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Bpl ‘Will Have To Be Privatised’

An “essentially insolvent” Bahamas Power & Light (BPL) will ultimately have to be privatised, the Minister of Works confirmed yesterday.

Desmond Bannister, who has ministerial responsibility for BPL, told Tribune Business that the Government would not allow a purchaser to ‘cherry pick’ the utility’s profitable assets, meaning it would have to be acquired ‘whole’.

While declining to provide a timeline for privatisation, and whether it would occur under the current government, Mr Bannister indicated that the Minnis administration would seek to get BPL to a position where it might attract private sector buyers.

Much work needs to be done to reach that point, and Mr Bannister said he expected BPL’s Board to present the Government with a strategy for moving the troubled energy monopoly forward as early as next week.

He confirmed that the PowerSecure ‘model’, where a foreign manager is brought in to operate BPL, had been rejected in favour of an all-Bahamian leadership team that must be in place by year-end.

“The Board is going to present us with a strategy,” Mr Bannister told Tribune Business, when asked how the Government plans to take BPL forward. “I expect that we’ll get that this upcoming week. We’re going to review it, and make some determinations based on their recommendations. We’re going to give it fair consideration.”

Many Bahamians, especially those in the private sector, have called on the Government to urgently outline its strategy for BPL following the termination of PowerSecure’s five-year management contract after just 18 months.

Mr Bannister yesterday reiterated the Minnis administration’s determination to place the utility under local management, saying Bahamians were as capable “as anyone else” of turning its financial and operational performance around.

“We’re looking to have Bahamians run BPL,” he confirmed. “We believe we have people with the experience, expertise and ability who can run a national power company.

“Until such time as it may be privatised, we believe Bahamians can run and operate it as efficiently and effectively as anyone else. That is going to happen, and we are going to meet the goals we have for BPL.”

Mr Bannister’s remarks are the first time anyone in the Minnis Cabinet has mentioned ‘privatisation’ in relation to BPL, and the Minister indicated that this was inevitable once the time was right.

“At some stage BPL is going to have to be privatised,” he told Tribune Business, “but privatisation is not going to involve someone coming in and scooping up the profitable parts of BPL.

“Any purchaser is going to have to understand that BPL has a commitment to the country. Whenever we do get to privatisation discussions, my role will be to ensure that any purchaser does not leave people in Abaco, Andros and all areas and islands that may not be profitable; that they don’t leave them behind.”

New Providence has traditionally subsidised the Family Islands, with profits outweighing losses there, until BPL and its Bahamas Electricity Corporation (BEC) predecessor began their spiral into annual $20 million-plus losses from 2007 onwards.

Mr Bannister’s comments indicate that BPL will have to be privatised as a ‘total package’, with no buyer able to purchase only New Providence and other profitable assets.

However, much remains to be accomplished to get BPL to the point where it can be privatised. Given its current financial predicament, the utility would likely fetch $1 and a buyer agreeing to take on some of its $600 million-plus liabilities.

The Minister conceded as much, telling Tribune Business: “Obviously, as you have written on many times, we have a company that is essentially insolvent.

“We’ve got to determine how best to make it operational, while leaving the responsibility for the debts of the organisation in the appropriate place, so the Bahamian people don’t take on those debts.

“It has to be operational, it has to be functional, it has to be efficient, and we’re going to require BPL to provide the services the Bahamian people need at reasonable cost.”

To prepare BPL for privatisation, the Government, Board and new management team will need to return the utility to profitability. The ‘to do’ list is extensive, as this will involve refinancing the $600 million-plus legacy debt and liabilities; upgrading BPL’s aged infrastructure; reducing electricity costs and boosting efficiency.

The former Christie administration had initially looked at partial privatisation involving BPL’s generation assets when it launched the 2013 Request for Proposal (RFP), and potentially splitting this sector from the transmission and distribution (T&D) business.

It ultimately rejected this in favour of replicating the Lynden Pindling International Airport (LPIA) model, where a private sector manager (Vantage Airport Group and NAD) took over management of the assets, but the Government retained ownership.

This ultimately resulted in PowerSecure’s selection, and the termination of its management agreement leaves the Bahamas no further forward than it was in 2012 when it comes to energy reform. The last five years were effectively wasted, leaving this nation with a significant opportunity cost given how electricity costs are killing economic growth.

The privatisation of state-owned enterprises (SOEs), though, has been extremely difficult to accomplish in the Bahamas, with the Bahamas Telecommunications Company (BTC) sale taking more than 13 years to complete.

Mr Bannister yesterday said the Government would likely “place emphasis on renewable energy going ahead whatever we do”, adding that “wonderful and imaginative ideas are coming to the forefront” on the possibilities in the Bahamas.

He added that the Bahamian people needed to be “educated and committed” on renewable energy, given its potential benefits and central role in energy reform, and the fact this nation was “so far behind” in the sector.

“We expect renewables are going to have quite a role in it,” Mr Bannister told Tribune Business. “One of the issues with solar in New Providence is that it simply takes up large areas of land, so we’re going to have to look at green buildings, roof-top installations.

“We’re going to have to have a national conversation about where we go; whether we amend the Building Code to require solar installation. These are national conversations we have to have, and to get the Bahamian people committed and, first of all, educate them and get them to support an initiative that really has to come because we’re so far behind.”

Mr Bannister added that the training and licensing of renewable energy installers, inspectors and trainers could potentially “open up a whole new industry for the Bahamas”.

Emphasising that BPL was just one of his many priorities, the Minister said: “We have Town Planning issues that we cannot allow to get out of hand, and which have been going on for so long.

“We have issues of prosecutions that ought to have happened and have not happened, there and in other areas, and we have building violations and concerns. All these things are of importance to the scheme of things in this country and the Bahamian people.”

Comments

observer2 3 weeks, 3 days ago

no. you are not looking for bahamians to run dat.

how come you never see all these nice jobs in the newspapers being advertized?

how come all of a sudden a complete board of directors is appointed in a non transparent manner?

why are all the contracts done in secret?

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sheeprunner12 3 weeks, 3 days ago

There are several simple alternatives ......... Let a privatized NPP&L entity with a new LNG plant exist for Nassau and have URCA monitor quality control for all power generation entities in the country.............and privatise each island plant and let them use best "green" practices to provide power for each island ....... case in point, we never hear any complaints about Spanish Wells who run their own power station ....... The same can be done with GB & Emera or create GRABACO Electric....... The smaller islands can go solar or wind completely - or just allow the residents to put in their own solar systems .............. There are surely PPPs that will invest by island ...... Long Islanders wanted to run their power plant from the 1980s. This will cost far less than the $1Billion needed to sort out an obsolete BPL/BEC as it presently exists....

THE BAHAMIAN GOVERNMENT NEEDS TO GET OUT OF THE ELECTRICITY BUSINESS

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OldFort2012 3 weeks, 3 days ago

Privatized? LOL. How stupid are you, Bannister? Yes, private capital is well known for wishing to acquire money-losing assets in heavily unionised companies which suffer from huge political interference and where you cannot collect receivables. And which require billions in new investment on top. Tell the truth: you could not give it away. In fact, even if you gave the bidder $100m, no one would turn up. Tell the truth, Bannister: BPL has huge negative net worth. It will never be privatised because no one of repute will ever want it.

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Well_mudda_take_sic 3 weeks, 3 days ago

Can we cap BPL's electricity rates for the next 10 years and somehow force Franklyn Wilson a/k/a Snake to buy BPL in exchange for the forgiveness of all debts owing by BEC that can be attributed to the outrageous price gouging over many years by his fuel supply and distribution companies, which debts have in essence since been guaranteed by the Bahamian government?

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concernedcitizen 3 weeks, 2 days ago

Companies don,t want BPL ,but they did bid to build own and operate their own plant and guarantee a 28 cent a kl rate .The thing is you have to get them to pick up the family islands also where the smaller ones are not profitable .A number of international companies bid to do this the PLP just would not pull the trigger .Bannister is really saying this ,he knows no company would pay one red cent for BPL , the companies were willing to invest 500 million to build a new plant ,Bannisters just working the numbers ,,maybe let then charge 30 cents a kl and pick up 100 million of the debt .Believe me they are well aware no one on this planet would pay the Government one red cent for BPL

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BahamasForBahamians 3 weeks, 3 days ago

Oldfort is smart.

Lol who is going to buy a company with +50m in debt? With the bulk of it to Frankie Wilson for fuel?

Are you going to offload the legacy debt into RenewBahamas as well?

Come on Bannister. We are THINKING Bahamians - we need a real plan!

Also - Papa left a bad taste in our mouth the way BTC was handled. Marlon Johnson, who ironically happens to be the Financial Secretary at MOF now along with other execs, were paid handsomely by Papa Clown Ingraham to keep quiet on the disservice being done to The Bahamian people. Why should we not expect the same thing with pretty much the same guys in charge?

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sheeprunner12 3 weeks, 3 days ago

Every island can take care of its own electricity needs .... we do not need a unionized BEC that is losing precious value for money and corporate currency

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TheMadHatter 3 weeks, 2 days ago

Govt needs to legalize solar power in private homes and businesses. At present everyone thinks it is legal just because everyone is doing it.

They need to start an awareness campaign. I am not buying any panels ans then get threatened the way the number houses were.....thet still waiting on their ACTUAL licenses by the

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sheeprunner12 3 weeks, 2 days ago

I agree with you ....... The Osbourne-Bannister Plan must include ....... URCA de-regulation of electrical supply to each Family Island entity (for privatization) ......... and private sector/household access to solar/wind units for supplying extra power to the privatized BEC ........ If Spanish Wells and GB can do their own power - why can it not work in every other island????? ....... BPL must be like the Central Bank - an electrical watchdog for URCA

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TheMadHatter 3 weeks, 2 days ago

Thank you sheeprunner. Glad you agree. Every time i mention this to people they say it is only not yet legalized to feedback into the meters....ie make your meter run backwards. BUT that is only a distraction from the real problem which is that the use of solar panels and any other electricity producing device (except in times of power loss from natural disaster) is illegal.
But we all know that in a country whose birthplace was in piracy....the lines between legal and illegal are very gray.

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sheeprunner12 3 weeks, 2 days ago

They are very gray ........ But if we continue with the PLP new BPL bill ....... how are we going to tell a new Bahamian BPL executive that he/she is not entitled to Pamela Hill $400,000 salary????? This is a trap for the FNM. They need to tear up the BPL Act and start over - or revert to the old BEC model and ACT until they sell or dissolve BEC once and for all.

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bahapride 3 weeks, 1 day ago

My suggestion to fix the issues with BPL is as follows, what needs to happen is the Governent needs to make some sort of deal or sign a contract with FPL (Florida Power & Light) Company. . Once a deal is made and successful the Present Government can then have them run a submarine cable from Fort Lauderdale to Freeport as this is much closer in proximity to Florida. A submarine cable can then be ran into Nassau the capital and then cables can be ran to the various Family Islands. FPL can then build a building in New Providence and Freeport to manage the companies business. The electricity hardly ever goes out year in year out in Florida, reason mainly being that the company has enough electricity to power the cities on the grid and adding The Bahamas to this grid adds hardly any additional load. FPL generates 25 gigawatts of energy with a diverse mix of fuels. FPL obtains most of its electricity from natural gas, followed by Nuclear power, this is enough to power a city the size of New Providence x50.

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OldFort2012 3 weeks, 1 day ago

And that is probably the most economic solution. If someone cared about the consumer. Which they don't. The problem is what to do with all the BPL staff that would make redundant. The fact that we would be totally dependent on the USA is not a real problem....because we are anyway. They can do with us as they please, when they please. Our independence is only a figment of our imagination, anyway.

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sheeprunner12 3 weeks, 1 day ago

I agree with you ...... Plus it will cost $1 Billion to modernize BPL to (hopefully) make it profitable ........ and then you still have an entitled and obstinate BEWU and BEMU to deal with ......... Just scrap BPL and run a drop cord from Florida sounds very good right now (but the special interests won't do it).

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Porcupine 3 weeks, 1 day ago

I wish I could jump on the privatization bandwagon like the rest of you. However, I can't. That, for how many years now, we have not managed to get BEC right is telling of us, as Bahamians. What level of expertise have we not been able to afford? What is it that the private sector will get right? Plus profits, that we couldn't? Privatization is no magic bullet. The only thing that privatizaion will do to succeed, if they do, will be to keep the pillagers and plunderers away from their company. It doesn't take a genius to figure out what this means. A brief look at every other enterprise in this country from Bahamas Air to Bank of Bahamas to NIB tells the same story, doesn't it? Should Bahamians be allowed to fill these crucial roles? To the detriment of all of the rest of us. Just an honest question.

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proudloudandfnm 3 weeks, 1 day ago

Sell it, give it away. Who cares? Just get government out of the electricity business. BEC has never made money, has never been reliable and is a jobs for votes depot. Get rid of it by christmas and the country would be far better off.

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proudloudandfnm 3 weeks, 1 day ago

By the way. Coming from Freeport. The island with a private electricty provider that offers reliable, clean electricity. Expensive yes but cheaper than the rest of the country.

This is a no brainer. Get rid of BPL...

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sheeprunner12 3 weeks ago

Emera comes with its own baggage, but it is a better option than BPL .... But we should not consider Emera as an option for the country except some serious logistical issues are resolved ..... like green energy, unions and costing vs inter-island linkages (one main central generation plant with cables)

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