By NEIL HARTNELL
Tribune Business Editor
Bahamas Power & Light (BPL) is “making its crisis our crisis” by placing the burden of its $650m refinancing on the backs of consumers, a governance reformer has blasted.
Robert Myers, pictured, the Organisation for Responsible Governance’s (ORG) principal, told Tribune Business that Bahamian households and businesses are about to pay for decades of mismanagement and politically-motivated meddling at the state-owned energy utility through the extra debt servicing charge that will be added to their light bills.
Describing the upcoming National Utility Investment Bond issue as an example of “crisis management”, Mr Myers said BPL’s present woes again spoke to the “lack of accountability in the public sector” with nobody being held responsible for poor decisions, wastage and corruption that is costing The Bahamas millions of dollars per annum.
“At the very height of it, its crisis management,” the ORG chief said of the proposed mammoth BPL refinancing. “That’s the ultimate answer. It’s crisis management. Why would I be happy with crisis management decisions that’s the result of it?
“We’re going to pay an increase because they couldn’t run the thing [BPL] properly in the past because both political parties meddled in the public sector, and the SOEs (state-owned enterprises) are the other half of it. Politics went into what rates you are paying, who or who not will be shut off, who will be determined to be delinquent.
“You start down that road and there’s hell at the end of it. That’s the reality. This is crisis management. Who’s happy about it? You’re putting your crisis on to the consumer. You’re making your crisis our crisis. The crisis continues,” Mr Myers added.
“The crisis continues. The more you jack up taxes and fees, the more you slow down your growth, the less competitive we are regionally and internationally, and the more people go elsewhere. If it’s not corrected it’s going to end badly.
“That’s why I keep harping on about the need for a State Sectors Act and reform. Not doing it will be the death of us. You can only get away with that irresponsible behaviour and lack of accountability for so long. We’re nearing the end of our rope. Don’t take my word for it. Ask the Inter-American Development Bank (IDB) and International Monetary Fund (IMF) how this ends.”
Bahamian consumers and businesses have reacted negatively to the fact that they will be asked to finance BPL’s $650m restructuring through paying the interest on this debt via a new charge added to their energy bills.
Many have automatically assumed this will result in a further increase to already sky-high electricity costs that are undermining consumer spending and business profitability, while also impairing wider Bahamian economic competitiveness.
Desmond Bannister, minister of works, told Tribune Business he will seek to “allay these fears” when he introduces the Bill to give legislative effect to the National Utility Investment Bond in the House of Assembly on Wednesday.
The minister confirmed that the addition of the bond’s debt servicing charge should not result in any total increase to consumers’ bills because it will be offset by lower fuel costs and other efficiency gains at BPL.
The theory, at least, is that the new 132 Mega Watts (MW) of generation supplied by Wartsila, which will ultimately be incorporated in Shell’s new power plant, will be cheaper to run because they are more efficient and burn less fuel, thereby lowering BPL’s fuel costs which account for between 50-60 percent of consumer bills.
The Shell power plant’s introduction in late 2021/early 2022 should further lower consumer bills by adding liquefied natural gas (LNG) to the fuel mix. “I know many businesses are frightened, and I’m going to allay those fears as best I can,” Mr Bannister told Tribune Business.
He slammed the Progressive Liberal Party (PLP) as “quite hypocritical” for its criticisms of the planned BPL refinancing on the basis that it had planned to do exactly the same thing, having passed the original legislation to facilitate the bond issue in 2015 as part of a package of comprehensive energy sector reforms that have yet to be fully implemented.
“BPL has been poorly managed for many, many years,” Mr Bannister added, “and we have a positive opportunity to do good for the Bahamian people, and we’re going to do it. The Shell plant coming on afresh will make a huge difference. It will have high efficiency engines and lower fuel prices.”
Mr Myers, though, expressed scepticism as to whether the Government’s optimism that the BPL bond servicing costs will not translate into higher bills becomes reality. “I’ve heard the Government say a lot of things that haven’t transpired so I don’t buy in too much these days,” he told Tribune Business.
“I’m not holding my breath. I’d be very happy to be surprised.... We’re all about to pay for all the mismanagement and all the irresponsible political meddling; for sure we are. It happened with VAT. The increase in VAT has not resulted in better services. The real slap in the face is we’re not getting better services for paying higher taxes. It’s getting worse.”
He confirmed that the debt servicing fee will act as a ‘first charge’ on consumer bills, meaning that if a customer pays just $400 on a $600 bill, and the fee is $300, the full $300 will ho