The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A $150m power plant’s developer is bidding to supply vessels docked in Nassau Cruise Port at rates more than 38 percent lower than Bahamas Power & Light’s (BPL) average commercial tariff.

Island Power Producers, the consortium selected to provide shore power to docked cruise ships, revealed in the offering documents for its $50m private placement equity capital raise that it will charge the likes of Carnival and Royal Caribbean just 23 cents per kilowatt hour (KWh) compared to BPL’s 37.4 cents commercial tariff.

Generating this hefty discount from using cheaper, cleaner liquefied natural gas (LNG) fuel, the group is forecasting that its annual profits will increase steadily to grow from $2.586m for its second financial year in 2026 to $3.786m in 2029. That represents a $1.2m, or 46.4 percent, jump over that three-year period from both supplying the cruise ships and selling excess power to BPL after hours.

Total revenues over the same period are forecast to remain stable at around $36.46m per year, with the majority of that - some $30.24m or 82.9 percent - coming from the provision of LNG-fuelled power to the cruise ships. Most of the balance, some $4.752m, is to be generated from providing excess power to BPL with the increased profits produced largely from declining debt service costs.

The offering memorandum, which has been obtained by Tribune Business, reveals that developing the necessary LNG pipeline and regasification terminal at Arawak Cay; the 70 mega watt (MW) power plant located immediately south-west of the existing Nassau Container Port; and substation and cables to connect to Nassau Cruise Port will cost an estimated combined $147.6m.

The bulk of this investment, just over $89m will be split between the LNG infrastructure ($42m) and the power plant ($47.1m). “Phase one of the project, which involves the installation and operation of the LNG turbine, is expected to be complete by the end of the 2025 second quarter, while the second phase of the project – the installation of the steam turbine - is expected to be completed a year later at the end of the 2026 second quarter,” the Island Power Producers document asserted.

“To sustain itself, the company will bill cruise ships for power consumption while in port. The average cruise ship stays in port for eight hours per day and, on average, there are 4.7 cruise ships per day drawing 7 MW of power. The rate charged to cruise ships would be $0.23 per kW/h which will allow the company to service its debt and maintain operations.”

That 23 cents per KWh is 44 percent lower than the all-in 41 cents charged when BPL’s so-called ‘glide path’ strategy was at its peak between June-August 2023 as it sought to reclaim under-recovered fuel costs. And it is 36.1 percent less than the 36 cents per KWh charged to Bahamian businesses back in August 2024.

Investors in the private placement were to acquire a combined 60 percent of Island Power Producers, according to the document. “The project will require $150m in initial financing, which will be sourced via debt (67 percent) and equity (33 percent) in tranches,” it added.

“The Bahamas has seen a rapid recovery in its economy since the COVID pandemic, which has driven demand for energy. Additionally, due to a quick recovery in the tourism sector and an upgraded cruise port, there has been a significant increase in the number of cruise ships visiting the country, particularly in New Providence.

“It is anticipated that more than 1,500 cruise ships will visit the country in 2025. While in port, these ships continue to run their engines as the country is unable to meet the demand for power given existing challenges with generation and reliability,” Island Power Producers continued.

“To address this issue, the company will build a natural gas power plant which will provide shore power to cruise ships while docked in port. Contingent upon demand signals identified in the Integrated Resource Plan (IRP), an agreement with BPL may be realised in the future for excess power sales. Island Power Producers (IPP) has partnered with world class companies for this project including Crowley, Kontrolmatik and Siemens.”

Anthony Ferguson, CFAL’s principal, could not be reached for comment before press time last night. However, Island Power Producers’ private placement was due to close on Friday last week, having already been extended for one week, with Mr Ferguson disclosing it had already beaten the initial $50m target by raising $60m from assorted private investors.

Tribune Business, which previously revealed that both Nassau Cruise Port and BISX-listed Arawak Port Development Company (APD) are part of the Island Power Producers consortium, also disclosed that the remaining partners are all overseas and international firms.

Crowley, the shipping company, will be responsible for transporting the LNG fuel to Arawak Cay and its subsequent offloading. Siemens will supply the generation equipment and manage/operate the plant, while Watts Marine, a specialist in shore power solutions, will deal with the hook-ups for all cruise vessels capable of connecting to it. An Indian company, Intertec, is providing engineering services.

“Watts Marine probably do about 80 percent of all cruise terminals in North America,” Mr Ferguson added previously. “We intentionally chose partners that are world-class and have an excellent reputation because we cannot afford to get it wrong.”

The power plant facility will “abut” Arawak Port Development Company’s (APD) Nassau Container Port. The LNG will be offloaded at Nassau Container Port and transported to Island Power Producers’ generation plant via a pipeline running underneath the port’s property. Mr Ferguson, together with Mike Maura, Nassau Cruise Port’s chief executive, sits on Island Power Producers’ advisory Board.

Island Power Producers’ main Board includes Charles Farquharson, the former Morton Salt general manager, as well as Angelo Butler, CFAL’s manager of corporate advisory services. Apart from Erold Farquharson, a contractor, who is the company’s managing director, all other members of the executive and management team appear to expatriates.

Given Arawak Cay’s industrial and maritime nature, Mr Ferguson earlier told this newspaper he foresees no environmental-related obstacles to beginning the facility’s construction in early January 2025 with the ambition to begin delivering up to 60 mega watts (MW) of power to the docked cruise ships by the end of next year or the 2026 first quarter.

The CFAL chief also disclosed that Island Power Producers also plans to sell its liquefied natural gas (LNG) fuelled electricity to Bahamas Power & Light (BPL) at night when it has no cruise ship customer base in port, thereby lowering this nation’s carbon footprint while also allowing Bahamian businesses and households to benefit from significantly lower electricity costs than they presently enjoy.

Confirming that Island Power Producers’ project is forecast to generate 30 full-time, “high paying” jobs when fully operational, Mr Ferguson added that the construction phase may create work for “200-plus”. He added that the developer was targeting an 80/20 construction workforce mix weighted to Bahamians, but in certain areas - such as gasification and engineering - this was unlikely to be achieved.