The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamian hotel industry yesterday said “any progress” towards cheaper and more reliable energy would benefit the sector, with guests finding it “difficult to comprehend” why there were so many blackouts.

Stuart Bowe, the Bahamas Hotel and Tourism Association’s (BHTA) president, told Tribune Business that a more efficient and consistent energy supply was “of paramount importance” to the industry and wider private sector.

Speaking after the Government confirmed it had selected Carolinas-based PowerSecure International as the preferred bidder to manage the Bahamas Electricity Corporation (BEC), Mr Bowe said: “The BHTA recognises the importance of reducing the cost of energy, as the Bahamas’ kilowatt per hour (kWh) cost is one of the highest in the region.

“The need to improve efficiencies and consistency of supply is of paramount importance to all sectors of business in the Bahamas, including tourism-reliant businesses. Therefore, any progress towards achieving that end is welcomed.”

The hotel industry is BEC’s biggest private sector customer, with Atlantis paying it $5-$6 million per month - or between $60-$70 million annually - to cover its energy consumption.

High utility costs, combined with expensive labour prices, have contributed to a cost base that has made the Bahamian hotel industry increasingly uncompetitive on price with rivals in both the wider Caribbean and elsewhere.

“Businesses in the hospitality industry are vulnerable when faced with inconsistent or irregular power supply, as the expectations of guests who pay a premium price to visit the destination, and often come from countries where power interruptions are virtually nonexistent, often find it difficult to comprehend how a premier destination can suffer widespread power outages,” Mr Bowe added in the BHTA’s statement to Tribune Business.

Tribune Business sources close to the process suggested the transition to Power Secure taking over 100 per cent management of BEC’s operations will likely take about four months.

While the broad parameters have been agreed, the Government and Power Secure still have to finalise the details of the latter’s five-year management contract.

BEC’s corporate set-up also has to be restructured along the lines established by the Nassau Airport Development Company (NAD) model, with new ownership and management entities created. The BEC Board, currently headed by executive chairman Leslie Miller, will also undergo radical changes in terms of its membership.

Tribune Business understands a Power Secure team will be arriving in the Bahamas within the week, in a bid to start closing the contract negotiations and understand the immediate requirements at BEC.

Power Secure’s plan calls for “a substantial reduction” in the cost of electricity for Bahamian consumers, targeting a price in at least the $0.20 per kilowatt hour range - something that would represent anywhere from a 30-50 per cent reduction on BEC’s average tariff.

And, to deal with BEC’s supply reliability/outages woes, Power Secure is understood to be proposing to increase the Corporation’s generation capacity and install new equipment.