Parliamentary Secretary Renward Wells would not confirm or deny if he signed a letter of intent (LOI) with a proposed foreign investor seeking to construct a $625-$675 million waste-to-energy plant, as government ministers claimed that they were unaware of the LOI and claimed that Wells would not have had authority to sign the document.
On Friday, Guardian Business reported that Stellar Waste to Energy Bahamas (SWTEB), headed by investment banker Dr. Fabrizio Zanaboni, had signed a letter of intent with the government with the objective of conducting studies with a view to ultimately develop the multimillion-dollar waste-to-energy plant at the New Providence landfill.
The document seen by Guardian Business, stated
that it was signed on July 4 by Stellar Waste to Energy Bahamas Ltd. Principal Dr. Fabrizio Zanaboni and by Parliamentary Secretary Renward Wells, former chairman of the National Energy Task Force.
Wells has a history of supporting an overhaul of the landfill. He went on record in August of 2013 as saying that the current state of the landfill is a "lose-lose situation" for the country, with "enormous" potential to be used for the production of energy and recyclable materials. His comments came after the NETF, appointed in April 2013, had reviewed close to 100 proposals for energy-related projects submitted to the government.
However, contacted for comment on Friday, Deputy Prime Minister and Minister of Works and Urban Development Philip Davis, Minister of the Environment Kenred Dorsett and another minister speaking on condition of anonymity all stated that they were not aware of such a signing, adding that Wells would not have the legal authority to execute such a letter at any rate.
Davis said of the LOI: "I know nothing about this. I know of Stellar Energy. I know this company had put in a proposal some time ago, and that's what I know about it. I know they would've met me once or twice to explain their proposal to me, but a matter of signing an LOI is something that would require Cabinet's intervention. I don't know that a parliamentary secretary would have authority to sign such a document without the direction of Cabinet; I don't know how this came about."
He added: "As far as we are in the process of, there's an RFP that's been responded to, and any waste to energy component has been put on hold until we would've dealt with BEC."
Contacted for comment on the ministers' claims that he was not authorized to carry out the signing of the document seen by Guardian Business, Wells appeared to agree, stating via text message: "Only the DPM or Minister Ken Dorsett can sign a letter of intent to bid the government of The Bahamas to anything concerning waste to energy."
Asked by text message if he did sign the letter of intent as it indicates, Wells did not respond. Pressed as to whether he was indicating that the letter was a forgery, Wells again did not respond. When Guardian Business attempted to reach Wells by phone call, he did not pick up and a voicemail message seeking further comment was not returned.
'Huge significance'
On his part, Dr. Zanaboni participated enthusiastically in interviews about the project and LOI with Guardian Business on Friday morning after this newspaper revealed the apparent signing.
He said: "The project has a huge significance and impact on The Bahamas, both to create a modern energy platform of renewable/hybrid energies based on zero-cost and zero-impact on the environment, reduce by 30 percent the electricity tariffs to attract business and relieve financially the general public, employ a large number of Bahamians - not Chinese - both on a temporary and permanent basis, import new state of the art plasma arc technologies, generate training opportunities for young Bahamians - in physics and plasma engineering - and last but not least produce a positive impact
on BEC's bottom line by over $100 million, due to the fuel savings on their latest fuel bill of $375 million."
Contacted later on Friday to respond to the government officials' statements and asked if he had sat with Wells, Dr. Zanaboni said: "The LOI has been signed by Mr. Renward Wells. We received the LOI. It was arranged by a local partner. The LOI was prepared, and we believe it was signed by Mr. Wells. I cannot comment on whether or not he had the authority to sign it. I understand that he is parliamentary secretary and close to the prime minister, so I believe he has the authority. He is a very reliable person, and we believe everything has been done properly".
He added: "I think this is all getting political. We have the support of the prime minister."
The letter of intent seen by Guardian Business went into fairly extensive detail on the responsibilities of SWTEB, which aims to construct a fully self-funded waste to energy plant at the landfill that would burn garbage in order to produce up to 70 to 80 megawatts of power, around 29 to 33 percent of New Providence's total power demand.
The document said that the company would initiate studies right away with a view to beginning construction on the plant once these were complete. It was stated that around 1,500 metric tons of waste would be required to fuel the plant on a daily basis, and the company would move ahead based on the closure of a 25-year power purchase agreement with the Bahamas Electricity Corporation.
Plans were outlined to conduct an initial public offering (IPO) within 24 months of the LOI's signing in order to provide the Bahamian public with an ownership stake in the company, which projects a mid-to-end of 2016 launch of the waste to energy plant.
Heads of agreement
Zanaboni claims that the company has access to an initial $40 million loan from a banking institution in the U.K. to launch its initial studies and once these are completed, would aim to enter into a heads of agreement with the government.
"We are making contact with some local companies for an initial private equity offering and then an I.P.O. next year. One of our objectives is to have this project 90 percent funded in The Bahamas. We will only involve foreign investors to participate if there is a shortfall in funding from Bahamian investors," said the banker.
Adding to the confusion over the situation, as Guardian Business reported on Friday, the responsibilities given to SWTEB appear to conflict with those stated as belonging to Renew Bahamas, a company which Minister of the Environment Kenred Dorsett announced last month had taken over the management of the landfill with a view to constructing a recycling plant that will use garbage at the site to make recycled products. The contract signed with Renew Bahamas had been criticized by individuals such as Chairman of the Bahamas Chamber of Commerce and Employers Confederation (BCCEC) Robert Myers, who questioned the "unusual manner" in which it was quietly awarded, and whether it was done according to a "fair and transparent" bidding process.
Beyond concern over how the LOI came into being, early reactions to the content of the LOI with SWTEB included surprise at the mega watt output which the company indicated it could produce based on the garbage flowing into the landfill.
Phenton Neymour, former minister of state for the environment, said that reports produced for the government by German engineering consultancy Fichtner in 2010 had suggested a maximum 20 to 25 mega watt output of energy from any waste to energy plant implemented at the landfill site.
Guardian Business understands that the waste-to-energy project previously proposed by the Bahamian consortium of waste management companies also suggested the landfill had the capacity to generate around 20 to 25 MW of power, if used to fuel a waste-to-energy plant.
Technology
Zanaboni said yesterday that the company stood out because it proposed a type of technology that no one else did.
"The reason why we were chosen has everything to do with the technology we are using compared with other people. We're only the ones who have plasma gasification, which allows for a higher BTU (British thermal unit) output. No other competitor proposed plasma gasification," said Zanaboni.
Asked why he thinks the letter of intent was being signed notwithstanding the government's earlier indications that it would postpone a decision on renewable energy, including waste-to-energy, until after the BEC reform process was complete, Zanaboni added: "I can only think, and it's just my guess, that the RFP seems to have run into difficulties. The decision was due last year and it's now six months late, and so maybe now they have decided to put waste-to-energy back on the front burner as it's probably easier to implement that power reform."
His comments in this regard appear to be somewhat validated by those made in an interview with Guardian Business by Philip Davis on Friday, in which he indicated the government "may find a better path" to achieve cost reductions than executing contracts with current BEC bidders. However, he also admitted no final decision has been reached in this regard.
Zanaboni said that SWTEB was one of the companies which participated in the BEC request for proposal (RFP) process.
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