The Tribune

By NATARIO McKENZIE

and NEIL HARTNELL

The Bahamas Electricity Corporation’s (BEC) trade unions yesterday promised they were “with the programme”, as the Deputy Prime Minister confirmed that the Government had given its approval for the signing of a five-year management contract with PowerSecure.

Paul Maynard, the Bahamas Electrical Workers Union’s (BEWU) president, said the unions would honour their commitment to moving BEC’s reform process forward, as Philip Davis asserted that no staff reduction was expected “in the near future”.

   Mr Maynard told Tribune Business: “We promised that we will honour our commitment and move the situation forward. As I have said before, I am in a perfect storm. We will do what we have to do to make this situation work.

“There are a lot of businesses that need to see a reduction in their electricity bill and, ultimately, be able to hire more people. There’s a big effect with all of this. We need to get the country moving. As union leaders we are committed to that.”

During a communication to the House of Assembly, Mr Davis said the Cabinet had given its approval to Bahamas Power & Light (BPL), BEC’s new operating subsidiary, to enter into a Management Services Agreement with PowerSecure.

“With this exciting step, PowerSecure is poised to assume management control of BPL in the coming weeks and the Bahamas can enter the next phase of its energy sector transformation,” said Mr Davis.

He confirmed previous Tribune Business revelations that PowerSecure will be entitled to a base management fee of $2 million per year adjusted for inflation.

“In addition, PowerSecure has the opportunity to earn a performance compensation bonus of up to 150 per cent [$3 million] of the base fee,” the Deputy Prime Minister said.

“Some $2.5 million of the performance bonus will be based on achievement of 11 target key performance indicators, including factors such as the management of non-fuel costs; fuel volume usage; efficiency and fuel volatility; reliability factors such as average number of outages and the duration of such outages; customer service metrics; the financial strength of BPL and others. The remaining $500,000 will only be earned if they surpass the targets.”

Turning to the concerns over potential job losses aqt BEC, Mr Davis said: “There has been much said about the scale of potential downsizing at BEC.

“I would like to put it on record that the Government, the Board and PowerSecure are extremely sensitive to this issue. Once PowerSecure has boots on the ground full time, careful ongoing assessments will be made as it relates to staffing.

“We do not expect any staff reductions in the near future, and if there are to be any it is to be done in a manner that is open and transparent, with key stakeholders and employees themselves.”

The Bahamian private sector yesterday branded the Government’s authorisation for the management contract signing as “a positive step”, pointing out that energy costs were “one of the most onerous parts of doing business in the Bahamas”.

Edison Sumner, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chief executive, told Tribune Business that the private sector was “anxious” to see PowerSecure’s business plan and management strategy, and understand how it would achieve energy reform objectives.

He added that the Chamber hoped to meet with PowerSecure “within the next week or two”, having made such a request to the Deputy Prime Minister, who had agreed to facilitate it.

“It’s important for us to understand what the game plan is coming in, so we can provide any assistance in that regard,” Mr Sumner said. “We need to know the plan for BEC as far as energy costs, and if they’re going to make staff redundant and how that will look like.

“It’s important for us to know how they’re going to manage BPL going forward, and how Bahamian society is going to benefit from their management of BPL going forward.

“It should give us greater appreciation for what they’re bringing to the table at BEC.”

Mr Davis yesterday reiterated that BEC’s infrastructure required $450 million worth of capital upgrades over the next five years and that, in its current condition, the Corporation was technically insolvent, with losses of $20-$30 million per annum preventing it from getting a credit rating.

“The Government of the Bahamas is satisfied that PowerSecure has the technical and financial capacity to effectively manage Bahamas Power and Light,” Mr Davis added.

“We are satisfied that value would be extracted from the existing New Providence and Family Island generation, transmission and distribution assets, and that the company can provide the advanced asset management, efficiency retrofits, improved  operating schemes, fuel selection and purchasing schemes that are required to set  BPL on a course to profitability.

“We are very pleased that the company has the ability to manage the building of new major generation in New Providence, as well as the ability to procure and mange the building of  renewable energy projects on the Family Islands.”