Davis demands answers over proposed sale of BPL power plants to Shell

Davis demands answers over proposed sale of BPL power plants to Shell
Progressive Liberal Party Leader Philip Davis

NASSAU, BAHAMAS – Progressive Liberal Party (PLP) Leader Philip Davis yesterday called on the government to explain its intentions to sell Bahamas Power and Light’s new power plants to Shell North America.

BPL Chairman Dr Donovan Moxey addressed the matter at the Bahamas Business Outlook conference at the Baha Mar resort last week, as he defended the power company’s decision to cover the cost of constructing the entire 220-plus megawatt power plant at the Clifton Pier site.

“The government must come clean on what it plans to do with the Bahamas Power and Light (BPL),” Davis said, in a statement.

“Given the statements by the chairman of the company, it appears that without the leave of the Bahamian people through parliament, the FNM has unilaterally decided that they are going to give the power generation portion of the company to a foreign entity.

“They never campaigned on this policy and were never given a public mandate to do so. There must be some public explanation for this.”

The government signed a memorandum of understanding (MOU) with Shell North America for the development of a gas-to-power project in November 2018.

The project would include the development of a gas-fire 220-plus megawatt power plant, marine infrastructure to receive liquefied natural gas; a gas pipeline to bring gas to shore; and an onshore LNG regassification terminal.

The MOU outlined that Shell, which would become an independent power producer (IPP), would cover construction costs of the plant and sell electricity to BPL. 

However, BPL announced in March that it signed a $95 million contract with Finnish technology group Wärtsilä to install a new 132-megawatt engine power plant at the Clifton Pier site.

Additionally, that project will also receive $70 million of the proceeds from the government’s electricity rate reduction bond to fund its expansion.

The second phase of the plant, which will bring an additional 90 megawatts of capacity online for a total of 222 megawatts, is expected to be on stream by 2021.

Eyewitness News Online reported exclusively last month on BPL’s plan to cover the costs to construct the entire power plant and transfer the assets to Shell.

At the time, Moxey said: “BPL has taken the lead in the construction of the power plants and these will be transferred to the Shell gas-to-power facility as per the definitive agreements that are in final stages of negotiations.

“…As initially intended, the MOU will be replaced with definitive agreements inclusive of the (purchase power agreement) PPA.”

Last week, Moxey cited the very complex nature and length of negotiations with Shell, noting that it was “better” for BPL to cover the construction costs and then sell.

Moxey said the move enabled the power company to create investment opportunities for Bahamians.

Negotiations are still ongoing between the two parties, he said.

Public Works Minister Desmond Bannister and Shell representatives have previously confirmed that an initial public offering (IPO) for shares in the company’s liquified natural gas (LNG) facility, could be on the horizon.

But Davis insisted yesterday that there is a “lack of a coherent plan or vision” for the company.

“The ever-changing positions of this government on BPL has deepened the mistrust, heightened the uncertainty and worsened the loss of public confidence in BPL,” he said.

As he called on Bannister to confirm the facts surrounding the decision, Davis said. “on the face of it, this makes no economic sense”.

He further warned Shell North America to be “very careful” before entering into the transaction.

“The PLP does not agree and will not agree to secretive, open ended and wholesale divestment of Bahamian patrimony once again,” Davis added.

“…In the end it is the Bahamian tax payer who suffers and bears the brunt of the costs.

“The government must come clean and do so without delay.”