Bpl ‘More Ambitious’ Than Govt With 20% Renewables In 5 Years


Tribune Business Reporter


The Deputy Prime Minister yesterday touted Bahamas Power & Light’s (BPL) business plan as even “more ambitious” than the Government’s National Energy Policy (NEP), calling for renewables to generate 20 per cent of this nation’s electricity within five years.

Philip Davis’s comments on BPL’s business plan which is yet to be made public, came during his address at the Caribbean Infrastructure Finance Forum  (CARIF).

The event also saw BPL’s executive director, Deepak Bhatnagar, warn that a “high rise” in Bahamian energy costs is imminent if the utility monopoly’s financial and operational performance is to stabilise.

He confirmed that the cost of repaying the proposed Rate Reduction Bond (RRB), which will refinance the legacy $650 million debts and liabilities of the Bahamas Electricity Corporation (BEC), BPL’s parent, will be borne entirely by business and residential consumers.

Mr Bhatnagar added that he expected consumers will “really be questioning the high rise in the cost of energy” once the bond is placed, given that their tariffs will contain an additional charge that will be dedicated solely to paying RRB investors their due interest payments.

His comments came after Mr Davis said the renewable energy ambitions of BPL and its manager, PowerSecure, were even more ambitious that the National Energy Policy 2013-2033, which aims to have 30 per cent of the Bahamas’ energy needs generated from renewable sources by 2030.

“The Government of the Bahamas recognises affordable energy as the single most important factor to investment, entrepreneurship and ownership,” the Deputy Prime Minister said.

“For this reason we have done so much to transform our energy sector.  Last year, we passed a compendium of Bills through the Parliament to provide the legislative base of a solution that allows for significant reductions in the cost of energy, creates a financially healthy electrical utility company, and facilitates energy security.

“It also provides for improved reliability of service, more responsible environmental attention and, ultimately, increases our competitiveness and marketability as a country.”

Mr Davis said the Electricity Act 2015, and the Utilities Regulation and Competition Authority (URCA) Amendment Act 2015, were all designed to work in concert to achieve the Government’s objective.

Acknowledging that state-owned BPL is “fiscally challenged”, Mr Davis said the legislative initiatives taken by the Christie administration have laid the foundation for change at the energy provider.

“The requirements for change include raising monies through private sources without a government guarantee, bringing a world class operator to operate BPL, modernisation of the equipment and instituting 30 per cent renewable energy under the National Energy Policy by 2030,” Mr Davis said.

“In fact, the business plan of BPL is even more ambitious, providing for as much as 20 per cent generation through renewable energy in five years.”

He added: “All this is to be financed though the instrument of rate reduction bonds. The rate reduction bond concept has proven successful for the airport, and we look forward to the same gains in electricity. In due course we plan to advance this concept to water and wastewater.”

Mr Davis not go into detail on the RRB, but some light was shed by Mr Bhatnagar, who played a key role in the energy reform process.

Posing a question to a panel at yesterday’s conference, he confirmed that the cost of financing the RRB would be passed on to consumers. 

“The financing cost will be passed on to the consumer. It hasn’t happened yet, but I’m sure that in due course the hotel sector and consumers will really be questioning about the high rise in the cost of energy,” said Mr Bhatnagar.

The RRB is intended to both repay BEC’s legacy debts and move the new ones off its - and the Government’s - balance sheet, while also taking care of unfunded pension liabilities and environmental clean-up.

“The entire business plan for BPL is somewhat depending on the bond,” one source intimately familiar with the proposed financial restructuring, and speaking on condition of anonymity, told Tribune Business

However, Tribune Business sources have suggested that the RRB may not be placed with local and international capital markets investors until 2018 - further hindering efforts to save BPL.

This newspaper was told that the delays are tied to efforts to obtain a ‘rating’ for the RRB from international credit rating agencies - something essential to fostering investor confidence in the bonds it will issue, and in obtaining the best possible price (interest) rate from the markets.

Tribune Business understands that the rating agencies want the special purpose vehicle (SPV) that will issue the bonds to establish some credibility/history behind it before they will rate it.

Establishing such credibility will, crucially, require the SPV to collect the portion of customer tariffs assigned to it to service repayment of the interest to investors.

To ‘bridge the gap’ between now and the RRB issue, the Government, together with BPL’s Board and PowerSecure, are understood to be in talks with CIBC FirstCaribbean International Bank and Credit Suisse to obtain a ‘bridge financing’ facility to ensure the utility has sufficient capital prior to the RRB’s placement.

The two named institutions are understood to be the front-runners to place the RRB, which was created by legislation passed by Parliament as part of efforts to reform the Bahamian energy sector.

Tribune Business sources, speaking on condition of anonymity, said BPL is seeking $250 million in ‘bridge financing’, but that CIBC and Credit Suisse were currently only prepared to extend $75 million.

Although that latter figure might be increased based on certain terms and conditions, this newspaper was made to understand it will come nowhere near BPL’s target $250 million.


ThisIsOurs 3 years, 7 months ago

This is wonderful news!! Now what do we do for the 43,800 hours before the plan is implemented?


TheMadHatter 3 years, 7 months ago

STUPID STUPID STUPID !!!!!!!!!!!!!!!!!!!! We are SICK SICK SICK of hearing about F&*#@# FIVE YEAR PLANS. Tell us what you are going to do in the next six months AND the next twelve months.

Can I go to work in the morning and tell my boss what I'm going to do in the next five years and then put my feet up on the desk like you guys? No.

In addition, I have no interest in reading their stupid plan released to the public until AFTER they release their management contract.



totherisingsun 3 years, 7 months ago

9 steps to own and milk a Bahamian cow

Step 1: Tell the local farmers "you can't trust "those other people" to look after your cow because "they don't care for you and want to ultimately steal your cow". Convince the farmers they can trust you. Step 2: Put a harness on the cow so you can lead it wherever you want Step 3: Milk the cow during the day for the owners and secretly at night for yourself Step 4: When the cow complains, place a few pieces of straw on its back and allow it to call someone, so it feels better and calms down Step 5: When the cow has no more milk, hire those "other people" to "fix" the problem so you have someone to blame for the inevitable Step 6: When the inevitable is evident to even the slowest cow owners, tell them the only way to fix the problem is to create a milk tax and charge the cow owner interest on the tax. Step 7: Always blame the "other people" for your terrible cow situation and remind them of step one Step 8: Publically praise yourself for being such a great manager of cows "under the circumstances". Step 9: When everything else fails, sell the cow in the night to the "new" "other people" along with the owners land so the cow feels right at home in its familiar pen.


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