Roatan’s reputation is on the line as the Roatan Municipal Corporation is considering signing a non-binding letter of intent to ONYX Services & Solutions, a company with $113 in cash reserves and no verifiable track record in solar energy, to develop the largest solar energy project in Central America and the Caribbean, valued at $84,000,000. A Roatan street vendor selling windshield wipers could provide a healthier financial statement.
On October 11, ONYX representatives met with the Municipal Corporation and local businessmen. According to ONYX’s press release, “Governor Shawn Hyde, Mayor Julio Galindo and a quorum of council members at the Roatan Municipal Government chambers gave their full support to the project.”
On December 5, Malcolm Burleson, ONYX’s president met again with government officials and explained their plans for a series of four or five solar farms which would generate power in close proximity to the larger consumers of energy- mainly resorts. The company asked for non-binding letters of intent from these resorts as well as from the Roatan Municipality, which would welcome the company to the island and confirm that a minimum amount of energy (kilowatt-hours) would be purchased. “For example, five resorts would commit to buying one megawatt each. We don’t want to generate a surplus,” said Burleson.
While Burleson promised to provide Mayor Julio Galindo with a draft copy of the letter the following day, he has yet to follow through. “I think he was very irresponsible,” said Mayor Galindo about Burleson. Mayor Galindo now feels suspicious of the company, and for good reasons. In reality, ONYX has no record of actually contracting any solar projects, and until just a few months ago they focused on managing two dozen ATM machines in upstate New York.
In the summer of 2011 ONYX (OTCQB: ONYX) jumped into the solar energy development business and issued 11 million shares of its stock at $2 a share. By mid-December the penny stock had fallen to $1.30 a share.
ONYX’s financials filed with the SEC (Securities and Exchange Commission) look very weak. According to its October SEC filings, the company has spent its entire $113 bank cash reserves and has posted no revenue related to solar projects.
ONYX’s headquarters doesn’t inspire confidence either. Onyx’s corporate headquarters at 7337 Oswego Rd. in Liverpool, New York, used to be a hair salon and rents for $300 a month. The same address was used by GO SOLAR USA Inc. (GLSO), a company which was suspended by the SEC and headed by David Brotherton, a now Roatan resident who alerted ONYX of opportunities on Roatan.
Roatan is a perfect place for ONYX – an island full of people who are angry at RECO, often uninformed and unwilling to do their due diligence. Many local residents and business owners are angry at RECO and willing to support anyone who could pick a bone with the utility company, which has one of highest costs of energy in the Americas.
At the December 5 meeting, government officials openly discussed possible ways to eliminate RECO’s monopoly on the distribution of energy throughout the island. Several city council members, the mayor, and Bay Islands congressman voiced their displeasure with RECO management. “I think that they are abusing the community. I think they want problems,” Mayor Galindo said about RECO. “They are not giving the island any favors as far as cost. By law in Honduras no one can have a monopoly.”
Congressman Romeo Silvestri said that steps had been taken to look at the validity of RECO’s monopoly of power distribution on the island. “We are working with the attorney general of the country [Honduras]. We need to go to the government and congress, but the government wants to avoid a lawsuit or RECO going to CAFTA,” said Congressman Silverstri.
A misleading statement on company’s website (www.solar-stock.com) turned the first meeting with local Roatan officials and businessmen into a done deal: “Breaking News. Onyx wins award for $84 million project.” That statement leads into a press release that goes over the project into more detail.
The Roatan project would use 65,000 280-watt solar panels to generate 18.5 megawatts. The price tag comes out to $4.5 million a megawatt and exceeds the island’s power demand which peaks at 13.5 megawatts.
The overall concept of large solar farms in the Caribbean is questionable and unprecedented. “The Caribbean is a tough place to do solar. A hurricane would blow all these panels away,” says Mathew Harper, RECO’s Operations Manager. Technical parameters of ONYX’s project are also shaky. Island’s peak power demand takes place around 7 pm, when solar panels would not be generating power and the island would still have to rely on RECO power to be generated after dark and during cloudy days.
ONYX seemed to understand some of the problems of power distribution on Roatan. “Without a partnership with RECO that is not feasible,” said Burleson. “The numbers just don’t justify doing a new distribution grid.” Still, even after two visits to Roatan, ONYX representatives had not contacted anyone in RECO management to discuss using RECO’s electrical grid. Without that agreement no plausible calculations of doing such a solar project could be made. [/private]