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Charlotte Amalie
Thursday, July 18, 2024


Gov. Charles W. Turnbull on Thursday pronounced the Arthur D. Little analysis of the government's proposed sale of 80 percent of the Water and Power Authority to Southern Energy Inc. "fair and reasonably positive." However, the Government House release carrying this comment also included responses by a government consultant to three points raised in the ADL report.
The Arthur D. Little study, contracted by the 23rd Legislature preliminary to its vote on whether to approve the partnership, "affirms most of the conclusions reached by the administration's financial and legal advisers during the development of the proposal," the release stated.
The ADL findings were released Wednesday. The report laid out a number of advantages and disadvantages of going with the Southern Energy proposal versus soliciting competitive bids to privatize the utility, as some critics of the SEI deal have advocated and one citizen has demanded in a lawsuit against the government.
In the Government House release, Johan van't Hof, managing director of PricewaterhouseCoopers, the administration's consultant on the proposed deal, responded to three issues raised in the ADL analysis.
ADL stated that the lack of competitive bidding limited the government's range of options in privatizing WAPA. Van't Hof responded that the "negotiated bid process gave us the flexibility to develop transaction terms which are the best for the Virgin Islands, such as protection for employees, environmental protection and pension liability."
To seek to negotiate a bid that was selected competitively "would be unfair to the other bidders who were not given a chance to improve their offers later," he said.
ADL posed the possibility of introducing "competitive generation" of electricity, but van't Hof said the government negotiating team "discussed this concept further with ADL and agreed that implementing competitive generation would entail additional costs and risks that were not warranted."
The Arthur D. Little report stated that the value of the Southern Electric offer for 80 percent of WAPA was fair, but the government might have been able to get more in competitive bidding. The Government House release cited van't Hof as saying that the ADL analysis did not include the value of the write-off of the debt of some $30 million that the government owes WAPA.

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