Heat oil in large saucepan over medium heat. Add onion and cook until beginning to soften; add garlic and chili powder and cook one minute, stirring constantly. Add beans, water and bay leaf. Simmer for 15-20 minutes, until reduced and thickened.
Turn off heat. Remove bay leaf and add vinegar, hot pepper sauce and sugar. Season to taste with salt and pepper.
In a bowl, mix together cilantro, red onion, and jalapeno pepper. Serve with beans.