Minister of Energy and Transport JoBeth Coleby-Davis during a sitting of the House of Assembly on May 1, 2024. Photo: Dante Carrer
By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
A Cabinet minister yesterday rejected assertions that the Government’s energy reforms violated procurement laws as she defended the “single source” bidding used to select a FOCOL Holdings affiliate.
Jobeth Coleby Davis, minister of energy and transport, used her 2024-2024 Budget debate address to justify Bahamas Utility Company’s selection as Bahamas Power & Light’s (BPL) independent power producer partner on the basis that it “immediately” raised the $75m required to purchase two generation engines whose output will ease summer load shedding fears.
She added that Bahamas Utility Company, a subsidiary 100 percent owned by the BISX-listed energy and petroleum products supplier, was in “a unique position” to address BPL’s generation woes through its existing on-ground presence. And it will now convert its rental generation agreements with BPL into longer-term power purchase agreements as it readies to construct a new New Providence power plant.
The Opposition and others have repeatedly challenged whether the Government has obtained the best possible solution, price and terms for resolving The Bahamas’ energy crisis given that neither the generation nor transmission and distribution contracts were put out to public, competitive bidding.
Questions have also been raised over whether the process complies with public procurement laws and regulations, which were first implemented in September 2021 but then revised by the Davis administration. Mrs Coleby-Davis admitted that the Bahamas Utility Company was selected via a “single source” process where just one entity was chosen to bid on providing the required solution.
However, she cited various factors in defence of the move. “Bahamas Utility Company is the only Bahamian group with an existing plant on Nassau, providing them with a unique position to lead this initiative and they are already licensed by URCA,” Mrs Coleby-Davis said, referring to the energy industry regulator.
“Bahamas Utility Company has demonstrated its capability to raise over $75m immediately to acquire 60 mega watts (MW) of new plants for the summer, which will be placed on power purchase agreements (PPAs).” Mrs Coleby-Davis said securing the two engines, which recently arrived on New Providence, was “no small feat” given supply chain challenges and competition from other utilities.
Bahamas Utility Company, together with Aggreko, are the present suppliers of BPL’s 143 MW of rental generation that is costing the state-owned utility $42m per year. Mrs Coleby-Davis said the FOCOL subsidiary will now convert these rental deals into long-term PPAs.
“By aligning with Bahamas Utility Company and leveraging these robust partnerships, we are not only securing the immediate needs of our energy infrastructure but also positioning ourselves to benefit from long-term stability and growth. Our strategic move to single source with Bahamas Utility Company underscores our commitment to efficiency, reliability, and a forward-looking energy strategy,” the minister added.
Mrs Coleby-Davis also disclosed that the Utilities Regulation and Competition Authority (URCA), as energy industry regulator, had issued a “no objection” verdict on BPL’s [and the Government’s] decision to employ a “single source” bidding process.
“BPL applied to URCA under the URCA regulations to get permission for the use of single source procurement for the purchase of generation by way a power purchase agreement and the use of LNG,” she added.
“I am pleased to advise that URCA has confirmed its non-objection to the proposed single-source procurement per condition 9 (5) of the procurement regulations for electricity sector licensees 2020. URCA recognised that BPLs proposal had been vetted by the internationally-recognized consulting firm, McKinsey and Company, and that the use of LNG would reduce the environmental impact, provide higher reliability and reduce cost to consumers..”
Turning to accusations that the Government and BPL have breached public procurement laws and regulations during these processes, Mrs Coleby-Davis said: “I also want to categorically state that at no point during this energy transformation process as far as I am aware have we violated any procurement rules or laws.
“We entered a joint venture as provided by the Electricity Act, and BPL received a letter of no objection from URCA for a single source procurement for the purchase of LNG and the purchase of power by way of a PPA.”
The minister confirmed that Bahamas Utility Company - not BPL - will be responsible for constructing New Providence’s new 177 MW liquefied natural gas (LNG) plant by 2026. However, she also revealed that it will be the Government - and not Bahamas Utility Company - that will buy the plant’s LNG fuel from Shell via a special purpose vehicle (SPV).
“The bulk purchase of LNG will be sourced from Shell North America, specifically, Shell North America LNG. The Government will set up an SPV 100 percent owned by the Government to purchase the LNG directly from Shell and the SPV will then sell to the independent power producers,” Mrs Coleby-Davis said.
“Negotiations with Shell North America are ongoing, and we are close to concluding the same. These negotiations are merely a restructuring and renegotiating of a tentative agreement we met in place from the former administration.”
However, questions are likely to be asked as to why the Government will effectively act as middleman in the sourcing of LNG fuel from Shell rather than Bahamas Utility Company and other independent power producers buying directly from the multinational energy giant. The Government’s role as middleman would appear to add another layer of cost to the supply chain.
“The Ministry of Finance has hired the large consulting firm McKinsey and Company to advise the Government and BPL to ensure we get the best possible price on our LNG contracts with Shell North America and our various power purchase agreements with independent power producers,” Mrs Coleby-Davis said.
Comments
moncurcool 4 months, 2 weeks ago
May Angelou said when people show you who they are, believe them..
This government is breaking the law straight up and don't care, and trying to justify it.
2026 cannot come soon enough.
truetruebahamian 4 months, 2 weeks ago
Absolutely.
TalRussell 4 months, 2 weeks ago
-- Yes?
TalRussell 4 months, 2 weeks ago
The Focal point is that so many are working 40-60+ hours for weekly pay-packets** to survive whilst still not dependent upon cuttin'-on light switches for rooms light-up. --- Now lookin' like some people, goin' gotten even richer off of others - darkness's and fridges' spoiled stuffs' are being tossed into the garbages'.--- Yes?
Porcupine 4 months, 2 weeks ago
It gets worse everyday. URCA approved the "single source" bid. Big surprise. The working Bahamian people are finished All benefits now go to those who sell their soul and give and take kickbacks. Some would call this a cartel. We gat some jokey leaders.
trueBahamian 4 months, 2 weeks ago
This is sickening. URCA is a rubber stamp. I filed a complaint months ago and they haven't even acknowledged receipt of it. They are not regulating anyone. This single bid nonsense is just a flagrant abuse by the government. We know who is behind FOCOL and we know that is also a major donor for the current government's election campaigns. So, this is more about ensuring their people get the lion share of contracts. This isn't about best bids or what is good for the country. We see yesterday the story of 40% of BPL being sold. Once again the deal circles back to the same people. This government is a sickening disgrace. They don't have the Shame in their minds to realize this shouldn't even be so utterly obvious the flagrant disregard they have for the Bahamian people. This is piracy. Plunder! Plunder! Plunder!
ThisIsOurs 4 months, 2 weeks ago
What completely circular reasoning. Completely unimpressed by this minonster.
The rights offering for those generators was opened in February, and from February Sun Oil was talking about a new expansion into the energy sector. It all happened very suddenly. February. Who knew "what" in February and then used the insider information to invest in this deal that Sun Oil clearly knew enough about to "gamble" to the exclusion of other bidders, and could seek funding to set themselves up as the perfect solitary choice? Remember Brave Davis told us relief was coming June 2nd, which turned out to be the ~exact date Sun Oils generators arrived?
I wonder if we'll uncover any Bahamar like "let's work together" emails in the future...
Is the minister referring to the bill they rushed through parliament in 1 (?) week that allowed URCA to approve a single source bid that they could say a law allowed URCA to act so? Circular reasoning enough? Remember when the entire country was asking why they were rushing this messy bill?
2026 cant come soon enough.
truetruebahamian 4 months, 2 weeks ago
This is just another plp disgusting abuse of power and elevation of old guard cronies. The sunshine boys have too much already. It is time to fade into the sunset with their ill gotten gains over the decades.
birdiestrachan 4 months, 2 weeks ago
These comments are never used for the shipping port the cruise port or the post office..
ExposedU2C 4 months, 1 week ago
I smell a most corrupt PM who, using his dumbo minister of energy, Jobeth Davis, and his dumbo AG, Ryan Pinder, as his pied pipers of choice on all matters relating to "juicy" BPL contracts, is paving the way for the Bahamian people to be bitten by a poisonous Snake. And the evil and greedily hissing Snake is lying in wait with the already selected greedy foreign partners and other greedy local scoundrels who are all licking their chops at the prospect of feasting on the wealthier electricity consumers using a billing rate structure based on their perceived wealth rather than usage.
I would encourage all persons deeply concerned about the disastrous consequences to flow from the new Electricity and Natural Gas Bills to read Claude Hanna's excellent letter to the Editor of The Tribune that was published in a late April.
The letter concisely addresses the unconstitutional, national security and many other most serious issues that these two new statutes will expose and subject our nation and its people to. The dire consequences Bahamians will face from the enactment of these two bills should deservedly be politically owned and worn around the neck of every current sitting PLP member of parliament and all future candidates for a PLP seat in parliament.
Opposition leader Pintard and the entire leadership apparatus of the FNM party should be taking immediate appropriate steps to publicly announce their intent to fully repeal the two statutes for constitutional and national security reasons, not to mention the frightening impact of extremely high costs for electricity consumers, especially those deemed to be wealthier. This should be one of the first acts of Pintard and his cabinet if the FNM is successful in winning a controlling majority of seats in the next general election.
Snake and his local and foreign cronies were instrumental in the drafting of the new electricity and LNG statutes for their own self-gain which will come at a great cost to the Bahamian people. This most corrupt Davis led PLP government has paved the way for these greedy crooks to reap and enjoy the huge windfall profits they so eagerly await, while leaving the Bahamian taxpayers on the hook for all of BPL's existing debts amounting to hundreds of millions of dollars. Pintard really needs to get off of his duff and make this unequivocally known to all concerned, especially Bahamian voters.
ExposedU2C 4 months, 1 week ago
CAN YOU JUST IMAGINE HER AND OTHERS LIKE HER PASSING LEGISLATION THAT WILL ALLOW THEM TO DETERMINE WHICH CUSTOMERS CAN AND CANNOT AFFORD TO PAY FOR THE ELECTRICITY THEY CONSUME, WITH THE GOVERNMENT DESIGNATED WEALTHIER HAVING TO PAY MUCH HIGHER ELECTRICITY COSTS FOR THE PURPOSE OF SUBSIDIZING THE MUCH LOWER ELECTRICITY COSTS THAT WOULD BE BILLED TO THOSE DESIGNATED LESS WEALTHY !!!!!!! Meanwhile the foreign owned hotels, resorts and other developments will continue to get their generous electrical power concessions and government departments, agencies and SOE's will remain BPL's biggest delinquent debtors, to the tune of mega millions of dollars. No sane Bahamian should ever vote for any PLP party candidate ever again. The party is no longer progressive ........ it is now a down right authoritarian communist regime!
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