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Chamber Chief: ‘Not Right Time’ For Extra Bpl Debt Charge

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE Chamber of Commerce’s chief executive is arguing that “now is not the right time” for Bahamas Power & Light (BPL) to add additional charges to customer bills.

Edison Sumner told Tribune Business in a recent interview that BPL needed to focus on improving system reliability and reducing costs before seeking to implementing a debt servicing fee to finance its nine-figure restructuring.

Suggesting that the utility monopoly cannot “just add on fees to bills” without first talking to its customers, Mr Sumner said Bahamian businesses were already “struggling under the weight of bills and taxes” in a high-cost economy - thus making BPL’s proposal especially ill-timed.

He was responding after BPL chairman, Darnell Osborne, recently revealed that the utility will be adding a debt servicing charge to customer bills to help it repay investors that buy into its Rate Reduction Bond (RRB) financing. This will refinance BPL’s legacy debts, million pension deficit and other liabilities, previously estimated at a collective $650 million, and remove them from BPL’s balance sheet, thereby enabling it to raise new funds for long-delayed infrastructure and network upgrades that cannot be put off any longer.

However, Mr Sumner told Tribune Business: “Right now I’m not sure this is the appropriate time to be talking about increasing rates based on the RRB that the Government is currently looking at.

“Energy costs have always been at the top of the private sector’s list of concerns when it comes to the cost of doing business in the Bahamas, and the ease of doing business in the Bahamas.

“People don’t mind paying for services if they get the service they’re paying for.. Before we talk about adding fees to people’s bills, how do we improve the system we have? How do we improve the reliability and efficiency of energy? How do we cut the cost of energy?” the Chamber chief continued.

“How do we introduce new forms of energy, so customers can decide if they want to stay on the grid or get off the grid? There has to be discussion and regular dialogue. You can’t just add on fees to bills. The cost of business is still exorbitantly high, especially for small and medium-sized enterprises.

“Before we talk about adding on to bills, let’s improve cost, efficiency and operations, and improve reliability and competitiveness. We’re struggling under the weight of bills, struggling under the weight of taxes, and trying to keep our doors open having to compete with international operations, especially in the online world.”

While most Bahamians and businesses will likely be vehemently opposed to any additional BPL fees, especially given there many challenges with the Government-owned utility, it is possible they may have to endure short-term pain - and increased energy costs - for long-term gain and reduced power bills.

For unless BPL can refinance and invest in vital network infrastructure upgrades it will likely find it impossible to improve system reliability and reduce costs. It is currently weighed down by around $350 million in debt; a $100 million pension fund deficit; and environmental and other liabilities, with annual losses over the past decade usually coming in at around $20-$25 million.

The RRB charge will likely be relatively small compared to consumers’ overall bills, and BPL may be able to offset this fee if it can extract savings elsewhere - especially on fuel supply costs and long/short-term generation reform.

Mrs Osborne said recommendations on the winning bids for both contracts are currently before Cabinet, adding that BPL had held off on the RRB plan to enable it to both focus on obtaining $100 million in short-term financing and find savings to minimise the burden on Bahamians.

The BPL chairman said the Board had recommended proceeding with the RRB plan, but pledged that it would the extra debt servicing fee “manageable and palatable for the Bahamian people”.

“The Board has made its recommendation to the Government in terms of needing that RRB done,” Mrs Osborne told Tribune Business. “We’ve not given a specific figure.

“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.”

Mr Sumner, meanwhile, said the Bahamas’ “progress is always interrupted by politics”, pointing to the fact that no political party had enjoyed two consecutive terms in office since the first two Ingraham administrations in 1992-1997 and 1997-2002.

“Our progress is always interrupted by politics,” he told Tribune Business. “We’ve changed government every five years for almost the past 20 years. When that change happens it tends to retard progress made by the previous administration and work done by the private sector.”

Government legislative and policy priorities vary from administration to administration, and Mr Sumner said this helped explain why, for example, the Bahamas’ progress in fully embracing renewable energy had been so ‘stop-start’.

He added that the private sector was “the critical element” in ensuring economic policy continuity, and added: “We have to push the Government to meet the goals and objectives set for the country.

“Governments change or amend plans and policies, and when that happens it interrupts growth and progress.”

Comments

TheMadHatter 9 months, 1 week ago

"...adding a debt servicing charge to customer bills to help it repay investors that buy into its Rate Reduction Bond (RRB)..."

This is very very funny. So we increase rates to finance a rate reduction? LOL

True clowns.

Why don't they send a couple employees to Freeport to be involved with the upcoming LNG experiment the private power company there is currently planning?

Watch, listen, learn, and duplicate.

But i'm sure that would be too simple and might not produce any graft.

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