NASSAU, BAHAMAS — Prime Minister Philip Davis said on Wednesday that it will cost a whopping $30-$60 million to convert the seven Wärtsilä engines Bahamas Power and Light (BPL) purchased back in 2019 to tri-fuel engines.
During his contribution to the debate on the Electricity Bill 2024 and the Natural Gas Bill 2024, Prime Minister Davis called the decision of the former Minnis administration to forego the gas-ready capabilities of those engines a “mistake.”
“We can’t forget the failure of the Wärtsilä engines, which were placed in an aged facility that can only accommodate five of the seven generators at a time, which means that they will never live up to their cost-savings potential. This affected the mix of fuel that was used for projections on their hedge, which meant that the hedge they like to bring up all the time was underperforming as well. The Wartsila engines were promoted as tri-fuel – they said they would be compatible with LNG, but they’re not – that mistake will cost us $30 to $60 million in conversion costs,” said Prime Minister Davis.
A report previously tabled in Parliament noted that in a December 2018 communication between BPL and Wärtsilä, BPL indicated that it had decided to forego the engine’s gas-ready capabilities and instead, opted for engines to be tuned for improved operational efficiency on the selected primary fuel option HFO. The records further indicated that the intent would be to convert the engines during either the manufacturer-recommended 32k hours or 48k hours overhaul.
Speaking previously on the issue, Opposition Leader Michael Pintard noted that commissioned engines were able to ruin HFO and LFO from day one, and when LNG became available, the required gas fuel kits would have been installed to allow for LNG as a fuel source. Pintard asserted that there was no need to install the gas fuel kits prior to LNG becoming available.
Davis told Parliament that when his administration assumed office, it met BPL in a serious crisis.
“The BPL we inherited from our predecessors was in serious crisis;$500 million in debt. Half a billion dollars. With experts telling us we need another $500 million in capital investments, to rescue and then modernize a grid on the verge of collapse. That’s more than one billion dollars, just to get BPL on track. And that’s before we get to the additional $100 million-plus in pension liabilities. And let me say this clearly: we will meet every commitment to our workers. No one will lose their job, and pension and other commitments will be met,” said Davis.
Opposition Leader Michael Pintard challenged Prime Minister Davis’ suggestion that BPL’s challenges were a result of a single administration.
Prime Minister Davis noted that with the Electricity Bill (2024), his administration is repealing and replacing the Electricity Act and repealing the Electricity Rate Reduction Bond Act.
“Our Bill ensures that URCA will have regulatory oversight over renewable energy, and promotes the adoption of efficient energy practices. URCA will also act as an arbitrator should any disputes arise between licensees and a third party. This Bill allows system operators to enter into management agreements with licensees to manage specific functions, and allows URCA to take restorative natural disaster relief costs into account when tariff rates are being determined,” said Davis.
He further noted: “The Bill introduces a transition period of three years in which URCA will accept the existing tariff rates presently in effect for licensees. During the next three years, a tariff review will be conducted with the objective of making the rates more equitable. It is our intention for tariff rates to residential consumers to go down, not up.”
He also noted that the legislation recognizes URCA as the regulatory authority for Grand Bahama.
‘This is nothing new. This government has always maintained that the Electricity Act and URCA’s regulatory authority extend to the Grand Bahama Power Company, so this is nothing new. This view will now be reflected in the law,” he stated.
The Prime Minister also affirmed his administration’s commitment to BPL workers, stating that the government will honor existing union agreements and accomplish its objectives without layoffs.
