The Tribune

• Island Grid aiming to raise up to $130m

• To fund transmission, distributionreform 

• Move to get local ownership in overhaul

By NEIL HARTNELL 

Tribune Business Editor 

nhartnell@tribunemedia.net

THE company set to be charged with overhauling Bahamas Power & Light’s (BPL) electricity grid is seeking to raise $30m in equity from local investors, it has emerged.

Multiple Bahamian capital markets sources, speaking on condition of anonymity because they were not authorised to speak publicly, told Tribune Business that Island Grid is seeking to raise a funding mix - split into $30m of equity financing, and around $100m of preference shares or some other form of debt - to help finance the transformation of BPL’s transmission and distribution (T&D) network.

This newspaper was told that the $30m equity ownership portion may have already been placed with Bahamian investors via a private placement overseen by CFAL, the former Colina Financial Advisers. The proceeds will be used to fund much-needed upgrades to, and the modernisation of, BPL’s New Providence grid infrastructure in a bid to halt the frequent outages and brownouts that destroy electrical equipment.

“The first piece is correct, $30m,” one capital markets source said of the equity raise. “I believe it’s gone, subject to all approvals. It’s been a while, but should have been closed. It’s just the equity part of the trans- mission and distribution. The debt piece, the $100m, hasn’t been circulated.”

Island Grid’s website lists its co-chief executive as Eric Pike, who is also chair- man of Pike Corporation. That is the North Carolina- based energy transmission and distribution specialist, which was named by Kyle Wilson, the Bahamas Electrical Workers Union (BEWU) president, as the entity set to take over management of BPL’s grid via a public-private partnership (PPP) deal with the Davis administration. 

Pike Corporation is named as one of Island Grid’s two principal “partners”. Tribune Business contacts suggested that the Bahamian capital raise may be part of the latter’s agreement with the Davis administration, which likely would have wanted a local ownership component and financing to be included in the deal. 

“I think they have money but want to finance it locally,” one source said of Island Grid. Another added: “They’re getting everybody involved. $130m, that’s correct. They’ve [the Government] got to get it done. The road has run out. Everybody has kicked the can down the road, but the road has run out. It should have been done a long time ago. We need liquefied natural gas. LNG has to happen here.” 

Tribune Business was told that the planned upgrades to BPL’s transmission and distribution network will also involve a focus on grid stability, and eliminating peaks and dips in voltage. This is critical to facilitating the smooth integration of the up to 100 Mega Watts (MW) of utility-scale renewable energy that the Government is seeking to attract for New Providence. 

“Dealing with the transmission and distribution capital expenditure they expect,” was how one source described Island Grid’s plans for its local financing. “If you are going to have all this green energy, you need to make sure the transmission and distribution can handle the energy coming from those sources. Some of it is upgrades and some of it is making sure you don’t have dips and surges in voltages.” 

The Prime Minister and his office are due to unveil what is being billed as “new and comprehensive energy reforms across the Commonwealth of The Bahamas” this morning. Based on what has emerged to-date, this will likely involve splitting BPL’s assets and functions into possibly three separate entities - generation, transmission and distribution, and customer collections and billing. 

While Island Grid/Pike will handle transmission and distribution, it is widely thought that a combination of Shell North America and BISX-listed FOCOL Holdings will assume responsibility for managing and overhauling BPL’s generation assets while also supplying LNG as their primary fuel source. 

Island Grid, in a section on its website listing the projects it has worked on, reveals it has teamed with Bahamas Utility Company, a FOCOL Holdings subsidiary, to help “connect a new power plant to the BPL grid on New Providence” via the creation of a hurricane and corrosion-resistant sub-station. 

“Working with the Bahamas Utility Company to build an Air Insulated Substation (AIS) connecting a new power plant to the BPL grid on New Providence so that the substation will be wind-rated and corrosion resistant,” Island Grid proclaimed. 

Sir Franklyn Wilson, FOCOL’s chairman, was coy when contacted by Tribune Business about Island Grid’s reference to working with Bahamas Utility Company. “It’s what they say,” he replied, adding that he knew nothing about its $130m capital raising plans. 

Island Grid’s website shows it is headquartered at Shipston House in Lyford Cay. The Shipston Group was founded by the late world renowned investor, Michael Dingman, and David Dingman is named as an Island Grid director on the company’s website. Mr Dingman did not respond to Tribune Business inquiries seeking comment before press time despite a message being left on his cell phone. 

The company, which bills itself as “bringing 60-plus years of US infrastructure and implementation expertise to islands around the world”, also showcases work done for Grand Bahama Power Company and the private developers at Walker’s Cay in the Abacos (Carl Allen) and Jack’s Bay in Eleuthera. 

Mr Pike has also previously been named as an investor and equity partner in the Jack’s Bay development, which is chaired by Sir Franklyn. Island Grid describes itself as “a one-stop shop for infrastructure services”, offering engineering, construction, project management, advisory, training and even marketing solutions for its clients. 

Jobeth Coleby-Davis, minister of transport and energy, told the House of Assembly in early March that a $130m investment is required to upgrade BPL’s New Providence transmission and distribution network “in the next two years alone”. 

Pegging BPL’s capital investment needs at $500m or half-a-billion dollars, she said then: “BPL operates 29 power stations on 17 islands. Over the next five years, BPL will need an investment of over $500m to upgrade its infrastructure.” Mrs Coleby-Davis said. 

This, Mrs Coleby-Davis added, was broken down into a collective $300m investment in new generation assets spread across New Providence and the Family Islands; $130m to upgrade New Providence’s transmission and distribution network “in the next two years alone”; $35m for the roll-out of advanced metering infrastructure (AMI); and $70m in undefined “other costs”. 

“Today, to fix BPL, we need over $500m to address its debts and over $500m to upgrade and improve its aged and deteriorated infrastructure. Mr deputy speaker, that’s over $1bn,” Mrs Coleby-Davis said. And the Prime Minister, in his recent Budget communication, reiterated how high energy costs and unreliable electricity supply have undermined The Bahamas’ economic competitiveness. 

Noting the heavy financial toll this has imposed on families and businesses, Mr Davis said: “The cost of electricity has been a huge expense and a huge burden to Bahamian families and businesses. We need system-wide change because, in order to reduce the cost of electricity for consumers, we need a grid that is well-designed, effective and efficient. 

“We simply cannot lower costs – or meet our full potential as a nation – with an outdated, deteriorating energy grid. An aging 20th century grid cannot support a modern 21st century economy. And the reality is, demand for energy is going up while our grid is falling apart. 

“We also need to add the capacity to integrate large-scale renewable energy. Solar energy has always been essential to our plans, but solar power is intermittent. That means the amount of solar power generated will fluctuate – will vary – depending on whether it’s a sunny day or a cloudy day, day-time or night-time,” he added. 

“Using solar energy across our archipelago requires careful planning and design, and major new investments in grid flexibility and energy storage... I look forward to sharing plans for a new energy future for our country, including extensive use of solar power, in New Providence and in the Family Islands, LNG as a partner fuel and a modern power grid.” 

The Island Grid capital raise is a private placement, targeted at specific institutional investors and high net-worth individuals, so no members of the public should seek to participate.