The Tribune

• Set to employ ‘good portion’ of $70m capital raise
• Sir Franklyn: Public can ‘take comfort’ from names
• Concerns over competitive bidding raised again

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

FOCOL Holdings yesterday confirmed “a good portion” of the $70m recently raised from investors will finance its power generation deal with the Government, its chairman pledging: “This is real change.”

Sir Franklyn Wilson, the BISX-listed energy and petroleum products provider’s largest shareholder, told Tribune Business that Bahamians “can take a certain comfort from the fact due diligence was done” on the private sector partners selected to execute the Davis administration’s energy reform strategy despite concerns about the seeming absence of competitive bidding.

Several sources, speaking on condition of anonymity, questioned whether the country is getting the best possible price and deal given that neither the generation nor the transmission and distribution (T&D) contract were put out to public tender as required by procurement legislation and associated regulations.

“Under what procurement process was Bahamas Utility Company [FOCOL’s wholly-owned subsidiary] chosen for the generation,” one contact asked. “There was no procurement process that went out. It’s not the same deal as the previous administration negotiated with Shell at all.

“Under what procurement process did they select Bahamas Utility Company as the generation provider, and under what procurement process did they select Island Grid as the transmission and distribution provider? How do they know this is the best possible price.”

Sir Franklyn, though, countered such criticism by describing all three companies selected - FOCOL Holdings (Bahamas Utility Company); Shell as fuel supplier; and Island Grid - as “credible names” that are all “real companies”.

He told this newspaper: “My bottom line position is that, without a doubt, this is real change. This is real change. Once you accept this is real change, the fact of the matter is once you are doing it it takes time. It takes time.”

No details were provided on the power purchase agreement (PPA) that will govern the generation deal, such as the agreement’s likely duration; the locked-in price at which Bahamas Utility Company will sell energy to BPL and its transmission and distribution network; and other key terms and conditions. This suggests such details are still being finalised and negotiated, and Sir Franklyn hinted as much.

“Government can only say so much at any one time,” he added. “Until it’s done, it’s not done. The fact of the matter is that process is important. To determine what you can say influences when you can say it. Something this big, you cannot say it before it happens. You have to do it at a certain time.

“When you are doing things that represent major change, it takes time. How do you do all this overnight? The bottom line point, when you say about things being explained, some things the Prime Minister cannot be certain about. There are many variables.” 

The energy reform strategy unveiled by the Davis administration yesterday did not answer other pressing BPL-related questions, such as how the state-owned energy monopoly’s $500m legacy debt and unfunded $100m employee pension plan deficit will be addressed and who will pay for it.

However, Sir Franklyn argued that Bahamians should have confidence in those selected to partner with the Government on energy reform and turning BPL around. “For all the specific names that were called today, the public, it seems to me, can take certain comfort from the fact due diligence was done,” he told Tribune Business.

“These are real companies. Due diligence was done. The good news is all the names called today are entities that the Bahamian public have reason to have a degree of comfort in. He [the Prime Minister] outlined the plans, he called names like Shell, he called names like Island Grid, and the public has reason to assess these are credible names.”

Dexter Adderley, FOCOL’s president and chief executive, was also tight-lipped on many details relating to the role its Bahamas Utility Company will play as an independent power producer (IPP) supplying lower-cost, cleaner energy to BPL using liquefied natural gas (LNG) as the primary fuel.

He directed Tribune Business to speak to the Government and BPL on details such as the energy cost/prices, who will be responsible for constructing the 177 Mega Watt (MW) new power plant at Blue Hills, and the level of investment the company will be making as well as the amount of construction and full-time jobs likely to be created.

However, Mr Adderley confirmed that a significant amount of the funds raised by FOCOL from its two recent Bahamian investor offerings - a $25m equity raise, followed by a $45m preference share placement - will help to finance the generation deal with BPL and the Government although he declined to reveal the exact amount.

“I would say a good portion of it will be used to finance this, assist with the financing of this project,” the FOCOL chief said. “I couldn’t reveal at this point in time how much of it. We’re focused and committed to this project. There’s still work to be done. We are working with BPL and the Government on various matters with generation.

“As a group we have more than 500, close to 500, employees, and in every sector we have a diverse range of Bahamian talent with vast expertise in the energy sector, particularly in the power generation sector. We’re very confident in our capacity to meet the needs of the Government and BPL for the generation services they require of us.

“One of the things we bring to the table is vast expertise, not just with generation but with the fuel and infrastructure that supports power generation, and we are leveraging that expertise in assisting the Government and BPL.” Mr Adderley said both FOCOL and Bahamas Utility Company have been adding staff since the start of 2024, and are continuing to hire.

He added that he has “absolutely no doubt whatsoever, absolutely no doubt whatsoever” in FOCOL’s ability to deliver what energy reform requires. Jobeth Coleby-Davis, minister of energy and transport, yesterday revealed that BPL is presently spending $42m per annum on 145 MW of rental generation split between New Providence and the Family Islands.

A significant amount of that rental generation is presently provided by FOCOL and its affiliates, so the IPP agreement with the Government and BPL will convert the BISX-listed company from a rental to permanent generation supplier via a PPA that could potentially last for up to 30 years.

“In less than a decade, BPL/ BEC amassed almost $500m in debt. BPL has loan interest payments of more than $28m annually and a $122m pension liability,” Mrs Coleby-Davis said. “BPL has about 90 MW of aged/obsolete generation assets teetering on the edge in New Providence and another 30 MW in the Family Islands.....

“Finally, BPL is not well positioned to complement the country’s growth projections for the next five to 10 years as generation projections call for 340MW of power needed for New Providence and 100 MW for the Family Islands.”