By NEIL HARTNELL
Tribune Business Editor
Bahamas Power & Light’s (BPL) status as “a broke company” means it will be challenged to suspend customer disconnections when its board meets today to discuss the issue.
Desmond Bannister, minister of works, confirmed to Tribune Business that the government-appointed board will consider whether it can follow in the Water & Sewerage Corporation’s foot-steps by suspending all delinquent customer disconnections to ease the economic fall-out from the coronavirus pandemic.
Yet the minister, who has responsibility for the state-owned energy monopoly, said the $100m-plus it is owed on a monthly basis by delinquent customers means it is “challenged” to provide any relief in the face of the economic downturn set to hit The Bahamas.
“BPL is going to consider what they can do in the circumstances,” Mr Bannister said of today’s Board meeting. “One of the challenges is that BPL is a broke company. It carries receivables of $100m a month.
“It’s a little different from the Water & Sewerage Corporation. Even though the Water & Sewerage Corporation operates at a loss, BPL is in a vastly different situation. They’re [the Board] going to look and see what is the best they can do. The board will meet tomorrow [today] and make some considerations as to how they can balance the challenges. They’re going to consider it [suspending disconnections’.”
Adrian Gibson, the Water & Sewerage Corporation’s executive chairman, announced via social media late last week that all planned disconnections of its delinquent customers cease with immediate effect.
He wrote: “Given the impact of the coronavirus on the world, and the importance of potable water in combating this disease, it is of the utmost importance that residents have access to fresh water. Our people should not, and ought not, to be without water.
“As such, executive chairman Adrian Gibson has directed the immediate cessation of any and all intended or proposed disconnection exercises. No Water & Sewerage Corporation staff are authorised to disconnect any home/building at this time. All disconnections are halted until further notice.”
The Water & Sewerage Corporation’s disconnection suspension comes even though it is selling water below cost, while its main BISX-listed supplier yesterday revealed that the sums it owes its Bahamian subsidiary have again ballooned to $18.2m at end-February 2020.
Consolidated Water, in its form 10-K filing with the Securities & Exchange Commission (SEC), blamed Hurricane Dorian for the increase in accounts receivables owed to it. The end-February figure represented a partial decline on the $18.4m outstanding at year-end 2019, with more than three-quarters of that sum categorised as delinquent - meaning it is more than 90 days past due.
“Consolidated Water Bahamas’ accounts receivable balances due from the Water and Sewerage Corporation amounted to $18.4m as of December 31, 2019, and $17.6m as of December 31, 2018,” the company’s filing said.
“Approximately 76 percent of the December 31, 2019, accounts receivable balance was delinquent as of that date. The delay in collecting these accounts receivable has adversely impacted the liquidity of this subsidiary.”
Consolidated Water added: “Historically, Consolidated Water Bahamas has experienced delays in collecting its accounts receivable from the Water and Sewerage Corporation. When these delays occur, we hold discussions and meetings with representatives of the WSC and The Bahamas government, and as a result, payment schedules are developed for Water and Sewerage Corporation’s delinquent accounts receivable.
“All previous delinquent accounts receivable from the Water and Sewerage Corporation were eventually paid in full. Based upon this payment history,Consolidated Water Bahamas has never been required to provide an allowance for doubtful accounts for any of its accounts receivable, despite the periodic accumulation of significant delinquent balances.
“As of December 31, 2019, we have not provided an allowance for Consolidated Water Bahamas’ accounts receivable from the Water and Sewerage Corporation. We believe the delays we have experienced in collecting Consolidated Water Bahamas’ receivables [are] due to the impact of Hurricane Dorian, which devastated the northern Bahamas in September 2019.”
Meanwhile, Mr Bannister said yesterday: “As you and I know, the Water and Sewerage Corporation provides water at a loss. The tariff has needed an increase for years. All of us buy water at less than it costs to produce. It’s an unsustainable model, but the Government subsidies Water and Sewerage Corporation so that we can have water as it’s critical to our health.
“BPL is a broke company, and has hundreds of millions of dollars in debt. It has an independent Board, even though the Government is the major shareholder, that makes decisions and comes to the Government as needed. They’ll consider what’s in the best interests of the country and the Bahamian people and make some decisions which they will discuss with us.
“Whatever they can do within the parameters they have to work with, bearing in mind they are completely broke, they will do.”
Mr Bannister said BPL’s funding will still “be very tight” even once it completes its planned bond refinancing, which has been delayed to allow amendments to the legislation that supports it.
“It’s not going to be a situation where they have a whole lot of room,” he added, while assuring that “huge interest” remains in BPL’s refinancing despite the delays and the coronavirus outbreak.