By YOURI KEMP
Tribune Business Reporter
A union leader has voiced fears that Bahamas Power & Light (BPL) will be unable to meet repayments on its $580m bond as its largest, wealthiest customers race to adopt renewable energy.
Paul Maynard, pictured, the Bahamas Electrical Workers Union’s (BEWU) president, told a Democratic National Alliance (DNA) Town Hall Meeting on energy reform that BPL would have insufficient customers and revenue streams to repay investors if its best-paying, major clients reduced their consumption through the increasing use of solar and other technologies.
He said: “What we’re not considering is the fact that Lyford Cay is now ten to 15 percent solar. Old Fort Bay is 20 to 25 percent solar, Albany is ten to 15 percent solar, Ocean Club Estates is now five to ten percent solar, and they are the big paying customers. They are BPL’s base customers. Paradise Island, Atlantis and Baha Mar are now in talks to bring in LNG in order to run their borders and stuff.”
“So you don’t have to be a mathematician to see that a lot of the money that is supposed to go to pay this rate reduction bond (RRB) is now going to be missing. So at this juncture you have to think to yourself: Why would I pay?
“The average light bill is at least $600 in the summer. They say it’s $180 but that’s foolishness. The average light bill is $600 in the summer. Why would I continue to pay $600 and I can go to the bank and I can get $20,000 to $30,000 and totally solarise my house and come off of BPL’s grid anyway? And that is what’s going to start happening.”
The legislation supporting BPL’s planned $580m bond refinancing suggested that renewable energy users would still have to pay monthly fees to service this debt like all other consumers, which would go some way to addressing Mr Maynard’s concerns.
The union leader, meanwhile, called on the Government to sell a 45 to 48 percent equity stake in BPL to Bahamian institutional and retail investors, warning it against following the same structure as the Bahamas Telecommunications Company (BTC) privatisation.
He added: “The Government must believe in Bahamians. We went down this road years ago with BTC. Once we go down this road and Shell takes over, and they take over generation and now we’re buying generation from them, and now we have this $580m rate reduction bond that we have to meet every month, I believe that we’re going to be in big trouble.”
Dr Donovan Moxey, BPL’s chairman, told the recent Bahamas Business Outlook that Bahamians will be given an opportunity to own an as-yet-undetermined piece of the new Shell majority controlled power plant via an initial public offering (IPO). He added that institutional investors will also be allowed to buy into the liquefied natural gas (LNG) terminal that will supply fuel to the plant.
Meanwhile, Judson Wilmott, an engineer and environmental consultant, told the meeting that the availability of generation plant at Clifton Pier had ranged from 40 percent to 65 percent over the past 10 years compared to an industry standard of 90-95 percent.
He added: “We need fuel flexible equipment. The equipment that we have in this country today in the Clifton Pier area, they can burn Bunker C and they can burn diesel, number 2 diesel oil, which is 25 percent to 30 percent more expensive than number 6 diesel oil, which is Bunker C.
“Let me tell you something else about Bunker C. If you get 100 gallons of Bunker C and you bring it in to generate electricity, out of every 100 gallons of Bunker C you have to throw away 8 to 15 percent because it’s not usable to produce electricity.
“Then you have to heat it up and add an auxiliary piece of equipment that adds to the cost. So when you add up all of the numbers, it looks cheap, but when you have all of these added costs to this it’s not as cheap as we say it is. Then you have the number 2 diesel oil, which is very expensive. It’s a killer. That’s what we get in the case of Clifton Pier.”