BAHAMAS Power & Light (BPL) was yesterday urged to “ramp up very quickly” on its generation deal with Shell, amid hopes it could result in $500 million of annual economic savings.

Private sector chiefs, while hailing the Government’s approval of Shell North America as BPL’s long-term generation partner, called for the two sides to execute swiftly and lower one of the costliest, longest-running burdens on Bahamian businesses and consumers.

Michael Maura, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chairman, told Tribune Business: “From the Chamber’s perspective we’re happy to hear that Bahamas Power & Light has made a decision, and we look forward to much cleaner energy and a much lower cost. We hope things ramp up very quickly, as we’ve been paying far too much for energy for too long.”

His sentiments were echoed by Robert Myers, the Organisation for Responsible Governance’s (ORG) chairman, who suggested that the Bahamian economy could receive a half a billion dollar annual boost if the Shell deal slashes electricity rates by around 50 per cent.

“It’s fantastic news, but it’s a shame they didn’t do it sooner,” he told Tribune Business after Shell’s selection was confirmed. “The sooner the better, as it’s currently a complete waste of money.

“We hope this is going to drive our power prices down to the anticipated 20-21 cents per kilowatt hours (KWh), which includes both generation and transmission and distribution costs. This is a big one.”

While the Bahamas was unlikely to ever match Florida’s energy costs dollar-for-dollar, Mr Myers said the promise of reduced energy costs was especially timely given the need to improve this nation’s economic competitiveness ahead of its planned accession to full World Trade Organisation (WTO) membership.

Both Mr Maura and Mr Myers’ comments also hinted at likely widespread private sector relief that at last a decision has been taken, and a tangible step towards energy sector reform has been taken, following a decade of ‘false starts’ that has spanned three generations.

Apart from the environmental and health benefits of moving to a cleaner fuel such as liquefied natural gas (LNG), which will be burned at the new Shell-constructed power plant at Clifton Pier, the promised lower energy bills will remove a major weight from the backs of Bahamian businesses and households.

Any reduction in household energy bills will free up disposable income for increased consumer spending in an economy where, University of the Bahamas (UoB) studies have shown, around two-thirds of economic activity is driven by consumption.

As for businesses, reduced energy costs could allow some companies to move from a loss position to profit. It will also free up capital for investment in job-creating expansion opportunities, helping to reduce unemployment while also paving the way for the Bahamas to attract new industries.

Mr Myers told Tribune Business that BPL’s deal with Shell should “narrow the gap” between energy costs in the Bahamas and its main competitors, including south Florida.

“The net effect of bringing power costs down to 21 cents per KWh is close to half a billion dollars a year,” he said, recalling studies conducted for the Coalition for Responsible Taxation (CRT).

“That goes straight to everyone’s bottom line. It’s a huge plus, a big win. The faster we do that, the better. It’s positive for our competitiveness in the region, and the savings become disposable income for anyone wanting to expand, create a new business, make new hires, upgrades.

“It stimulates the economy, and is a big step for the Government as it narrows their deficit. The Government consumes a tremendous amount of power, so to lower their cost lowers their cost of operations. K P Turnquest should be really happy about that.”

BPL has provided few details apart from confirming Shell has been selected to lead development of New Providence’s new power plant, and that construction of its LNG-fuelled solution will be completed in 2021 and provide up to 270 Mega Watts (MW) of capacity.

BPL’s statement said: “Nineteen companies passed the vetting process but, in BPL’s Board’s opinion, Shell NA provided the best solution for the company’s new direction and its commitment to renewable energy.

“In the Board’s opinion, Shell NA’s commitment to power generation with the inclusion of LNG in BPL’s fuel mix will provide long-term energy security, new employment opportunities for Bahamians, stimulate economic growth and the stabilisation of customer rates.”

It added: “Shell NA has proposed an integrated ‘gas to power’ solution that would include construction of an LNG plant at Clifton Pier and enable BPL to produce up to 270 MW of power generation.

“This will have a positive impact on consumers and the environment. The LNG project is scheduled for completion in 2021. Shell NA has committed to continue providing HFO (heavy fuel oil), diesel or other interim fuels until LNG and the necessary power infrastructure is operational.”