By FAY SIMMONS
Tribune Business Reporter
jsimmons@tribunemedia.net
The Prime Minister yesterday said talks are continuing over who will construct the pipeline to transport liquefied natural gas (LNG) to the new Blue Hills power plant as he denied the energy sector is being “divested”.
When questioned about the pipeline’s installation and which party will be responsible for its construction, Philip Davis KC replied: “We are now discussing that”. As to who will own it, Mr Davis maintained that his administration “is not divesting anything” when it comes to energy reform.
“The Government is not divesting anything,” said Mr Davis. “What the Government is really doing is finding capital to put in this infrastructure and working on an arrangement for that capital provider where they can recoup their investment through a partnership arrangement.”
A pipeline will be required to safely transport LNG from Clifton Pier, the most likely location where it will be brought to shore, to the new 177 MW power plant that Bahamas Utilities Holdings, a FOCOL Holdings subsidiary, is to construct at Blue Hills as part of the Government’s energy generation reforms for New Providence.
The pipeline’s construction will likely require an investment in the tens of millions of dollars, and private sector observers have said a key – but until now unanswered – question is who will own it and whether the Government or the BISX-listed entity and its subsidiaries will be responsible for building it.
Some will also likely dispute the Prime Minister’s assertion that the Government is “not divesting anything” with its planned energy reforms as it is transferring New Providence’s energy grid to the control of Bahamas Grid Company, which is 60 percent owned by private investors, for a minimum 25-year period with the option to renew for a further ten.
Meanwhile, JoBeth Coleby-Davis, minister of energy and transport, said the addition of two dual-fuel turbine engines supplied by a FOCOL Holdings affiliate to Bahamas Power & Light’s (BPL) existing Clifton Pier facility will increase New Providence’s present generation capacity to 318 mega watts (MW).
Speaking at the commissioning ceremony for the two 31 MW dual fuel turbine engines capable of running on either diesel or LNG, Mrs Coleby-Davis said by 2025 they will be operating fully on LNG provided by Shell North America.
Currently, the available electricity capacity on New Providence is 256 MW, and the 62 MW added by these these engines will increase that by 24.2 percent. “The engines allow for dual fuel technology, which will enhance operational flexibility. However, by June 2025 the engines will run fully on LNG. The LNG fuel will be provided by Shell North America,” said Mrs Coleby-Davis.
“Shell is one of the world’s largest, leading LNG suppliers, trading 67 million tons of LNG in 2023; around 16 percent of the global LNG market.” The minister said the engines were acquired through a private-public partnership (PPP) between BPL and Bahamas Utilities Holdings (BUH) and represent a “strategic solution” to transforming the energy sector.
“The partnership between BPL and BUH is representative of a strategic solution that has proven to be effective and successful in transforming the energy market as a small island developing nation,” said Mrs Coleby-Davis. Mr Davis confirmed to reporters the engines at both Clifton Pier and the Blue Hills power station will run on LNG by 2025.
Mrs Coleby-Davis previously told Tribune Business that the Government’s decision to act as LNG middleman will drive lower fuel and energy costs through leveraging economies of scale. The Government’s plans to create a fully-owned special purpose vehicle (SPV) to acquire LNG from Shell will result in lower energy prices for Bahamian electricity consumers rather than raising them through inserting another entity into the supply chain.
She explained that the SPV will not only be selling the LNG on to Bahamas Utilities Company but also BPL as well as independent power producers (IPPs) based in the Family Islands. Sourcing LNG for all these customers via one entity, the minister said, will leverage economies of scale for better fuel prices.
“The structure actually does quite the opposite; it is to control the cost,” Mrs Coleby-Davis said, when asked why the Government plans to take an active role in the electricity fuel supply chain by creating another entity – its SPV – that seemingly will add another layer of cost in the supply chain.
“Although Bahamas Utilities Company (BUC) will consume LNG, Bahamas Power and Light (BPL) will also convert engines in its generation fleet to LNG. In addition, our Family Island IPPs will also use LNG and purchase from the 100 percent SPV,” the minister added.
“By consolidating the purchase of LNG through a single entity, we leverage economies of scale, which will result in a more favourable pricing structure. Bulk purchasing in this sector yields significant cost savings compared to smaller, individual purchases.
“In summary, the Government’s decision to use a 100 percent-owned SPV for LNG purchases from Shell North America is driven by a comprehensive strategy to achieve cost savings, ensure energy security and streamline operations. This approach will ultimately benefit all, contributing to a more stable, affordable and efficient energy sector for The Bahamas.”
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Publish date : 2024-10-15 12:59:00
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