What MOU? BPL to pay for Shell power plant 

What MOU? BPL to pay for Shell power plant 
Bahamas Power and Light (BPL) Chairman Dr Donovan Moxey.

NASSAU, BAHAMAS – Bahamas Power and Light (BPL) will cover the costs to construct the entire 220-plus megawatt power plant at the Clifton Pier site and transfer the assets to Shell North America for its gas-to-power facility, BPL Chairman Donovan Moxey revealed yesterday.

The revelation comes a week after the government announced the expansion of the Wärtsilä plant at western power station.

“There is no conflict with the [Shell NA] MOU,” Moxey told Eyewitness News Online, in an email.

“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.

BPL Clifton Pier plant

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

Last November, the government signed a memorandum of understanding (MOU) with Shell NA for the development of a gas-to-power project.

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 will 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.

At the time, BPL CEO Whitney Heastie insisted the Wärtsilä deal would not conflict with the Shell MOU.

Heastie said Shell was “integrally involved” in the selection process of Wärtsilä, and explained the 132 megawatts of power to be provided by the Finnish company would complement the 220 megawatts committed by Shell.

“And so the 90 megawatts will be added at Clifton Pier to complete the 220 megawatts that Shell has committed to build, as a part of the memorandum of understanding,” Heastie said at the time.

Despite this, Public Works Minister Desmond Bannister announced last week that $70 million of the proceeds from the government’s electricity rate reduction bond will fund the expansion of the Wärtsilä plant.

Bannister said 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.

When asked by Eyewitness News Online, what changed between March when Heastie made the clarification and last week when Bannister made the Wärtsilä announcement, Moxey said, “there was no significant change.

“The important thing is the full 220MW power plant needs to be up and running by the end of summer 2021,” he continued.

“And in an effort to make this happen on time, BPL is taking the lead in its construction. 

“These power plants will be transferred into the Shell gas-to-power facility.”

The power company has said once the plant is complete it will no longer need rental generators to operate at the Blue Hills power station, which cost millions of dollars annually.

The new engines are also expected to lower the cost of operations at BPL, while the fuel flexibility of the engines means The Bahamas will be able to move toward the use of more environmentally friendly fuel.

Bahamas Electrical Workers Union (BEWU) President Paul Maynard said yesterday that he believes the extended 90-megawatt power station will cost at least $90 million.

“When Shell comes to take over, Shell got to automatically give us $220 million back, because that’s what it cost to put the plant there,” Maynard said.

“If they taking over the plant, the new plant, they need to pay our money back, what the Bahamian people pay to get this plant done.

“It can’t be that we own the plant. If we pay for it, that means we own the plant, and Shell just coming to take it over, that shouldn’t happen.”

The government last week passed the Electricity Rate Reduction Bond Bill (ERRB), 2019, which will allow BPL to restructure more than $320 million in inherited debt, and secure more than $350 million in new funding to address longstanding issues.

The legislation makes clear that BPL’s customer base will be relied upon to service the bond issue.

Officials have said that the average household light bill will increase temporarily by $20 to $30.