By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Electricity generation reform on New Providence is “coming together like clockwork”, FOCOL Holdings’ top executive is asserting, after sealing a near-$100m deal backed by a US government institution.

Dexter Adderley, the BISX-listed firm’s president and chief executive, told Tribune Business “there is zero doubt” it will meet its commitments to transforming New Providence’s generation mix with cheaper, more reliable and cleaner supply after securing nearly $99.6m in financing from the US Export-Import Bank.

Describing the transaction as a “significant portion of the overall financing package” for upgrades, which are being spearheaded by FOCOL’s subsidiary, Bahamas Utilities Holdings, he added that “commitments on the full financing needs for the project” - estimated at “just under half-a-billion dollars” of investment - are already in place.

The US Export-Import Bank, the federal government arm that funds and underwrites credit for American exporters, confirmed in a statement on Friday that the $99.6m will finance FOCOL Holdings’ acquisition of the equipment needed to construct the two pipelines - one for diesel, the other for natural gas - that will carry the generation fuels from Clifton Pier to the Blue Hills power station.

The funding will also be used to procure two aeroderivative gas turbines, capable of using multiple fuels depending on which is least costly, from General Electric (GEV) Vernova. The two pipelines are being supplied by Pike Electric, the same North Carolina-based entity that has been contracted to overhaul New Providence’s transmission and distribution (T&D) electricity grid. 

Mr Adderley told this newspaper that, while the exact numbers have yet to be confirmed, construction of the pipelines, liquefied natural gas (LNG) regasification terminal at Clifton Pier and “177 mega watts “combined cycle plant” at Blue Hills will likely create “over” 200 jobs during construction and 40-50 full-time posts “once everything is completed and in operation”.

Affirming that Bahamas Power & Light (BPL) and its consumers will enjoy “in excess of $100m a year” savings on fuel costs alone when all aspects of the New Providence generation reforms are completed, the FOCOL chief said Bahamas Utilities Holdings is currently in the first two of a four-phase rollout that involves getting the LNG terminal and pipelines built and all generation engines on-island.

He added that the energy and petroleum products supplier is targeting by “the end of this year” to have all four of its 30 MW GE engines employing LNG “in a single cycle”. The ultimate goal, Mr Adderley said, is to have all four operating from a yet-to-be constructed “combined cycle plant” at Blue Hills, which will “capture” the engines’ waste heat and use this to produce additional energy at no extra cost.

While unable to provide a date for when construction on the new Blue Hills plant will start, he confirmed that “just about all the approvals are in place” for FOCOL Holdings and Bahamas Utilities Holdings to start laying the two 13-mile pipelines that will carry fuel from Clifton Pier to that plant.

Pipeline construction, Mr Adderley said, will take around ten months to complete once it starts. And, confirming that site clearance and preparation for the LNG regasification terminal, a joint venture between FOCOL Holdings and Shell North America, has already started, he estimated that completion of that component should occur by year-end 2025.

“It’s clockwork. Everything is coming together like clockwork,” Mr Adderley told Tribune Business of the project’s progress. “We have a tremendous team, tremendous partners who are working with us on the project. It’s coming together like clockwork.”

Asked how confident himself and FOCOL Holdings are that they will meet their commitments to the Government, he replied: “There is zero doubt, zero reason for concern. We are 100 percent confident in our ability to meet all our obligations under the contract with BPL and the Government.”

Mr Adderley, confirming that the US Export-Import Bank (EXIM) financing is “extremely significant to the overall financing package”, said the interest rate cost was “very competitive” although he declined to disclose the precise rates. And he asserted that other parts of FOCOL Holding’s financing jigsaw are also falling into place.

“This is a very significant portion of the overall financing package for the LNG power project. It’s not the final component,” he told this newspaper. “There are two other components to follow; all about the same time. These are being done in parallel, and they are on track to close on time. I would say we are extremely confident.

“There’s no reason for doubt. We have early commitments on all the financing needs. We have commitments on the full financing needs for the project. It’s now a matter of doing due diligence and process. There’s commitments to meet the full financing needs of the LNG to power project. It’s several hundred million dollars in total.... maybe just under $500m.”

Mr Adderley confirmed that one of the two pipelines between Clifton Pier and Blue Hills will carry diesel, while the other will transport natural gas already converted to gaseous form by the LNG terminal facility. “Diesel is a back-up fuel,” he explained.

“The machines at Blue Hills will be running primarily on natural gas, but we’re keeping the diesel supply and diesel infrastructure for contingencies should there be some interruption in natural gas supply.” The FOCOL chief also confirmed that the Department of Environmental Planning and Protection (DEPP) has issued a certificate of environmental clearance (CEC) for the pipelines’ construction.

Asked when laying of the pipelines will begin, Mr Adderley added: “We are in the final stages now to start the process, and we’ve really gotten just about all the approvals and are in the final stages of preparing to start.. We’re looking at ten months for completion once we get started.”

He disclosed that he will be in a better position to provide a pipeline start date “in a couple of weeks”. Mr Adderley said that, of the four GE multi-fuel engines, three are now operating at Clifton Pier while the other is at Blue Hills, and they are expected to start burning LNG by year-end 2025 in line with the regasification plant’s completion.

“A total of four 30 MW GE engines will be positioned at Blue Hills and placed in combined cycle,” he said of the generation reform’s end-goal. “All four of the gas turbines are on-island right now and three of them are in service. The fourth is being installed at Clifton Pier.

“In the first phase of the project, they will operate at Clifton Pier and, towards the end of the project, we will move them to Blue Hills once we construct the combined cycle plant. The gas turbines will be in operation [using gas] we’re aiming for the end of this year in the single phase.

“The next phase of the power generation project involves the construction of a combined cycle plant at Blue Hills. That is where we capture the waste heat from the gas turbines and use that to produce additional electricity with no additional fuel. Once we finish with the combined cycle construction, all will be repositioned in the combined cycle plant.”

Mr Adderley said he did not have “firm dates” for when construction of the Blue Hills combined cycle plant will start, as the engineering work is still being performed, but added that site preparation and clearance for the Clifton Pier LNG terminal is already underway.

“All of the major equipment is order,” he said of that facility, “a good bit of the contracts for services have been executed, a few installation contracts have been finalised. We are well underway with development of the LNG terminal. Our goal is to be completed by the end of the year.”

As for the cost savings Bahamian households and businesses can look forward to as a result of the energy reforms, Mr Adderley declined to provide a figure as “we only have one piece, the generation piece of the puzzle”, and the figures will also be determined by what happens with upgrades to the electricity grid and other aspects of the sector.

“We’re certainly doing our part to get the best cost of generation to go into that mix to give full impact,” he said. “I can’t quote financial numbers, but in terms of savings on fuel, when the project is all said and done, when all parts of the project are completed, the savings on fuel alone are anticipated to be in excess of $100m a year.

“The savings will be realised immediately as you go from one phase to the next. It’s a four-phase project. We’re focusing on phases one and two, and we’re well on the way. It’s getting all the generation on-island, getting the pipeline and terminal built, and the first set of machines on natural gas.”

However, several observers yesterday raised eyebrows over Pike Electric’s selection as the pipeline supplier to FOCOL Holdings. This is because the North Carolina-based entity is also implementing the New Providence electricity grid upgrades for Bahamas Grid Company, meaning it stands to benefit from both the generation and transmission and distribution reforms.

And Eric Pike, Pike Electric’s chairman, is also a key principal in Island Grid, Bahamas Grid Company’s management firm and operating partner. He is also on Bahamas Grid Company’s Board. “That’s incredible. Incredible but not surprising,” one source said of Pike’s pipeline involvement. 

“This is why it is so critically important that you put these things out to a procurement process.... We have no way to determine whether we got the best deal.” Other contacts asked whether a throughput fee, based on the amount of natural gas and diesel carried by the pipelines, will be levied and ultimately passed on to BPL customers, as well as regasification fees.

This newspaper was also told that BPL examined a similar pipeline solution under the Minnis administration but rejected it because the cost involved, including acquiring rights of way and maintenance, was simply too high and “didn’t make sense”.

Still, Sir Franklyn Wilson, FOCOL’s chairman and largest shareholder, told Tribune Business that the financing is being provided by Banco Santander, guaranteed and underwritten by the US Export-Import Bank. “It represents the the first time a Bahamian-owned entity has done such a transaction with EXIm,” he said. “That makes it significant in a national context.

“The actual under-funder is Banco Santander, which won a highly competitive bid. It is a positive for the local capital markets. The process was sufficiently rigorous that the positive comments relative to how the chief executive and his team performed speaks extremely high about the executive leadership of FOCOL being world class.”

“This transaction meets two key priorities for EXIM - strengthening the energy supply chain and supporting good-paying American jobs,” said acting president and chairman, James Cruse. “Combined, the financing of the pipelines and generators ensures reliable energy production and access, while also shifting the energy supply chain away from the People’s Republic of China.”

“This is another example of the strong partnership between the United States and The Bahamas,” said chargé d’affaires to The Bahamas, Kimberly Furnish. “We are thrilled that, with EXIM support, The Bahamas will be receiving state-of-the-art US-made turbines to bring fast and reliable power to New Providence.”

Mr Adderley added: “On behalf of the FOCOL Board of Directors and management team, I would like to express our sincere gratitude to the officials at the US EXIM Bank for their approval of the FOCOL transaction.

“We are also extremely grateful to all the stakeholders who participated in this historic process. Now, it’s time to put ‘shovels in the ground’ to support BPL and the Government of The Bahamas with their energy transformation initiatives.”