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'Stupid Is As Stupid Does' On Bpl Crisis

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A governance reformer yesterday blasted The Bahamas’ tendency to only address key problems “in a crisis” as he blamed its energy woes on “irresponsible governance” and bad fiscal habits.

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Robert Myers

Robert Myers, pictured, a principal with the Organisation for Responsible Governance (ORG), told Tribune Business that the country’s fiscal ill-health is directly linked to the Government’s seeming inability to do anything substantial about Bahamas Power & Light’s (BPL) New Providence generation shortfall in the near term.

With all fiscal “headroom” used up by the spending of previous administrations, Mr Myers argued that BPL’s daily load shedding and outages represented part of the “pain and suffering” Bahamians must endure to place their country back on the right path.

He added that BPL’s problems were a prime example of the lack of accountability that plagues government-owned corporations, and highlighted the “negligence” of successive governments - PLP and FNM - in not addressing the state-owned utility’s mounting financial and energy infrastructure challenges even though they were becoming increasingly obvious to all.

Mr Myers also warned it would be “a real disaster” if BPL’s load shedding and outages continued through November-December 2019 as that period represents the start of “peak tourism season” when “most businesses earn the majority of their money”.

Edmund Phillips, Wartsila’s business development manager, this week said installation of BPL’s new 132 megawatts (MW) of generation capacity is likely to be completed by mid-December, meaning that all hopes for an end to load shedding in time for Thanksgiving may have to pinned on milder weather and a corresponding reduction in electricity demand.

Meanwhile, Mr Myers said the unreliable energy supply had impacted his own group of companies by shutting down the Automatic Transfer Switch (ATS) that brings power back up after an outage. This, he added, had forced him to send head office and retail employees home two to three times, while also costing his businesses “tens of thousands of dollars”.

Tying BPL’s crisis directly to poor governance and fiscal polices, the ORG chief blasted: “If you go back to the core of it: Are their accountability issues? Are their management issues? Are their money issues? Yes, there are all those things. The core is if people were accountable, and we were fiscally prudent, we would not have these problems.

“A lot of these things stem from decades of poor accountability, poor governance and no fiscal prudence. Just spend, spend, spend until we can’t spend any more, and that’s where we’re at. We’ve got to work ourselves back into some sort of responsible pattern or we will create more pain.

“This [BPL’s crisis] is the pain I’ve been talking about. We’re not going to get through it without pain. It sucks. It’s rough on business. It’s rough on homeowners. It’s shame. It’s just upsetting that so many people were so negligent in their duties. It’s a culmination of an incredible amount of negligence by BPL and successive governments. It sucks.”

Emphasising that blame for BPL’s predicament cannot be laid solely on BPL’s present Board or management, or the Minnis administration, Mr Myers said that without improved governance and accountability “we end up in this crisis management”.

BPL’s road to its present ruin can be traced back to the 2004 cut in its base tariff, which generates all its profits and cash flow. This cut left BPL’s predecessor, the Bahamas Electricity Corporation (BEC), selling electricity below cost and ultimately plunged it into multi-million dollar losses from 2006 onwards - making it one of the world’s few loss-making monopolies.

Faced with annual eight-figure losses, among the first items to go were regular maintenance of BEC’s generation fleet and investment in new, more efficient engines. As a result, BEC was left with an aged, poorly-maintained and decaying generation capacity as well as a deteriorating transmission and distribution network by being starved of investment capital.

Michael Moss, appointed as BEC executive chairman by the last Ingraham administration, was able to claw back some of the base rate reduction and return the Corporation to “break even” with a $1,000 profit in 2011. However, his departure following the 2012 general election promptly plunged BEC back into “the red” with $20m losses.

Several reform efforts initiated under the Christie administration were never seen through to fruition. While the Minnis administration selected Shell North America as the preferred bidder to build, construct and operate a new power plant for New Providence, it left a three-year gap until this comes on stream.

Mr Myers, meanwhile, argued yesterday that the cash-strapped Public Treasury is a further obstacle to the Government’s ability to immediately tackle the present generation shortfall.

“The big overriding issue is they’ve [successive governments] spent us into a hole that’s very difficult to get out of,” he charged. “If we didn’t have a debt-to-GDP ratio of 60 percent-plus the Government might have some headroom, but they’ve spent us into a hole so there’s no catastrophe funding.”

Mr Myers, voicing concern over PLP chairman, Fred Mitchell’s, recent refusal to commit the party to upholding the principles of fiscal responsibility, added: “That’s the danger. You can be irresponsible and kick the can down the road, but you can only kick the can down the road so much until the IMF, IDB and World Bank come in and say you must do these things.

“Your fiscal mechanisms have completely failed, investors don’t have any confidence in your country, and you’re up the creek without a paddle. We’ve got to be disciplined and stick to the plan. There’s going to be pain and suffering. These [BPL] are the kind of incidents that create pain and suffering. The money’s not there to fix it. We’ve got to hold the course.”

Otherwise another “crisis” is inevitable, Mr Myers warned, as he urged BPL and the Government to ensure daily load shedding and outages are a thing of the past before the winter 2019-2020 tourism season.

“We don’t want to see it go into December; that would be a real disaster,” he told Tribune Business. “It’s peak season, so we’ve got to get it done before November. Kick whatever ass is needed before peak season - Thanksgiving, Christmas, New Year. We can’t have this crap going on in peak season. That’s when everyone makes their money.

“They need to get the right planning and management in there [BPL] to make sure we don’t come back here ever again. They have to have money for parts, go to pre-paid metering and collect their receivables. You can’t run a business where you’re owed something like $100m and can’t collect it. We’ve just got to get through it.”

Mr Myers said the importance of reliable, lower cost energy supply to the Bahamian economy’s competitiveness had been brought home to previous governments by studies such as the Oxford Economics report for the Chamber of Commerce, which highlighted the hundreds of millions of savings if power prices were reduced to around 21 cents per kilowatt hour.

He argued that this made it all the more baffling why reforms had not been implemented sooner, and added: “It’s simple straight stupidity not to deal with it as as early as we can. It’s just not been a high enough priority.

“In typical Bahamian fashion we deal with it in a crisis. It’s sad, but unfortunate. Stupid is what stupid does.”

Comments

DDK 1 year, 2 months ago

Gloom, despair and agony on we....... deep down depression and excessive misery........ stupidity after stupidity.......

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Bahamianbychoice 1 year, 2 months ago

I agree with Mr. Myers. My understanding was Shell's previous MOU was to stabilize the power, significantly lower costs while setting BPL on track to be profitable including paying down the legacy debt. Unfortunately, the back door deals have sabotaged what was meant for the benefit of the country by the previous board chaired by Mrs. Osborne. With proper due diligence the engines could have made it until Shell came online. As something this significant including I would assume cleanup and site planning cannot happen overnight.

The damage to this country is stunning. We have not seen the ramifications of the irresponsibility. The lack of knowledge of the management at BPL and the resulting fires here and in the out islands, purchase of engines not meant for this country...its all just shocking....as if intentional?

Bahamians should watch very closely who purchases the RRB's..now that BPL assets are in such bad shape it's a fire sale. Though once the LNG is up and running will become quite lucrative but sadly the Bahamian people will not have ownership...Bahamians will only be paying high interest on these bonds. Would be interesting as well to know who exactly the Beneficial Owners are in the solar deal in Ragged Island...

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birdiestrachan 1 year, 2 months ago

PLP and FNM to blame. more so the FNM they have been in power for 15 of the last 25 years.

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proudloudandfnm 1 year, 2 months ago

Birdie, PLP have been in power 35 of the last 50 years....

um.... thank you....

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ThisIsOurs 1 year, 2 months ago

"Emphasising that blame for BPL’s predicament cannot be laid solely on BPL’s present Board or management, or the Minnis administration"

Oh yes it can.

The fire happened on May 28th. The daily load shedding started in June. Who caused the fire? Who appointed them? Who fired an entire board to allow that person to make decisions unencumbered? Who heading the country did nothing to determine why an entire board had to be fired? Which board has done nothing to remove said individual or bring them to account and gives them room to make more potentially devastating decisions?

BEC had problems before...But nothing absolutely nothing like the near collapse state it's in now. And the absolute refusal to declare it what it is, a crisis and a state of emergency. Businesses have been operating since June like we are in post hurricane mode.

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Porcupine 1 year, 2 months ago

BPL is merely the tip of the iceberg. The thinking that got us to this point with BPL is the exact same mentality that has ruled over every major decision in this country for decades, We have simply gotten used to it. There is not a leader in sight in this country that isn't shackled by this thinking. Not one. What about when NIB runs out of money? What about when the complete neglect of our water systems starts to fail? What about in a few short years when sea level begins its acceleration, drowning much of The Bahamas? Please don't say this isn't happening. We seem to have faith in a God that gave us free will. But, with that free will comes responsibility. Responsibility is something in short supply here. We can't even own up to, and take care of our own children, let alone the good of the country. I am in agreement with Myers on most of what he says, however, these shortcomings are merely symptoms showing themselves in financial metrics. And, while they couldn't be more clear, they pale in comparison to the true damage being done to our humanity, and social ethic. Those of us who point these problems out, with an urgency towards fixing them, are most always derided as doom and gloomers, always negative. A successful manager is allowed to hire and fire according to the needs of the organization. When every hire in this country is based on political party affiliation of simply nationality, we see where this leads. The lack of emphasis on education over the last few decades has done wonders to allow us to get to this point, and to allow this nation to continue, over and over, to elect the jackasses who are in political and economic control of this once great country. The chickens are coming home to roost, and BPL is only the beginning of the pain this country will soon be experiencing. Say what you will about my perspective. Look around. Who are your leaders? PLP or FNM? Does it matter? Hardly.

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DDK 1 year, 2 months ago

Right again and most eloquently put, Prickly One!.

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proudloudandfnm 1 year, 2 months ago

If you live in Nassau and have a generator large enough to run your entire home/business you'd be a fool to stay on BPL's grid. Cut yourself off from BPL entirely and run your gennie til (or if) BPL gets it act together....

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Well_mudda_take_sic 1 year, 2 months ago

Emergency use residential and commercial generators are not meant to be run 24/7/365 from an engineering/reliability standpoint, not to mention all of the downside from an economics point of view.

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themessenger 1 year, 2 months ago

You are incorrect Sir, if your generator is rated Prime, not Standby, you can indeed use it as your primary power source with short periods off line for maintenance purposes. Unfortunately with the cost of diesel you can't run your generator indefinitely for less than what you pay BPL.

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