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$211m Borrowing Approved To Aid Electric Supplier

By KHRISNA RUSSELL

Deputy Chief Reporter

krussell@tribunemedia.net

FINANCIAL crisis was cited as the reason government yesterday passed a resolution to borrow $211m to aid the Bahamas Electricity Corporation.

This undesirable situation, the resolution said, was caused by the high cost of fuel in 2018, funding of capital projects, a high expense ratio and reduced cash flows due to tariff reductions.

The move allows BEC to refinance existing loans by entering into a non-revolving term loan facility agreement with various banks.

The banks collectively include Scotiabank Limited, First Caribbean International Bank, Royal Bank of Canada, Bank of The Bahamas and Citibank. The resolution was debated in Parliament last week and passed yesterday.

It comes amid reports Bahamas Power and Light has earmarked $20m to pay out more than 300 employees who have expressed interest in taking voluntary separation packages.

"Whereas BEC has found it desirable for the better performance of its functions under the act to refinance its existing loans to enter into a non-revolving term loan facility agreement with various banks whereby the banks have made available to BEC as Borrower loan facilities in the maximum aggregate principal amount of $211m in currency of either the Bahamas or the United States of America together with interests thereon at the rate and upon the terms and conditions set out in the facility agreement," the resolution read.

It continued: "Whereas it is a pre-condition of the facility agreement that the government of the Commonwealth of the Bahamas guarantees to the banks the repayment obligations of BEC in respect of the principal of the loan and interest thereon under the facility agreement.

"And whereas by virtue of section 17 of the Act the government may guarantee in such manner and upon such terms as it may think fit the payment of the interest and principal or either of them any loan proposed to be raised by BEC.

"And whereas by virtue of section 17 of the Financial Administration and Audit Act, chapter 359, 2000 revised edition of the Statute Law of the Bahamas, no loans shall be raised by the government and no guarantees involving a financial liability shall be binding upon the government unless entered into with the prior approval of the House of Assembly signified by resolution thereof."

Last week, Chamber of Commerce's Chief Executive Edison Sumner said Bahamians must brace for "a very expensive summer" as global oil prices surged to $80 per barrel. He told Tribune Business greater renewable energy penetration and usage "can't come soon enough", with no Bahamian or business able to escape the impact of energy costs that are forecast to soon exceed $100 per barrel.

Virtually all companies and households will feel the impact in their Bahamas Power & Light (BPL) bills and at the gasoline pump.

Mr Sumner said there was little most Bahamians can do to mitigate the immediate impact, other than focus on energy conservation, as he renewed private sector calls for a regulatory framework that will better spur more rapid take-up of renewable energy technologies.

The Chamber is itself moving to improve access to renewable energy financing, with Mr Sumner disclosing it will shortly unveil an initiative to help persons fund the installation of roof-top solar panels.

In the meantime, he urged energy consumers to "use only what you have to', reiterating that it could be "a long, hot summer" with the Bahamas totally at the mercy of oil-producing countries and global political developments.

Comments

Bruce_Almighty 3 weeks, 3 days ago

Why not move to Solar....many European countries with far less sunlight and wind have made the switch from Fossil fuel to solar/wind successfully....this situation isn't going to get better.

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jcintheflesh 3 weeks, 2 days ago

THE VIEWS EXPRESSED BY CONTRIBUTORS ARE THEIR OWN AND NOT THE VIEW OF THE HILL

The opinions in this article belong to the author. and not CNN

these are just opinions of writers , any one can write anything....lot of opinions out there now days , do not mean they are facts ,could be "fake news"

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BoopaDoop 3 weeks, 3 days ago

We will all pay for this borrowed $211m eventually. On the bright side, BPL hopefully won't triple the fuel surcharge on bills.

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Well_mudda_take_sic 3 weeks, 3 days ago

Within only its first year, the Minnis-led FNM government has borrowed over one billion dollars - that's right, over $1,000,000,000. And they have done nothing but blame the previous PLP government for any and everything to justify borrowing this enormous amount. Minnis and his cabinet ministers refuse to make an earnest effort to cut costs by significantly reducing the size of our grossly bloated and largely non-productive civil work force. Downsizings so far have been much more about replacing PLP supporters with FNM supporters. At this rate five years of Minnis will add $5,000,000,000 (five billion dollars) to our national debt. Now that will surely break the piggy-bank for all future generations of Bahamians.

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DWW 3 weeks, 3 days ago

I hope this is inaccurate

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Dawes 3 weeks, 3 days ago

THis is a bunch of crap How can one of the reasons for the need for this loan be the increase in fuel prices when we pay a fuel surcharge which negates that.

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bogart 3 weeks, 3 days ago

Simply invest in tidal power which each island has...number of different means to collect it....basically an upside down wind turbine in the channel...ocean........that is more reliable than wind and sun....dozens of othher countries use it .....

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Porcupine 3 weeks, 1 day ago

This requires vision and foresight.

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stillwaters 3 weeks, 2 days ago

Come on, every Bahamian knows that we passed over a rotting, corrupt, overstaffed, disintegrating company to BPL and now we running around expecting them to work miracles for us. Getting mad when the light goes off, acting like we don't know we swing those people. Suck teet!!!!!!

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DDK 3 weeks, 2 days ago

"Government had incorporated a new company named Bahamas Power and Light (BPL), wholly owned by BEC and created (here I quote) “to allow BEC to split off its generation, transmission and distribution duties and prepare for ring-fencing the utility’s $450 million-plus legacy debt.” In other words, BPL would become the operator of all aspects pf our electric power business leaving BEC as a corporate shell with nothing but debt."

from BPL and BEC: Siamese Twins of Electric Power R. Coulson

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joeblow 3 weeks, 2 days ago

Anyone has buyers remorse yet?

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Socrates 3 weeks, 1 day ago

DAWES is correct. if fuel surcharge is to cover the variable cost of fuel, how could you need to borrow due the high cost of fuel? further, last 2 years or so fuel prices have been below $40 a barrel so it doesnt add up to me either.

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sheeprunner12 3 weeks, 1 day ago

AGREED .......... What is the purpose of paying fuel surcharge????? Bahamian should BOYCOTT paying fuel surcharge ...... We are facing DOUBLE JEOPARDY ...... Pay fuel surcharge and BPL loans.

BOYCOTT THE FUEL SURCHARGE!!!!!!!!!!!

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