The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An ex-prime minister is again voicing concerns that “the average Bahamian is being excluded” from opportunities to grow their wealth - this time through the newly-unveiled cruise ship ‘shore power’ deal.

Dr Hubert Minnis told Tribune Business that individual Bahamian investors risk “being denied” the chance to purchase an ownership interest in Island Power Producers, the entity selected by the Government as the preferred bidder to supply 60 Mega Watts (MW) of energy to vessels docked in Nassau Cruise Port, and urged that they be given this chance via an initial public offering (IPO) of shares.

Raising similar concerns to those he expressed over Bahamas Grid Company, the 60 percent majority private sector-owned vehicle to which New Providence’s electricity grid has been transferred, he questioned whether Island Power Producers has some of the same beneficial owners, investors and advisers and if the profits it generates will be concentrated in the hands of the economic and political elite.

Online searches could find no trace of a company called Island Power Producers, other than in relation to the Nassau cruise ship ‘shore power’ award, which indicates the company was likely formed for the specific purpose of bidding on and winning this contract.

Jobeth Coleby-Davis, minister of energy and transport, told Tribune Business that the Government is in “the early stages” of finalising the details of its agreement with Island Power Producers but said this was likely to be completed “within the next 90 days”.

Once that concludes, she added that the company will need to be licensed by the Utilities Regulation and Competition Authority (URCA) as an independent power producer (IPP), as well as obtain the necessary environmental and planning approvals from the Department of Environmental Planning and Protection (DEPP) and Town Planning Committee.

“Currently, we are in the early stages of our contractual arrangements with Island Power Producers. Once these arrangements are finalised, we will share more detailed information with the public. Throughout this process, we are conducting thorough due diligence to ensure that all aspects are carefully managed,” Mrs Coleby-Davis wrote in replying to this newspaper’s questions.

“We anticipate that this phase will be completed within the next 90 days. Following that, Island Power Producers will proceed with the necessary regulatory applications. This will include the usual requirements, such as seeking approvals from relevant authorities - Department of Environmental Planning and Protection for the Environmental Impact Assessment (EIA), Town Planning and the Utilities Regulation and Competition Authority for licensing. These applications will be made in accordance with the standard procedures for any development or construction project.”

However, Mrs Coleby-Davis did not reply to Tribune Business’ question on who Island Power Producers’ beneficial owners and investors are, and if they include some of the same players involved in the Bahamas Grid Company deal. She also did not answer whether the Government felt it had received sufficient and diverse bids given that only three were submitted.

Dr Minnis, meanwhile, questioned whether the provision of ‘shore power’ from a plant located at Arawak Cay to cruise ships docked in Nassau was really “a back door entrance” for Island Power Producers to enter the bunkering sector. 

He argued that this niche, involving the provision of liquefied natural gas (LNG) to cruise ships, so that they operate with cleaner-burning fuel and achieve their mandate to slash the industry’s global carbon emissions, was where the major earnings are based on work done under his administration.

The ex-prime minister revealed that Shell had wanted full 100 percent ownership of the Clifton Pier LNG bunkering facility it planned to construct, and from where it would supply this fuel to the cruise ships. However, he asserted that his administration was negotiating a revised shareholding structure whereby the Government would own a majority 65 percent, Shell just 15 percent, and Bahamians 20 percent via an IPO.

“There’s a lot of concerns for me,” Dr Minnis told Tribune Business of the Island Power Producers and Bahamas Grid Company deals. “In relation to Bahamas Grid, it seems very odd that the Government did not negotiate a better deal in reducing the returns that shareholders and bondholders will receive.

“What is interesting with this new company, Island Power Producers, is when was this company formed? And there should be an IPO, just as I’ve advocated for Bahamas Grid Company. If this is following the same pattern as Bahamas Grid, why are only a handful of individuals or entities involved but the average Bahamian will be excluded unless they put out an IPO?

“The question is: When was Island Power Producers formed, and who are Island Power Producers’ shareholders and owners? Are they the same as Bahamas Grid Company? Why are Bahamians being excluded from owning part of Island Power Producers, which will make millions and millions of dollars like Bahamas Grid Company, but Bahamians are excluded from? Minnis and the Bahamians want to know.”

Pledging that he will “have a lot more to say” on these issues after Parliament resumes on Wednesday, Dr Minnis asserted that while the Davis administration “continues to say they love Bahamians, at the same time you have a select group they are giving more wealth to.

“Are they the same ones sharing in all the wealth? Why are the average Bahamians being denied this potential for an uplift? Why should it be the same crew? I will have a lot more to say when I go to Parliament. I ain’t calling no names yet, but when I go to Parliament I’m going to put it altogether. We are not going to tolerate this economic monopoly.”

Dr Minnis added that the Island Power Producers deal goes “a lot deeper than it appears”, arguing that the provision of ‘shore power’ to cruise ships docked in Nassau was merely a first step towards offering a bunkering facility that supplies them with LNG fuel.

With the cruise industry converting to ships with cleaner fuels, as part of its drive to cut carbon emissions, the former prime minister said the provision of LNG bunkering was where the real money is especially since existing facilities at locations such as Port Canaveral were insufficient to meet demand.

“This is where the big money, millions and millions of dollars, comes in,” Dr Minnis told Tribune Business. “You’re excluding the Bahamians from that. Only a select few will make millions from that. Why I point that out, when we were in government, we were looking at that LNG facility for bunkering cruise ships because we knew that was the direction that the industry was mandated to go in.

“Shell at that time wanted 100 percent ownership. We objected and worked out a formula where we, as the Government of The Bahamas, owned 65 percent, Shell owned 10 percent and give the public a chance to own 20 percent to ensure the Bahamian people would own what is to come. We were doing a bunkering system in the Clifton area.

“That was our proposal to ensure the Bahamian populace was involved; that they share a part of the wealth. The Bahamas, for the Caribbean area, is positioned in the right place. This is basically a new golden opportunity and should be shared with the same people, not the same crew as Bahamas Grid Company.”

One well-placed source, speaking on condition of anonymity, said it remained to be seen whether Island Power Producers’ plans extended to LNG bunkering as this was usually left to major fuel suppliers, such as Shell and New Fortress.

They questioned, though, why the Government was outsourcing the provision of cruise ship ‘shore power’ to the private sector rather than allowing Bahamas Power & Light (BPL) to do this and earn much-needed revenue to alleviate its debt-laden, cash-strapped financial position.

The Government, in the request for proposal (RFP) tender released back in July, said: “BPL cannot supply the 60 MW required for shore power at the newly-opened Nassau Cruise Port. At this juncture, BPL is fully subscribed to meet its existing energy demands and cannot allocate additional power for the port’s requirements.”

However, this newspaper understands the Minnis administration was looking at providing this via BPL. “Why in the world, knowing BPL needs revenue to survive, would you have someone else do that?” a source asked. “You’re turning away $50m-$60m revenues annually. It makes absolutely no sense that you are taking those away from BPL.”

Pointing out that ‘shore power’ is the equivalent of supplying electricity to “floating hotels”, they added: “It’s amazing they would let those revenues walk away from BPL. The question is why. BPL gets zero revenue from it. Absolutely none.”

The cruise ship ‘shore power’ RFP was issued on July 9, and the selection of the preferred bidder unveiled two months’ later. Tribune Business also picked up private sector talk, unconfirmed, that potential bidders were dissuaded from applying amid suspicions that the winning bidder had already been chosen.

“They had put together a group,” one contact, speaking on condition of anonymity, said. “This group had gone and presented to the Government to do the shore power deal. They presented their proposal to the Government. BPL had no objections.

“The deal was done and ready to be signed off on when all that stuff kicked off in Parliament over the Electricity Act and everything. They then decided to do the RFP. Most people knew it was a done deal, which is why they only had three bids.”