Deputy Prime Minister Philip Brave Davis yesterday explained that of the $3 million performance bonus PowerSecure International could earn for the $10 million, five-year management service agreement (MSA) to manage Bahamas Power & Light (BPL), $2.5 million is tied to 11 key performance indicators.
Davis announced Cabinet approval for PowerSecure and BPL to enter a five-year MSA, for which PowerSecure will be paid a flat fee of $2 million per year.
"Some $2.5 million of the performance bonus will be based on achievement of 11 key performance indicators, including factors such as the management of non-fuel costs; fuel volume usage; efficiency and fuel volatility; reliability factors, such as average number of outages and the duration of such outages; customer service metrics; financial strength of BPL and others. The remaining $500,000 will only be earned if they surpass the targets," Davis advised.
He was speaking to the matter in the House of Assembly, and sought to identify some of the key terms in the proposed management service agreement. It is to be noted that while he announced Cabinet approval for the signing, he did not announce a date on which the agreement would be signed.
Davis called the agreement "solid", pointing out that the government's financial advisors, KPMG, as well as its legal advisors, the Attorney General's office and Hogan Lovells, aided the board in its negotiations, as had DNV GL.
"Under oversight of the BPL board, the agreement gives PowerSecure full management and operational control of BPL and responsibility for all electricity generation, transmission and distribution, procurement, and customer service.
"The MSA has an initial term of five years, with the option to be extended for an additional five years upon mutual agreement of BPL and PowerSecure. On an ongoing basis, PowerSecure will be required to prepare a comprehensive business plan and financial model each year for approval by the board.
Davis also disclosed that BPL will be managed by an executive management team comprised of PowerSecure and Bahamian employees.
"Further information on the management team will be forthcoming in the next weeks. PowerSecure will also appoint two members to serve on the BPL Board together with the government's six appointed board members," he said.
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