By NATARIO McKENZIE
REFORMNG Bahamas Power & Light (BPL) may cause “pain” for Bahamians, its chairwoman yesterday warning that its $600 million legacy debt and liabilities “cannot be ignored”.
Darnell Osborne, speaking at a press conference at BPL headquarters, said the Board of Directors’ finance committee was targeting savings in a bid to reduce the utility monopoly’s borrowing needs.
“We cannot ignore the legacy debt,” she conceded. “This is inherited. It is something that is years in the making, and it must be addressed very shortly. We have had many discussions on this. We have a finance committee which has been working very hard, looking at ways to save, which will bring down the amount that we need to borrow.”
BPL unveiled a new chief executive and chief operating officer yesterday, as it starts the process of transitioning to an all-Bahamian management team following the termination of PowerSecure’s five-year operating partner contract.
Yet Whitney Heastie and Christina Alston, a Bahamian who recently served as director of supply chain services for Georgia Transmission Corporation, will face the same problems as PowerSecure and all previous Boards and management teams unless the legacy Bahamas Electricity Corporation (BEC) debts and liabilities are refinanced and moved off BPL’s balance sheet.
Besides some $320-$350 million in bank and bond debt, BPL and its BEC parent are also burdened by a $110 million pension deficit and multi-million dollar environmental liabilities at its various power plants in New Providence and the Family Islands.
The former Christie administration passed legislation to facilitate BPL’s refinancing via a Rate Reduction Bond (RRB), which would have moved legacy debts off-balance sheet into a special purpose vehicle (SPV).
However, debt repayments to bond holders would have to be financed from a portion of customers’ bills, and both current and former governments have shown a reluctance to implement the RRB solution given the potential impact on Bahamian households, businesses and general election votes.
Mrs Osborne yesterday warned that reforming BPL, and placing it on a sustainable, profitable footing, may ultimately cause discomfort to Bahamian consumers.
“It may be a bit of a bitter pill to swallow, but no pain, no gain,” she said. “We will definitely try to keep the pain at a minimum for the Bahamian people.” She did not specify what she meant by this.
Mrs Osborne, though, continued: “Not only do we need to address the legacy debt but also our generation needs going forward. We have tied down the capital expenditure budget. We have issued proposals for the generation.
“We have had a lot of interest in terms of companies willing to provide energy solutions to BPL, and some of these have included financing options. Once the RFP for the generation is completed and bids are closed, we will look at the proposals and determine the lowest cost for the Bahamian people and also the reliability of energy. We have received some proposals and we want to hear from all that are interested.”
BPL’s former manager, PowerSecure, had planned to lay off between 200-300 employees, a move ex-Minister of Works, Philip Davis, said had been averted after the former administration worked out a deal to increase consumer tariffs instead.
Speaking on the possibility of lay-offs, Mrs Osborne said: “ The business plan as it exists currently will be revised, and we will reserve our comments until we have had a revision of the business plan and after we have brought some savings through the RFP process to determine the way forward in terms of any reductions in staff.
“We will seek to bring about serious cost savings through our RFP process. We also intend on doing a human resources needs assessment, and then determining the way forward.”