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Hope Bahamas Power & Light ‘Shake Up’ Shows Reform Desire

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A governance reformer yesterday expressed hope that the “shake up” in Bahamas Power & Light’s (BPL) top management is a sign the Government is serious about delivering energy reform.

Robert Myers, a principal with the Organisation for Responsible Governance (ORG), told Tribune Business he hoped Pamela Hill’s termination as BPL chief executive was evidence of the Minnis administration’s “desire for change” when it came to energy costs and reliability.

He described energy reform as “the easiest and lowest hanging fruit” to pick in turning the Bahamian economy around, adding that reduced electricity costs alone would return “hundreds of millions of dollars” into the Bahamian economy and generate significant GDP growth by itself.

Mr Myers described the Bahamas’ decades-long energy reform failure as “maddening” for himself and other business owners, and blasted the Christie administration as “absolutely stupid” for its inability to deliver this during its term in office.

“What I’m hoping is that we’re seeing a shake-up because this administration is fed up with the nonsense,” the ORG principal told Tribune Business. “We can’t keep doing what we’re doing.

“It would be nice to hear what the Government’s plan is, and what’s going on behind the scenes. I’m hoping their desire for change is creating a shake-up, and that’s a good thing. Either we will have a statement from the Government or time will tell, but it’s a little unnerving.”

The BPL Board has yet to reveal its rationale or justification for Ms Hill’s termination, and the energy monopoly’s manager, PowerSecure, is understood to be challenging whether the Government-appointed directors had the contractual and legal ability to dismiss her.

The Board is also demanding that PowerSecure fully reimburse the $1.9 million alleged to have been stolen in the much-publicised vendor fraud scheme, and that it cure alleged “breaches and deficiencies” of its management services agreement (MSA) within 30 days - making the deadline mid-September.

The relationship between PowerSecure and the BPL Board has almost completely deteriorated as a result of the latter going public with its accusations, which the US utility feels are wrong and baseless.

PowerSecure yesterday elected not to respond publicly to the Board, and is understood to have hired Brian Simms QC, litigation head at the Lennox Paton law firm, to represent it in the matter. Mr Simms previously acted for the China Export-Import Bank in the Baha Mar dispute.

Desmond Bannister, who as minister of works has responsibility for BPL, yesterday indicated that the managerial/leadership disruption at BPL would not throw the Government’s energy reform plans off-course.

“We expect that matters will proceed in accordance with plans,” Mr Bannister said in a brief message reply to Tribune Business.

Mr Myers, meanwhile, said “turmoil” at a company’s senior management level could be both good and bad. “It depends on where the direction is coming from,” he added, “and who’s driving the process, who’s pulling the strings, who’s pushing the buttons.

“My guess is that this administration has shown themselves to be more performance motivated than politically motivated. To lower the cost of power is imperative to the private sector, and the public and the Government in order to help our fiscal condition.

“If they’re pushing on that part of their agenda I’m all behind it, because we need that badly,” Mr Myers continued. “In my opinion it’s too little, too late, because we could have been enjoying lower power costs for the pas three years. Every dollar saved in energy costs goes straight to the bottom line of the private sector, government and households.

“It’s absolutely stupid that the previous administration didn’t do something about it earlier. Energy is the lowest hanging fruit. It’s the single easiest thing to fix to reduce the cost and ease of doing business.”

The Christie administration issued a Request for Proposal (RFP) tender to reform the energy sector exactly four years ago in August 2013. After dropping plans to split BEC’s energy generation from its transmission and distribution, the then-government settled on the so-called ‘NAD model’ pioneered at the airport, where the Government maintained ownership of the assets but hired a private sector manager.

This led to the March 2016 signing of PowerSecure’s five-year management agreement, worth a maximum of $25 million or $5 million per year if certain performance targets were hit, and with a $10 million base fee.

Yet PowerSecure was never allowed to manage BPL as a business. The former Christie administration rejected its request for an increase in BPL’s base tariff rate, which would have boosted cash flow and ended its practice of selling electricity ‘below cost’ - freeing up funds for much-needed maintenance.

And the previous government’s failure to refinance the Bahamas Electricity Corporation’s (BEC) $650 million-plus in legacy debts and environmental liabilities via the promised Rate Reduction Bond (RRB) has also left PowerSecure and BPL’s hands tied financially.

Mr Myers yesterday questioned how many more RFPs and debt refinancing plans were needed to resolve BPLs woes, and added: “Somebody has to come and fix it.

“Our power situation has been poorly managed and directed for decades. BEC/BPL is over-staffed, it’s inefficient, behind the times, has not kept up, is not progressive and needs to get its ass kicked.

“You could add millions of dollars to the country’s bottom line if we reduced the power costs to where they should be; 21 cents per kilowatt hour,” Mr Myers continued. “That’s free money; hundreds of millions of dollars that we’re paying to foreigners and oil companies that’s immediately returned to the Government and private sector.

“It would be a massive boost for the economy. It’s the easiest low hanging fruit. Get on with it. From mine and the private sector’s point of view, it’s maddening. Get it fixed, and save hundreds of millions of dollars annually. If oil prices go back up, we’re screwed.”

Comments

OldFort2012 2 years, 11 months ago

The solution has always been there and it is real simple. But no government will ever implement it, because they care much more about votes than the price of electricity: run a cable to Miami and buy it @ 8c or less. That's it. Problem solved. Hard one, was it not?

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watcher 2 years, 11 months ago

This, together with solar plants and a minimal back up in case of repairs and/or maintenance on the cable, would be more than enough for our needs. But Frankie needs all that lovely oil income and. as you say, them votes Man !!.

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BahamasForBahamians 2 years, 11 months ago

The shakeup was futile as the person who was responsible for the bleeding funds is still in place. The CFO was quietly allowed to return to her post, after overseeing astronomical losses at the corp.

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