By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An abruptly-withdrawn $1m legal claim has exposed questions about the Government’s handling of renewable energy reforms designed to save Bahamian households and businesses millions of dollars.

Burke Energy Solutions, which is described as a solar systems developer, designer and installer, withdrew its south Florida federal court lawsuit against the Bahamian government within five days of last Thursday’s filing after it finally received its $1m ‘break-up’ fee due under the terms of a non-binding Letter of Intent (LoI) that the two parties signed on December 20, 2022.

But, while the legal action may have ended, the claim and supporting documents raise queries over whether the Davis administration was running two parallel, but separate renewable energy reform processes at the same time. The competitive open bidding process for utility-scale solar on New Providence and the Family Islands was held at the same time the Government was talking to, and negotiating, with Burke.

Two of the three islands identified for the Florida-based energy firm to work on, Exuma and Eleuthera, subsequently saw solar energy provision contracts awarded to other providers as part of the open bidding request for proposal (RFP) process. It is unclear why Burke was never invited to participate in that process, or whether it was even aware of it.

Documents filed with the south Florida court also reveal that Burke was working on a utility-scale solar design for Cat Island, the Prime Minister’s constituency, which was not included in the renewable energy open bidding process. It is uncertain why Cat Island was seemingly carved out of that process and the Government seemingly decided to deal with Burke alone.

The filings, which have been seen by Tribune Business, show the Government continued to meet and deal with Burke under the terms of their Letter of Intent even after the renewable energy tenders had been launched for the Family Islands and New Providence in December 2023 and January 2024, respectively.

Burke, in April 2024, alleged that it was requested by the Government to “completely redesign” its Cat Island solar energy proposal - in particular, switching back-up generation from a diesel-fuelled model to one powered by cleaner low pressure gas (LPG). This it claims it did, with the result that the Davis administration allegedly approving its revised proposal by month’s end.

Then, one month after the Government announced the winners of the renewable energy bidding process, Burke alleged that it met with more than 20 government officials from agencies such as the Ministry of Energy and Transport and Bahamas Power & Light (BPL) in late July 2024 to further discuss its Cat Island proposal.

The company, a joint venture between Burke Construction Group and Dimensione Ingeniere, an Italian firm, alleged in its lawsuit that it was informed at the meeting it would receive “an executed term sheet” enabling its proposal to proceed within two days. However, on July 31, 2024, the Government announced it was dumping Burke due to “serious concerns about the technical proposal and the price proposed”.

Tribune Business efforts to obtain an explanation for the Government’s dealings with Burke, and whether it was running separate but parallel energy reform processes, proved fruitless. Jobeth Coleby-Davis, minister of energy and transport, did not respond to this newspaper’s detailed message seeking comment. 

Both Latrae Rahming, the Prime Minister’s communications director, and Ryan Pinder KC, the attorney general, asserted that the Government does not comment on legal matters before the courts. And Simon Wilson, the Ministry of Finance’s financial secretary, who signed the “non-binding” LOI and repeatedly promised Burke it would be paid its $1m prior to the lawsuit’s filing, did not respond to requests for comment.

However, Michael Pintard, the Opposition’s leader, yesterday blasted what he termed a “side deal” with Burke and challenged why Cat Island was treated separately in the renewable energy reform process. He also queried whether both versions of the Public Procurement Act had been breached by the affair.

Burke, in its legal claim, asserted that it first approached the Minnis administration in 2019 to explore “renewable energy projects in The Bahamas”. While progress was halted, it returned to this effort in September 2022 a year after the Davis administration was elected to office “to gain a comprehensive understanding of The Bahamas’ goals regarding 30 percent” of energy derived from renewable sources by 2030.

This resulted in non-binding LOI that was signed on December 20, 2022, by Burke and Mr Wilson for the Government. If Burke proved successful, and both sides fulfilled their obligations, the LOI was to lead to a 20-year power purchase agreement (PPA) whereby the Florida-based company would supply solar-generated energy “at a rate of $200 [per] MWh (mega watt hours)”.

It is unclear why Burke filed its lawsuit in the Florida courts given that the LOI stipulates that it is governed solely by Bahamian law. The company also agreed that its terms were non-binding apart from the condition that the Government would pay it $1m in “unliquidated damages”, or a break-up fee, if it performed all that was required under the LOI but, through no fault of its own, the Government decided not to proceed with the PPA.

“After Burke and The Bahamas executed the agreement, Burke invested significant time, resources and money to carry out its obligations, including but not limited to: Preparing multiple solar feasibility studies, which included detailed designs for diesel back-up generators; conducting site analyses, which required multiple trips to The Bahamas; developing preliminary technical designs; preparing investment prospectus materials; securing investment capital necessary to develop and complete the project; and drafting a Solar PPA for The Bahamas’ execution,” Burke alleged in its claim.

“Following completion of the solar feasibility study, Burke was to provide a comprehensive report to The Bahamas, and if Burke’s economic analysis provided The Bahamas with a net benefit of solar versus grid electric rates, The Bahamas would commit to executing a solar PPA with Burke.

“The LOI containing the agreement further provides that upon The Bahamas’ approval of Burke’s final analysis, Burke and The Bahamas were to review and approve appropriate contracts for The Bahamas’ solar services agreement.”

If Burke’s LOI had progressed to a full solar PPA deal, it contains several clauses that would have given the Florida-based company “right of first refusal” to develop renewable energy projects on all Bahamian islands similar to the those it was designing for Cat Island, Eleuthera and Exuma. And another section, though non-binding, would have prohibited the Government from negotiating with any rival providers.

“Burke will have the right of first refusal to develop and implement renewable energy generation systems throughout all of The Bahamas islands, adopting the technical and/or business criteria developed and executed for [Eleuthera, Exuma and Cat Island],” the LOI’s ‘right of first refusal’ clause states.

This, and the “exclusivity” clause, would have cut across and blocked the outcome of the renewable bidding process if the Government had progressed to a binding solar PPA with Burke. The latter’s lawsuit also exhibited copies of its e-mail exchanges with Christina Alston, now BPL’s chair, but then key adviser to the Davis administration’s energy reform committee. Also copied on some e-mails was Philip McKenzie KC, attorney and partner at the Davis & Company law firm.

“After nearly 16 months of efforts on Burke’s part, on April 2, 2024, Christina Alston, the director of energy and sustainability initiatives for The Bahamas, sent an e-mail to Burke requesting a complete redesign. The Bahamas requested Burke incorporate an LPG engine design, rather than a diesel engine design,” Burke alleged.

“Burke advised against the change, as gas engines are less robust, have shorter life spans, slower ramp-up times, require more units and necessitate larger building structures. Despite its objections, Burke made the revisions requested by The Bahamas, and also consulted with its supplier to accommodate the changes.

“On April 29, 2024, Alston wrote to Burke advising that The Bahamas had approved Burke’s proposal. The Bahamas seemingly doubled down on its approval at an in-person meeting on July 24, 2024, where it agreed to provide Burke with an executed term sheet for a Solar PPA by Friday, July 26, 2024. The Bahamas did not provide Burke with an executed term sheet by Friday, July 26, 2024,” the company claimed.

“Instead, on July 31, 2024, The Bahamas delivered a letter to Burke in which it stated that the ‘parties have been unable to reach agreement on the way forward. The [Bahamas] continues to have serious concerns about the technical proposal and the price proposed by Burke for an energy solution’, thus breaching the liquidated damages provision of the agreement.

“The correspondence further noted that The Bahamas would be opening a Request for Proposals (RFP) for the project, which Burke could participate in.” The July 31 letter was signed by Donella Bodie, the Ministry of Energy and Transport’s permanent secretary.

“Additionally, upon information and belief, The Bahamas awarded contracts to four or five other contractors in Eleuthera and Exuma, two islands in The Bahamas, for work that is subject to Burke’s right of first refusal - without The Bahamas first offering such opportunities to Burke as contemplated under the LOI containing the agreement,” Burke alleged.

Mrs Coleby-Davis last year unveiled Verdant and Consus as the preferred soar energy bidders for Eleuthera, and Inti Corporation and Osprey Construction for Exuma. However, frustrated and having run out of patience that the $1m break-up fee had not been paid despite repeated demands, Burke filed its action against the Bahamian government.

Mr Pintard yesterday argued that the affair raised numerous unanswered questions and demanded that the Government “come clean” over what he branded as a “sketchy solar deal”. He argued that it had “wasted” $1m in taxpayer monies for no gain.

“There can be no reasonable explanation why, with an $80m IDB facility for Family Island solarisation already in place, the Office of the Prime Minister hatched a side deal with this US company to provide solar power to Cat Island,” Mr Pintard said.

“By what authority did the financial secretary sign a Letter of Intent with Burke when the energy portfolio does not fall within the Ministry of Finance? By what authority did the Government commit, and later promise, to pay out $1m to Burke, again without disclosure to Parliament or the public?”

In fact, the unit responsible for executing the $80m IDB solar energy project resides within the Ministry of Finance and Prime Minister’s Office. And civil servants can execute instruments such as LOIs that can bind the Government once they are instructed to do so by Cabinet or their responsible minister.

Mr Pintard, though, was not finished. “Why was Cat Island singled out and treated separately from the other islands that were, in fact, subject to an RFP process that began in late 2023?” he asked. “Why did the Government want to avoid its own public procurement law and bidding process for Cat Island, while the solar projects for other islands were subjected to an open bidding process?

“What message does it send to Bahamian or foreign investors when a government can agree to a proposal in April 2024, only to renege on it a few months later in July 2024? Evidence suggests that both the spirit and the letter of the Public Procurement Act have been deliberately breached to benefit the Prime Minister’s constituency and a foreign company.

“Can the Prime Minister explain why he and his Cabinet approved a Letter of Intent that runs directly opposite to the Government’s own stated plan and process to award contracts for Family Island solarisation? Will he also explain why he and his Cabinet approved a Letter of Intent that committed the sum of $1m to this foreign firm without advising Parliament and the public of the details?”