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Bpl Pledges: You’Ll Have ‘Soft Landing’ On Extra Charge

BAHAMAS Power & Light’s (BPL) chairman yesterday pledged to make “the landing as soft as possible” for Bahamian consumers when it adds a debt servicing charge to their bills.

Darnell Osborne told Tribune Business that the utility was working to make this extra fee “manageable and palatable for the Bahamian people” by extracting as much savings as possible from BPL’s existing operations prior to placing a Rate Reduction Bond (RRB),

She added that BPL would “advise the Government in a few months” on the amount of the RRB servicing fee that will be added to all consumers’ monthly bills, its Board having recommended to the Government that the RRB was essential to restructuring the utility’s balance sheet for the long-term. Mrs Osborne said BPL would turn its attention to the the RRB, and long-term needs, once it completed a $100 million short-term capital raise that will fund its summer readiness programme and other customer service improvements.

Revealing that BPL hoped to obtain some of that $100 million before this month ends from a lending syndicate, the utility’s chairman added that recommendations had also been forwarded to the Minnis Cabinet for its approval on the bidding process for its fuel supply and short-term generation contracts. Mrs Osborne said long-term generation was also addressed in the recommendation on the latter.

The Minnis administration initially seemed reluctant to adopt the long-term financial restructuring tool left behind by its Christie predecessor, but BPL’s Board views the RRB’s placing as critical to raising the nine-figure sum required to restructure its legacy debt.

Mrs Osborne said it was “not so much the exact plan left behind by the previous administration”, indicating that BPL would likely seek a lower amount than the $650 million touted by the former Christie administration to minimise the burden on Bahamian businesses and households.

“The Board has made its recommendation to the Government in terms of needing that RRB done,” she told Tribune Business. “We’ve not given a specific figure... We have to really tie down this interim financing before we can talk about the details of that RRB.”

Mrs Osborne added that “the intention is to go out for an RFP for the RRB”, meaning that BPL will solicit bids from the likes of banks, investment and finance houses, broker/dealers and other capital markets players to act as its adviser/placement agent on the bonds. Recent changes to the Electricity Act and RRB Act will also facilitate the issue.

She also explained that BPL had “held off” on the RRB “to effect some savings in operational costs” that would reduce the sum required, and therefore lessen the burden on consumers.

Mrs Osborne said BPL had already been able to save around $10 million through improved controls and a new procurement system, and said the cash-strapped utility was taking a “one step at a time approach” to fixing its finances.

“In a few months’ time, once we get past the interim financing and turn our attention to that, we will make a recommendation to the Cabinet and go from there,” she told Tribune Business of the RRB.

“We’re almost there. Not far off. In a few months we will be able to advise the Government on how much we need in terms of the percentage on to the bills. We’re hopeful with the savings we’re able to effect that it will be manageable and palatable to the Bahamian people. We’re trying to make the landing as soft for Bahamians as possible.”

The Government will likely be wary of potential political fall-out from any additional charge that makes light bills more expensive, especially with global oil prices starting to rise and the potential drag this will cause for the private sector, economy and household disposable income.

Yet BPL’s dire financial position makes it imperative that a nine-figure restructuring of its balance sheet be implemented to refinance some $350 million in bank and bond debt; a near-$100 million pension plan deficit, and deal with environmental damage and other legacy issues.

The former Christie administration’s plan involved issuing the RRB bonds, via a special purpose vehicle (SPV), to Bahamian and international capital markets investors. The proceeds would take out BPL’s legacy debts while keeping the new financing off the utility’’s and government’s balance sheets, enabling the former to raise new capital to invest in badly-needed network upgrades.

The RRB bonds debt would be serviced by an additional charge added to customer bills, which will likely be a small percentage of the overall amount.

Mrs Osborne, meanwhile, said BPL was “in the final stages of negotiating the short-term financing” vital to enabling the utility to undertake much-needed pre-summer infrastructure enhancements in New Providence, Abaco, Bimini and Exuma.

“I would like to see we’re a month out with the majority of it,” she told Tribune Business of the short-term raise. “We think we can get some more after that. We’re looking at $100 million thereabouts, and are hoping to get some this month, March.

“We can then start summer readiness and look at beginning the Automated Meter Reading (AMR) system. We’re going to try and start with some of that so by the end of the year our customers will see some real improvements in customer service and billing. We want to have some of the money carved out to do that.”

Mrs Osborne said that while some work on BPL’s summer readiness programme had already started, “the bulk of it requires money”. 

She added that the Board had made its recommendations to the Minnis Cabinet, and was now awaiting its approval, on the fuel and generation supply tenders.

Comments

Damifiknow 1 year, 5 months ago

The fuel sir charge has doubled the electricity bill and you want more?

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John 1 year, 5 months ago

Seems like consumers will be hit with this additional charge beginning right in the heart of summer when electricity bills are already at their highest.

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ohdrap4 1 year, 5 months ago

it was along time in the making. but the plp did not implement it because it wanted to preserve the special list. the fnm had to finish the special list immediately.

some still cry for the special list in the house of assembly.

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John 1 year, 5 months ago

How many people know that switching to LED bulbs can cut your light bill down. Also switching to a gas dryer from electric. Also putting a solar water heater or putting a timer on your electric heater that cuts in an hour before everyone showers in the morning and the same thing in the evenings. Most timers have a bypass switch if you need to wash or need hot water. Then there’s a 23 SEER a/c unit that burns the same amount of electricity as a ceiling fan. A $600 electricity bill was cut down to just over $200 in the winter and over $300 in the summer.

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ohdrap4 1 year, 5 months ago

LED light bulb exposured is linked to diabetes and other stuff. i use the curly ones, they are cheaper and save lights. i have had gas stove and dryer for many years. always wash in cold water, which in our climate is only cold 4-5 days out of the year.

in abaco tho, there are places where there is no gas delivery so you have to have electric stove.

i do not turn on water heater in the summer or air conditioner in the winter.

i want tho, the politicians to pay their bill.

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realitycheck242 1 year, 5 months ago

Get off Fossil fuel ASAP and go with the LNG ASAP and save every one some money.

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bahamian242 1 year, 5 months ago

Why we got to pay for people tefling!

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Sickened 1 year, 5 months ago

Agreed. Lock up some people before you start charging us additional shit!

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DDK 1 year, 5 months ago

Maybe we should start with this chairman person.

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Sickened 1 year, 5 months ago

Our BEC will start looking like a hotel bill; so many additional charges. Are we going to see a 'Cable Beach levy' like what we see on Baha Mar bills?

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DDK 1 year, 5 months ago

Are they freaking nuts? A soft as possible landing. What kind of sick platitude is that? The blatant audacity of these people! The People should not pay a red cent extra.

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John 1 year, 5 months ago

The light at the end of the tunnel is they are hoping to convert to LNG which will cut electricity bills by by near 50 percent. As you know Leslie Miller tried to make this conversion many years ago, but he did not get the support of his PLP colleagues. as you know there was a powerful Snake in the picture and BEC was getting oil from the Sun. So will it happen some 15 years later? Imagine the hundreds of millions the Bahamian people could have saved, had the conversion been back then.

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SP 1 year, 5 months ago

Does this promise "soft as possible landing" equate similarly to the same "soft landing" new inmates are promised at Fox Hill prison?

http://tribune242.com/users/photos/20...">http://thetribune.media.clients.ellin..." alt="Vell Muddo...Dey catch ME red handed dis time">

http://thetribune.media.clients.ellin...">Vell Muddo...Dey catch ME red handed dis time by SP

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BONEFISH 1 year, 5 months ago

The political elite and connected persons have exploited this country for years.They don't want to pay their share of anything even though they have the ability to do so.It will be the small man at the that bottom that will have to carry the load as always. BPL needs to vigorously pursue and collect all monies from these persons with no exceptions.

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DDK 1 year, 5 months ago

Regarding the refinancing of BPL’s legacy $650 million debt, here's an idea. Work out how much generation of electrical power is needed by each major island and its outer islands. Divvy up the debt proportionately and sell each island's plant and assets to individual private bidders. Debt gets paid. Government gets out of BEC once and for all. No tax breaks. The Government gains revenue instead of pouring it away. The People get Power!

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