By NATARIO McKENZIE
Tribune Business Reporter
nmckenzie@tribunemedia.net
A LEADING businessman and former Bahamas Electricity Corporation (BEC) director warned yesterday that country’s major electricity supplier would “never turn the corner” unless the Government divests its controlling interest.
Dionisio D’Aguilar said that while he “completely agreed” with the Government’s plans to generate 30 per cent of energy sector’s power via renewables by 2030 and the creation of two separate entities for distribution and power generation, the Government must give up its control of the corporation. “Politicians don’t know how to run companies and the Government should divest itself of BEC and it should move into a private environment. While the BTC example is still a work in progress it is so refreshing not to hear stories about how at election time BTC is taking on extra people and is constantly being subjected to meddling by politicians. While the service may have slightly deteriorated I feel we have turned the corner on that,” said Mr D’Aguilar.
Prime Minister Christie revealed that the Government intends to create two new BEC entities into which the relevant assets, liabilities and operations of the Bahamas Electricity Corporation will be transferred. The first is company, a new transmission and distribution company (“NewCo”) will be wholly owned by BEC and will be responsible for the operation, maintenance, repair, and expansion of NewCo’s electricity transmission. The company will also be responsible for distribution systems, billing, collection, customer services and other relevant services across The Bahamas. The second company will be a new generation services company. “This company will be responsible for the operation, maintenance, repair, financing of BEC’s current electricity generation facilities and certain other assets located across The Bahamas, as well the development of new power generation plant. It will enter into a Power Purchase Agreement with Newco,” said Mr Christie.
“It’s a good idea but it will fail if it’s run by politicians. Our politicians must give it up. Look at the companies that they run, Water and Sewerage, ZNS, Bahamasair, BEC, The Mortgage Corporation, all loosing money. You’re tweaking with a failed model. You need to divest yourself of running this company. Politicians should not be appointed to the board and should not be running these companies. BEC will never turn the corner until they change the structure,” said Mr D’Aguilar.
Prime Minister Christie had noted that the Government was “keen’ to see Bahamian participation in the process, “be it as part of a consortium or ultimately taking part in an IPO of one or both of the companies”. To this Mr D’Aguilar said: “I as a Bahamian will not invest in anything that is controlled by the Government because they are not going to make decisions in the best interest of the company. They are going to make decisions in the best interest of their selection campaign.”
Comments
TalRussell 10 years, 8 months ago
I think what the often "politically long-winded" Comrade Dionisio is trying to say is we need less of a politically run BEC and more lights to turn on in we houses and businesses. But is spinning off BEC into the hands of private owners really he best answer? What about Freeporters who wake up ever day to the most excessive electricity bills in the entire Caribbean, including those in Nassau? All supplied by a privately.owned the Grand Bahama Power Company? Let us never forget forget the vital role BEC has played going back to 1956 making it possible for each the respective governments of the day to attract investments to Bahamaland. Without BEC we would still be a backwards country. The same can be said of BTC's role played in our amazing development. Comrade Dionisio be careful how much of the peoples utilities we are willing to sell-off. The peoples shorelines. the peoples lands. There will be another generation, after we adults done sell-off the little of what we have left.
Reality_Check 10 years, 8 months ago
Bahamian taxpayers will be stuck with the much higher costs of the BEC owned "Transmission and Distribution company" whereas the favoured business cronies of Perry Christie and the PLP will end up owning the "Generation Services company" which will have a sweet profiteering Power Purchase Agreement with BEC. Christie has in fact already decided who will be his anointed lucky investors in the "Generation Services company". Oh yeah, you be sure the PM's restructuring plan for BEC will ensure his designated crony investors in the power generating plant prosper handsomely at the expense of Bahamian taxpayers who will be stuck bearing the losses of the electrical distribution and transmission system.
All of the proposals thus far put to Government are quite glaring in terms of the greed of the investors behind them as evidenced by their keen desire not to acquire BEC through a Government supported privatization initiative. The investors behind each of the proposals received to date would love a "sweet profiteering" arrangement that leaves BEC and Bahamian taxpayers on the hook for the high cost of the country's electrical distribution system (covering many islands), BEC's unfunded pension liabilities, etc. etc. The eventual outcome of putting only the electrical generating plants in the hands of these investors, with a "sweet deal" contract on the back of an already financially troubled BEC, is all too obvious: BEC would soon go belly-up leaving Bahamian taxpayers saddled with funding its unsettled liabilities, and the less costly parts of its electrical distribution system would be picked up at a fire sale price by the private plant owners.
The arrangement between Water & Sewerage Corp and Consolidated Water is a classic example of why these types of deals fail.
surf_racer 10 years, 8 months ago
I sort of agree with Reality Check. The only way to do this is to sell both generation & distribution to 1 or 2 private companies. It would be preferable to have some competition in the sector as well. Here in Florida, we have Florida Power & Light and Progress Energy as the largest power suppliers that do both generation & distribution with other smaller regional providers. The example of the WSC & CWCO relationship is also partially correct, but my belief is that the government really needs to sell the distribution side to CWCO or another private firm so government is not involved in either of these State-Owned Corporations. I contend that is one of the reasons why the government did not want to approve the CWCO/NPDC deal since that would allow their joint venture to provide not only the bulk water supply for western NP, but the water distribution business as well. This would likely demonstrate how inefficient WSC is at managing the distribution of water and generating revenue from the customer base. There are very few examples of financially profitable and financially stable State-Owned operations anywhere in the world in this day in age.
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