After delay, five still in running for BEC

Mon, Jan 6th 2014, 11:42 AM

Five companies remain in the running to become a part of the overhaul of the Bahamas Electricity Corporation (BEC), KPMG has confirmed, having been asked to make their final submissions to support their bids by the end of this month.
Providing an official update on the BEC reform process, which is now behind the initially anticipated schedule, Simon Townend, partner, KPMG (Bahamas), said that these remaining companies were invited shortly before Christmas to "clarify and expand upon certain key elements of their bids".
"Discussions were held with all of the bidders to inform them of next steps before Christmas," he said.
The update signifies that the field has yet to be significantly whittled down at this stage, either by attrition out of lack of willingness to proceed, or through selection by KPMG, DNV Kema (technical advisors) and Hogan Lovells (legal advisors).
In October, KPMG announced that six bidders had advanced to the next stage of the BEC request for proposal, having been asked to submit pricing proposals.
While there has been no official disclosure of those who were involved in the bidding process, Guardian Business understands that among those who were involved at this stage were the Malaysia-based Genting Group, the state-owned China State Construction and Engineering Corporation, Cayman-based Inter Energy, and U.S.-based PowerSecure, Caribbean Power Partners and Pike.
Townend said that a "competitive set of pricing proposals" were received on November 15, 2013, and these were evaluated by the three companies.
"Based on the evaluation the next phase of the process has been approved," he said yesterday.
While Townend did not confirm who submitted proposals, Guardian Business understands that Pike may have elected not to continue with the process. This could not be confirmed, but could explain the reduction of the field to five, as indicated by Townend.
Pike had been partnering with a Bahamian company, Northern Bahamas Utilities, based in Grand Bahama. If Pike has exited the process, this leaves PowerSecure as potentially the only company still in the running for the transmission and distribution-side contract.
Townend added that once final submissions are received and evaluated, final recommendations will be made to the government, and it is expected negotiations will commence.
According to initial tender documents, the government had been planning to select the winning bidders for the contracts by year-end 2013. Earlier in December, Guardian Business reported that there has been significant anxiety among bidders over a perceived lack of information forthcoming about the status of the selection process after pricing proposals were submitted and initially anticipated deadlines elapsed.
The government is hoping to bring private sector involvement into BEC in order to produce efficiencies that are intended to reduce the cost of power.
BEC will be split into a semi-privatized generation company, JVCO, that will sell power to its other half - the transmission and distribution entity (NewCo) - under a 25-year power purchase agreement (PPA). JVCO is intended to be, at least initially, majority government-owned.
NewCo will remain entirely government owned but will be operated under a 10-year management contract.
The company that takes over the management of NewCo will be required to bring in capital that can enhance the performance on the transmission and distribution side, while also refinancing BEC's debt without the support of a government guarantee.

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