By NEIL HARTNELL

and FAY SIMMONS

Tribune Business Reporters

A Cabinet minister yesterday said the energy sector regulator approved the use of non-competitive bidding for the outsourcing of Bahamas Power & Light’s (BPL) generation and electricity grid functions.

Jobeth Coleby-Davis, minister of energy and transport, effectively hid behind the Utilities Regulation and Competition Authority (URCA) when asked by Michael Pintard, leader of the Opposition, whether the Government plans to use competitive bidding via the issuance of requests for proposal (RFP) in soliciting and awarding contracts related to BPL and wider energy sector reforms.

Responding in the House of Assembly to questions posed by the Opposition, the minister said: “The Government of The Bahamas remains committed to transparency and fairness in all procurement activity including those related to generation, transmission and distribution within the energy sector, and have been guided by the provisions of the Procurement and Electricity Acts.

“Where competitive bidding has been feasible, the Government has [issued] RFPs publicly intending to attract quality bidders. In instances where non-competitive procurement was necessary, the decision was made in accordance with the Procurement and Electricity Acts, specifically under provisions that account for extenuating commercial and technical reasons.

“It’s important to note that BPL is required to provide comprehensive justification to the regulator, URCA, outlining the technical or commercial imperatives that necessitated non-competitive procurement processes.”

The issue of competitive bidding, or its absence, arose in relation to BPL because neither the outsourcing of the proposed 177 mega watts (MW) new power plant at Blue Hills to Bahamas Utility Holdings, a FOCOL subsidiary, as well as construction of the pipeline responsible for supplying liquefied natural gas (LNG) to it, nor the selection of Island Grid and Pike as Bahamas Grid Company’s partners, was seemingly put out to tender.

Mr Pintard, in a follow-up question, asked Mrs Coleby-Davis “to outline the extenuating circumstances that accounted for the lack of competitive bidding, both in terms of the generation side as well as the transmission and distribution”. To which the minister replied: “BPL would have provided this in detail to URCA, the regulator, who gave the approvals and any further details I can provide at a later date.”

Mrs Coleby-Davis also said all existing employment terms and benefits enjoyed by BPL staff will continue if they are “seconded” to Bahamas Grid Company, the entity created to take over upgrading New Providence’s electricity grid. Those who elect to join Bahamas Grid Company will have their salaries and benefits paid by that entity “upon the time of their transfer” and once agreement is reached.

The minister, again responding to Mr Pintard, said she was also “unclear” about his assertion that the Davis administration is encountering “challenges” in concluding its agreement with Pike Electrical, the operating partner for Bahamas Grid Company. The Opposition leader had pressed Mrs Coleby-Davis to disclose any “present challenges” that might affect the two sides’ arrangement.

Mrs Coleby Davis said she is “unclear” on what issues Mr Pintard is referring to but added that arrangements are still being finalised and they will be tabled in Parliament once concluded.

“I am unclear of what the member is referring to as challenges. I am clear on that we’ve advised the public numerous occasions that we are continually dealing with legal agreements and concluding those matters. They’re concluded, there will be further tabling of those agreements, as we stated,” said Mrs Coleby Davis.

Mr Pintard also asked Mrs Coleby-Davis who will ultimately own the assets in the reconfigured group of companies.

Mrs Coleby-Davis said Bahamas Power and Light (BPL) will “remain in the generation business” assisted by independent power producers and transmission and distribution assets will be owned by Bahamas Grid company in line with the 60/40 ownership structure.

“I believe that we clearly stated that BPL remains to be in the generation business, and we have independent power producers, which is an industry standard under a power purchase agreement, that is how we will provide in some of the power needed,” said Mrs Coleby Davis.

“As it relates to the transmission and distribution, I can advise that only New Providence transmission and distribution assets are being unbundled. With respect to Bahamas Grid, the assets will be owned in line with the company’s ownership structure, the 60/40 that was originally advised last year, and for the avoidance of any doubt, BPL remains to be a partner in that ownership structure.”

Mr Pintard asked if an evaluation was done on the value of BPL’s assets and their potential for revenue generation and the price an independent power producer would have to pay to own those assets.

Mrs Coleby-Davis said a valuation was done on BPL’s assets and they were transferred to Bahamas Grid for a 40 percent ownership stake in the company.

“Neither the government or Bahamas Power and Light have the financial resources to conduct the necessary upgrades to the transmission and distribution. To directly answer the question, yes. An evaluation was conducted on BPL’s assets and their potential for revenue generation to determine fair value,” said Mrs Coleby-Davis.

“It is important to note that the evaluation clearly noted that many of BPL transmission and distribution assets on New Providence are 40 to 50 years old. As previously outlined, the transmission and distribution assets owned by BPL on New Providence has been transferred to Bahamas grid for a 40 percent ownership stake in the company.”

Mr Pintard also asked Mrs Coleby-Davis why no distinction or accommodation was made for vessels that are used for mixed purposes in the boat registration and water skiing and motorboat control amendment bills.

Mrs Coleby-Davis said basing the fee schedule on the purpose the vessel is being used for can lead to “ambiguity and misinterpretation” while basing the fee schedule on vessel length is more equitable.

“In each act, the type of craft is clearly outlined in the preliminary section. The schedule of fees is organised based on a boat’s length. It is important to note that successive administrations have followed that arrangement to adjust the schedule of fees based on the question posed, can result in ambiguity and misinterpretation,” said Mrs Coleby-Davis.

“Further a practical analysis of a possible adjustment based on the question posed can possibly result in the owners of larger boats paying less than the owners of smaller ones. In the final analysis, we believe in fairness and equity, the law should not be based on hypotheticals.”