not to the level Wartsila required.

“The Wartsila guys pointed out the fuel was not clean enough, so they had to do a lot more maintenance to clean those engines up. The fuel purity did not meet the manufacturer’s standard, and they had to do more maintenance because of the impure fuel. A couple of times those engines shut down because the fuel was not pure enough.”

Dr Minnis, meanwhile, said BPL’s reliance on rental generation seemed to be increasing. Having inherited 80 MW of leased generation when his administration took office, he acknowledged this peaked at 115 MW while the Wartsila engines were being installed in ‘Station A’. However, once they came online, BPL’s rental generation need dropped to 56 MW by the time of the September 2021 general election.

Of that 56 MW, some 40 MW was provided by Aggreko and the balance by Sun Oil, a subsidiary of BISX-listed FOCOL Holdings. However, Dr Minnis asserted this has now increased to 113 MW, with Sun Oil supplying 73 MW and Aggreko the minority. He also questioned how much BPL was paying for this power, adding that Wartsila had received two cents per KWh compared to the six cents that BPL’s own generation assets required.

“I and my government were very pleased with how we managed BPL, and the results were reflected even during the pandemic with air conditioning running 24/7 at people’s homes. The power bill was lower then than it was today,” Dr Minnis added.

The former prime minister added that Mr Cambridge’s remarks last week, when the current BPL chief said he would likely have made the same decisions as his predecessors regarding the Wartsila deal and the engines’ installation, had vindicated his administration’s actions.

Mr Cambridge, while acknowledging that Station A’s construction was rushed, with the cooling and fuel systems less than optimal, and fewer redundancies installed to counter emergencies, said the haste was understandable given the constant load shedding experienced by New Providence at the time and the loss of BPL’s two most efficient engines in the 2018 fire.

“I would like to think that under the circumstances, those were the best decisions to make,” he said. “I will say, given what we were going through or what the country was going through then, in terms of right after the fire and the four, eight-hour rolling blackouts, I cannot be critical of the decisions because I probably would have agreed with the decision.”