Bahamas Power and Light (BPL) Chairman Dr. Donovan Moxey yesterday revealed that the power company intends to sell stations A and D at the Clifton Pier Power Plant to Shell North America.
“We’re also putting money into Station D, the new Station D, money that we will get back because unlike what you’ve been hearing in the reports we’re not giving Station D to Shell,” said Moxey at the 29th Annual Bahamas Business Outlook at the Baha Mar resort.
“We’re selling it to them and we’ll take that money and reinvest it into other infrastructure needs in The Bahamas as well.”
When The Nassau Guardian asked Moxey to clarify his comments, he replied, “Just to clarify, Station A is the 132-megawatt that was released in December. Station D is the 90-megawatt. Ninety plus 132 gives you roughly 230. Both of those stations will then represent Power Co. or the Power Company.
“Shell will purchase those assets from BPL. BPL will still retain some level of ownership in Power Co. and as an operating entity, a commercial entity and then there will be an IPO. And so, Bahamians will now have the opportunity to own Power Co.”
He did not indicate when the sale would take place or how much the stations will be sold for.
In November 2018, BPL signed a memorandum of understanding (MOU) with Shell Gas and Power Development B.V.
The MOU established Shell as the project developer for the power project, which will include the development of marine infrastructure to receive liquefied natural gas; a gas pipeline to bring gas to shore; onshore LNG regasification terminal and a new gas-fire 220-plus megawatt power plant.
At the time, it was said that Shell, which would become an independent power producer (IPP), would cover the cost of constructing the plant, which was reportedly expected to be upwards of $100 million. BPL will in turn pay Shell to supply electricity.
It is unclear if that still stands.
In November, Public Works Minister Desmond Bannister said the government will use $70 million of the proceeds from its rate reduction bond to fund the expansion of the Wartsila plant, which will bring an additional 90-megawatts of capacity online at Clifton.
BPL intends to start construction on this new plant, which is also known as Station D, in March 2020, according to Moxey who yesterday insisted that BPL isn’t simply building the plant but rather “investing in it”.
“And so, what we’ll end up doing and what Shell will do is Shell will create an entity, and that entity itself will purchase the plants from us and they will then have their own Bahamian entity; that’s the Power Co.,” he said.
“As part of the deal we’re negotiating with them, we want to make sure that there’s Bahamian ownership and Bahamian ownership will be in several forms and one of the forms will be in an initial public offering.”
Asked if a structure for Bahamian ownership had been determined, Moxey replied, “No.”
He continued, “We do know that Shell will have a majority ownership in the power company and Shell will have a majority ownership in the terminal company. Now, how the other pieces roll out, again that’s to be negotiated, that’s to be decided.”
When asked if the two companies had a timeline in mind, Moxey said, “That’s a part of negotiations…”
He said Shell and BPL are negotiating two “very important definitive agreements right now”.
“One’s called an asset purchase agreement (APA),” Moxey said.
“The other is called the PPA or power purchase agreement, and then obviously there are shareholder agreements that fall out from there as well. And so, we’re just working through that.
“So, our timeline now to get those first two definitive agreements done is by the end of March this year. Once those things happen, because those are the very important and very critical agreements, then all of the agreements will fall behind that.”
Moxey said once negotiations with Shell are finalized, which isn’t expected to happen until March, Bahamians will be able “to buy into the utility company”.
“And from our perspective, it will be a very fruitful and productive investment and we want to make sure that Bahamians have a chance to participate,” he said.
Markus Hector, who serves as general manager of Shell’s LNG market development, added, “We can confirm that our interest is fully to get a maximum ownership of Bahamian people into both of these entities from our point of view.
“And not only that, but we can also say at Shell, I want to commit here, we’re committed to develop local people and to employ local talent in the operation of these plants…”
He said that Shell will also aim for Bahamians to be employed with the development and construction aspect of the project.
“The way that we run our business we want to have strong local participation,” Hector said.
“That’s how we basically run our businesses across the globe so I can fully support Donovan. We want to develop this as a power complex with a power plant and a G-terminal in the best possible way for The Bahamas. And we want to get basically local investment into both of these entities as soon as possible.”