FNM Press Conference
March 3, 2024
Topic : BPL Privatization Without Competitive Bidding
The Hon. Michael C. Pintard:
Good Afternoon members of the Press Good afternoon FNMs. It is good to
see you on this beautiful Sunday afternoon.
The country as we are all well aware is facing some very serious challenges.
One of the main challenges we face as a country is the whole issue
surrounding Energy Security. Our consultation with the IMF and other
agencies who have visited The Bahamas have consistently discussed the issue
of energy. If we get the energy sector properly regulated, working effectively
and efficiently, we improve our prospects as a country to not only grow the
economy of The Bahamas, but to contribute to the overall economic
development of our citizens.
The challenges that are faced by BPL are not new. So today our goal is not to
attribute all of the dysfunction at BPL to one administration but let me be
clear – the Progressive Liberal Party should shoulder responsibility for the
lying share of the dysfunction that has taken place at BPL. Today w’re not
going to go through the extensive history of BPL and what brought us to this
point, it is important that we put in context some of the things that have
happened over the last several years, particularly beginning in 2016.
The former PLP administration in 2016 decided to hire Power Secure to take
over the management of BPL. One of the things that become absolutely clear
to us is that they had very little (that is the PLP) confidence in Bahamian
talent to a large extent and they made a determination that some of the
persons who were there at the time were not going to be elevated to manage
generation, power generation, transmission as well as distribution. In 2017,
when they signed the management agreement, they gave us a sense that we
were going to see fundamental transformation. The 2016 agreement was first
entered into. They then augmented the executive team and by the time we
changed governments it was clear that the Progressive Liberal Party had not
done a great deal to transform the energy sector. The new government then
made the determination that was going to bring in a Bahamian team of
leaders and appointed a brand new board that worked, in our estimation, at a
very high level. Unfortunately there was a reconfiguration with that board,
but even the new board demonstrated that it had the capacity to cast a vision
for the energy sector in general, not just BPL, but the energy sector in
general. They recognized that BPL was a pivotal part of the new focus on
energy. One of the things they left in place when we were kicked out of office
in 2021 was a strategic plan on how we would go about as an administration
in returning the legacy debt we had, how we would go about refining the
employees – ensuring that employees were provided with training in order to
create a world class workforce. That plan also included what would be done
to raise the necessary capital in order to improve the infrastructure of BPL,
how they would go about integrating renewables to ensure we had cleaner
energy sources but most importantly, they focused on how we would go
about lowering the cost for the average citizen, residents as well as
businesses. That plan was left on the table in fact, a whole package of
information including that plan was left for the government to review. Both
Alfred Sears and the Prime Minister received their package. The public
would recall that included in that package was the Hedge Program which was
successful for the 2 years that it ran because that program reduced the cost of
electricity for some 10.5 cents for the average consumer, at the time they
were paying somewhere in the vicinity of 18 or 19 cents. We are now far
beyond 10.5 cents. In Fact we are far beyond the 18 cents, electricity cost
because of the bad decision of Prime Minister Davis and Alfred Sears has
caused the fuel charge to first increase and then the overall electricity cost to
skyrocket for the average Bahamian and for businesses. This administration
has made a mess of the energy sector but what they did in terms of causing
the increase in fuel and electricity cost pales in comparison to what they are
doing right now.
They are making decisions and signing off on agreements that the Bahamian
people are absolutely unclear on what they’re doing but it is safe to say that
the Davis Administration appears to be privatizing BPL without a candid
discussion with all stakeholders. If you would have had a chance to read his
press release that came out just moments ago, he talked about his
administration’s commitment to consult with all stakeholders. Well, he didn’t
do that, so what he is saying is because the Bahamian people have become
aware of his operation in the dark and like always once they are facing
reasonable questions about unethical things that they are doing, they then
make a public statement about their willingness to consult. We say they are
late in this regard because for them to at this point have entered into verbal or
written agreement, and we get the impression that it’s well beyond verbal,
would have meant that for months they have been having discussions with
various parties about the future of BPL which the PLP does not own. The
Bahamian people own BPL.
We wish to raise several questions for the Prime Minister and his team to
answer. First we will say what we understand, we understand that the
generation of power at BPL has been awarded to one company, a company
that is known to this administration very well and some would go as far as to
say is headed by an avant supporter of the Progressive Liberal Party. The
second part of the operation of BPL is Transmission and Distribution and another
company the government has been in talks with in terms of them taking
over that particular dimension. Now the government is going to be cute
as they always attempt to and say this is not privatization. It appears to
be privatization that if you take your entire generation component and
you make that available to another company to execute and you take
your transmission and distribution and turn that over to another company
it appears to me that the reason for your existence has been been made
available to someone else to execute on your behalf. Well, there may be
a reasonable explanation but we are here today because we don’t know
what that explanation is and we are sure that members of the public are
not aware of what that arrangement is. We would like to know to what
extent the government has consulted any of the agencies or members of
the public, who option matters, in what the future vision and direction of
BPL is going in?
We do know they have just started conversations with the employes at
BPL. The second question relates to the employees, will all of their
benefits be honored? The Prime Minister said in a recent statement,he
intends to make sure their benefits are honored, everything in the
industrial agreement in terms of their terms of employment and pension
will be honored. The question is honored by whom? Will they be on the
government’s payroll? Will they be on the company that is responsible
for power generation’s payroll? Or will they be on the payroll of the
company responsible for transmission and distribution? Have they
actually worked out how all the entities will work in tandem with each
other? Our suspicion says , No. So you can have, qualified persons doing
transmission and distribution and we believe that they are. Having had a
chance to meet and talk with at least two of the principals, two
Bahamians with stellar reputation in business, no doubt, capacity to pay.
but the question is, have the appropriate arrangements been worked out
between the transmission and distribution company and the company
that is doing the generation and what roll is the government going to
play in all of this? What is going to be the share structure ? To what
extent would Bahamaians be able to buy into this entity? If this
particular arrangement is to commence in June, do we have enough time
to work out those details in terms of whether Bahamaians will be able to
be shareholders in this new configured company? The most important
question is, how the hell did we get to this point ? Where the
government can enter into an arrangement without competitive bidding?
Without advertising what they’re considering is to give many talented
Bahamains an opportunity to put forth their proposal on how we are
going to move this corporation forward and how we’re going to tackle
the broader issues in the energy sector that directly impacts economic
growth and ultimate economic development. What we have heard thus
far from having only spoken to but one component of the overall
consortium that the government hopes will ultimately run BPL, it
appears that there can be some sort of cost savings. However, in the
absence of the competitive bidding, we still don’t know if it is the
maximum savings we could have achieved. If multiple players were at
the table making their presentation about their vision, and the way
forward for this corporation so the government is duty bond to give a
candid explanation of its vision to say what the imminent challenges
they face that in their mind force them to take this kind of nuclear
approach because essentially, that’s what it is. It’s a big corporation that
Bahamaians have spent hundreds and hundreds and hundreds of millions
in over the years. Who will ultimately own the assets in this
reconfiguration? Would it be any of the two companies that are presently
being considered? Will it be the Bahamian people or will it be split? Has
the evaluation been done on the assets and the potential for revenue
generation to determine what is a fair value to be placed on assets and
potential to generate revenue? How did the government arrive at
whatever conclusion that they have arrived at in the dark? We wish to
understand how they arrived at those decisions.
We want to remind the public that this chaotic situation that the
Government has once again landed the Bahamian people in, it is not at
all surprising. The Government, you would recall, when they came to
power. They had already commissioned additional power generation
through rental units. Some of you would recall that through the 30
megawatt rental gas turbines that was secured last year, there were no
competitive bidding for that as well. We have dramatically moved, some
would say, and some who are in a position to know that, the Government
has almost tripled the rental generation at BPL. They continue to engage
others to rent generators to the country and we are paying an inordinate
amount in renting power. Knowing this administration, they are going to
try and come up with some “smoke in mirrors” and talk about why they
are in that position. We would only remind them that the record speaks
for itself. When they came to power we had enough generation capacity
to handle the peak demand that occurred during the summer months.
What went wrong? The Government loves to talk about some
mysterious fire and other things that certainly nobody fully understands
or believes. But here is what we understand went wrong. The
Government canceled the arrangement they had with Watsila and they
had a local company that had some of the employees that worked with
Watsila to operate and to maintain these equipment. The problem is that
the Government failed to explain to the public a couple of things.
One, the arrangement that that company had with the Bahamian
Government it was based on their performance. They had a performance
contract. If the equipment does not work up to specifications or what
they stated, they had to pay the difference of any costs that were to be
incurred and they were made to pay. If any aspect, any part of their
machine went wrong, they had the requirement of supplying that part of
the machine, replacing it. The new company did not have that luxury. If
something went wrong with that machine and you are not the original
equipment manufacturer you are then responsible for sourcing those
parts that went wrong. And I don’t know too many companies that if you
fire them and then go back to them to get the equipment. And so what
occurred was you had catastrophic failure, or let’s just say failure, with
two of the engines and to date we understand that those systems are not
yet back online and fully operating. So, the Government’s poor decision,
and I believe it was 2020 to cancel that arrangement with Watsila, 2022,
is the primary reason why today we are facing a situation where they
have to rent to generate power versus using the capacity that the Free
National Movement left in place. And so again, we say to members of
the public that you have no way of knowing what your eventual price for
electricity will be under the new arrangement.
The Government is duty bound to come to the House of Assembly to
carefully explain to its vision to energy in general, BPL in particular. It
has a duty to consult with all stakeholders, to explain the challenges that
they face and the decisions that they’ve made to address those
challenges. Short, medium and long term. The Free National Movement
knows that the Government’s word is very difficult to accept on the
surface and that you have to fact check everything as I’m sure the BPL
workers are doing, because it doesn’t matter what they say to them, its
what’s going to happen down the road. We know that when we left
office, we believe that the complement of staff was somewhere between
800 plus, there about. It is our understanding that the Government has
improved that number dramatically. They’ve added, I understand, quite
possibly another 150 persons to the payroll. The question is, “Have they
had a candid discussion with the companies that they are proposing to
take over generation, transmission and distribution. And has there been a
candid discussion on how staff concerns would be addressed, so that the
staff is not be put in the position that there are surprises down the road.
We in the Free National Movement are unlike the Progressive Liberal
Party. If we believe that there needs to be an adjustment in the staff
complement, we have had candid discussions with staff and we have
indicated what the programme would be and what the target numbers
would be. Sometimes it is not light, and there would be some acrimony,
but at a minimum you could rely, certainly on this administration, that
we will be candid, open, honest with you and we will be consultative in
anything that we propose to do that affects your livelihood. But more
important than workers’ livelihoods, which is important, is what will
happen to the cost of electricity for Bahamians across the spectrum. For
the various business, small and medium size businesses. What will
happen to them?
The final point I will make then we’d open the floor for questions. This
same administration thats now talking about the reconfiguration of BPL
and their plan for the energy sector (and we don’t know the details), is
the same administration that’s now permitting major companies that pay
substantial money to the government to come off of the grid. The
question is, and we faced this when in government, has the officials at
BPL and the Government done sufficient calculation to determine the
impact of permitting that provide millions of dollars per month to the
government to then leave the grid. Would that in any way compromise
your capacity to serve those underserved or irregularly served
communities. Those lose less profitable areas in the country. Have you
made the appropriate calculation in respect to that.
Having said that, it leads us to another major issue. Cruise ships are now
required to reduce their carbon footprint internationally as a part of that
overall exercise that they’ve gone through with the International
Maritime Organization. Cruise ships when docking in ports, will
generally not run their own power but either utilize a cleaner source of
fuel, LNG or plug into a local service provider. Can the government
explain its plan to take advantage of this massive new revenue stream
that can potentially come from these cruise vessels. It is our
understanding that that ship has already sailed. The others will in fact do
so and we wish only to understand from the government what is their
rationale, what is the new configuration or consortium of companies or
what has gone into their decision-making not to take on board that level
of revenue. So if we look at cruise ships they are like floating hotels. I
believe one of our big hotels are paying somewhere between 3-5 million
dollars per month for electricity. So imagine now when you multiply that
across all of these cruise vessels what the potential revenue is. Has the
Government been transparent with the Bahamian people. We asked this
question over a week ago. Has the government been transparent with the
Bahamian people on any move afoot for private investors, and we do not
fault the investors, to capitalize on what is an economic bonanza for
them, but quite certainly an economic loss for the Bahamian people.