By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Investors behind a $250 million project that could reduce Bahamian energy costs by up to 50 per cent are “at a total loss” as to why the Government has yet to approve it, describing their proposal’s potential economic impact as “phenomenal”.

John Bostwick, the FNM Senator, who is acting as Bahamian legal counsel for the SGI Global Holdings consortium, told Tribune Business its ‘Floating Power Plant’ proposal was “the most holistic solution you could conceive” to this nation’s energy woes.

He added that SGI’s two barge-based power plants would bring “more than five times” New Providence’s average daily demand for electricity, and could be operational within 120 days of receiving all necessary approvals – including the signing of a Power Purchase Agreement (PPA) with the Bahamas Electricity Corporation (BEC).

Mr Bostwick said some $50 million of the consortium’s proposed investment would go towards upgrading BEC’s transmission and distribution lines, plus the installation of a Smart Grid system.

Emphasising that the project would not cost the Bahamas or the Christie administration one cent to set up, Mr Bostwick said the power plant’s units could be modified to run on a variety of fuels, including Compressed Natural Gas (CNG), heavy fuel oil and liquefied natural gas (LNG).

SGI’s preference, though, was to run the floating power plant from locally-produced biodiesel and biofuels, thus keeping any emissions to the bare minimum. Mr Bostwick added that the plants would look to provide power directly to the seven-nine cruise ships typically docked in Nassau Harbour at any one time, thus eliminating the harmful environmental effects associated with the vessels running their generators/smoke stacks in port.

The attorney added that SGI’s two barges, each carrying generation capacity of 136 Mega Watts (MW), would be moored at the industrial section of Arawak Cay. They would also be able to easily connect to New Providence’s two major hotel energy consumers, Paradise Island and Cable Beach.

Describing energy costs as “the number one” issue facing the Bahamian economy, Mr Bostwick said of the SGI proposal: “It would take the cost of energy down by approximately 50 per cent. What that does to an economy is phenomenal.

“There’s an investment I have a portion in, where we’re running at $4,000 a month in light bill. If those barges had been here for three months this year, we could have saved $6,000 already. What could we have done with that? We’ve let a waitress go, a chef go, hired one chef back…… We’ve let three people go because of that – the cost of operating, the cost of business.”

Suggesting that such a $6,000 saving could have rescued some of those jobs, Mr Bostwick said the sum was close to the waitress’s base salary for the entire year. He added that food stores were typically incurring $20,000 monthly electricity bills, and the proposed savings from the SGI proposal – if approved – could thus amount to $120,000 per store, per year.

“The chairman of BEC is paying $30,000 a month to power his bowling alley, and that could be cut to $15,000/$16,000 a month,” Mr Bostwick told Tribune Business. “It’s the cost of business, the cost of doing business.”

Energy costs in Florida were typically $0.17 per kilowatt hour, he added, compared to the $0.40-plus per kilowatt hour norm for BEC and the Bahamas. “Coming from Florida, why do business here,” the SGI attorney asked.

The SGI consortium’s proposal offers to supply electricity to BEC at a $0.28 per kilowatt hour rate for the first six years of any supply agreement with BEC, before dropping this to $0.25 per kilowatt hour in the seventh year.

Based on an average BEC price of $0.40 per kilowatt hour, the proposal represents a minimum 30-37.5 per cent savings on the utility monopoly’s current prices. That, in turn, would translate into a multi-million dollar savings for Bahamas-based companies and consumers, stimulating economic activity, business investment/expansion and the creation of jobs.

Mr Bostwick said the SGI consortium featured numerous “internationally-known entities” and financial/energy consulting firms. They include TAG Energy Partners, a firm linked to defeated US presidential candidate Mitt Romney, and the Rothschild family foundation.

“I have great belief in what was presented. It’s the most holistic solution you could conceive,” Mr Bostwick told Tribune Business, adding that SGI’s make-up had been fully disclosed to the Government.

“This thing was designed to address every aspect of concern, every potential challenge, with the financial partners revealing themselves.”

SGI’s proposal was first submitted to the Christie administration in September/October 2012, and has since been “refreshed three times to cover all the bases”. Mr Bostwick said it had been modified to show the barge-based generation units could use CNG or LNG, after the Government started talking about these as potential alternative fuels.

“We recommend burning biodiesel that can be locally produced,” he added, “but if you want gas, we prefer CNG, as it is much cheaper, safer and easier to handle.” LNG, by comparison, was more costly due to its containerization and transport costs, and Mr Bostwick said SGI had made clear in its proposal it was prepared to negotiate with the Government over using CNG in its plants.

But, despite encouraging noises from government officials to SGI about its proposal, praising it as a viable solution, the consortium is no nearer to obtaining full government approval.

Mr Bostwick told Tribune Business he was “at a total loss” as to why this had not been forthcoming, as the project was initially presented to a meeting involving the minister responsible for BEC, Deputy Prime Minister Philip Davis. Also present were minister of state for investments, Khaalis Rolle; BEC chairman Leslie Miller; and BEC general manager Kevin Basden.

Kenred Dorsett, the minister of the environment, has also been kept appraised of developments, and Mr Bostwick said numerous follow-up documents – including draft power purchase agreements and memorandums of understanding (MoUs) had been supplied to the Government.

It is unclear why approval has not yet been granted, although it may have something to do with political concerns about the jobs and votes bound up with BEC workers and their families. IF SGI’s ‘Floating Power Plant’ got the go-ahead, it would effectively replace the Corporation’s existing Clifton Pier and Blue Hills plants, thus making numerous BEC jobs redundant.

Investments such as SGI’s $200 million project do not wait around forever, and the question facing the Government is likely whether it wants to continue to pander to the ‘minority’ at BEC instead of focusing on the needs of the majority – the private sector, Bahamian economic competitiveness and hundreds of potential jobs.

Pointing out that SGI’s price, unlike BEC’s, would include no fuel charge due to the use of biofuels, Mr Bostwick said the consortium would require just “a couple of cents” to cover administrative costs and other expenses.

He added that the Floating Power Plants earmarked for the Bahamas were currently anchored on a Manhattan river. With New York upgrading its power generation capacity by 300 MW, these units were now free to be redeployed to this nation.

Mr Bostwick said Arawak Cay had been chosen both for its industrial surroundings and the sheltered anchor it affords, important when hurricanes come calling. “It’s a no brainer at Arawak Cay, and is easy, quick and clean to do,” he added.