The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

Bahamas Power & Light (BPL) is seeking to borrow $125 million by end-August 2017, despite the receipt of $32 million in Baha Mar receivables cutting operating expenses by almost 40 per cent.

Desmond Bannister, minister of works, revealed in his 2017/2018 Budget communication that the utility’s total operating expenses were down 37 per cent compared to the prior year due to the Baha Mar creditor payout.

He said the payment “resulted in the reversal of the provision for doubtful accounts against bad debt expense”, the accounting treatment enabling BPL’s net profit to hit $42.3 million for the first eight months if its current financial year.

Mr Bannister added that BPL, a wholly owned subsidiary of the Government’s Bahamas Electricity Corporation (BEC), has entered into an agreement with JP Morgan and CIBC FirstCaribbean to secure a loan facility of $125 million. This does not have a government guarantee, and is expected to be funded by August 31, 2017.

“Total assets of BPL stand at $763 million, up from $728.4 million at the start of the year. Cash balances remain high after the receipt of payment from the Baha Mar properties, and as the capital projects approved for the current year are progressing slowly,” said Mr Bannister.

He added that BPL recorded total revenue for the eight-month period of $267 million, with fuel costs standing at $128 million or 48 per cent of revenue. This compared to prior year revenue of $270 million and fuel costs of $131 million - also 48 per cent of revenue.

On the generation front Mr Bannister noted: “BPL is taking a number of steps on the generation, transmission and distribution fronts to prepare the system for the peak demand period. Readiness on both the generation and transmission sides includes ensuring installed equipment is adequate to meet the expected loads imposed during the summer, and then performing the necessary maintenance and repairs to have that equipment both available and reliable for the summer peak.

“Steps have been taken to put BPL on a better footing to handle the summer demand in 2017, given the execution of projects in both generation and transmission since last summer. BPL has advised that while they are unable to state conclusively that all infrastructure will perform as expected, they believe that under normal circumstances BPL will be able to meet the peak.”

Mr Bannister, though, said the Government would launch a new Request for Proposal (RFP) tender to address continued concerns over BPL’s generation capacity.

“To this end I have met with a number of companies that have expressed interest in providing the generation capacity that is needed, and we expect that an RFP will be issued sooner rather than later,” he added.

It is unclear whether this means the Minnis administration has rejected the proposal from New Fortress Energy, which was left behind by its predecessor, as Mr Bannister’s words seem to imply.

The Minister added that he would investigate whether there was any obstacle for BPL’s Management Services Agreement with its operator, PowerSecure, being disclosed along with the latter’s business plan for the utility.

“A prepaid system is expected to substantially reduce bad debt expense, while providing customers with greater control over the timing and frequency of payments as well as energy usage,” he added, with the forgiveness of customer debts and reconnections also under discussions.