0

Bpl Cash Crisis As Payments Collapse

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamas Power & Light (BPL) has suffered a "frightening" multi-million dollar March revenue drop that threatens the energy provider's very existence if it continues, a Cabinet minister has revealed.

Desmond Bannister, minister of works, told Tribune Business that customer payments on their March electricity bills were "lower than they have ever been for the past five years" as the tourism shutdown, coupled with the COVID-19 lockdown, leaves thousands of businesses and households struggling to meet their obligations.

Declining to give either a dollar or percentage figure for the decline, Mr Bannister said the Government was now faced with "making some policy decisions" with regard to BPL although he declined to detail what those options might be.

He confirmed that BPL's bond refinancing, lasts pegged at $580m and viewed as critical to finally placing the cash-strapped energy monopoly on a sustainable financial and operational footing, was "unlikely to happen any time soon" due to the COVID-19 turbulence in the international capital markets.

The minister, who has Cabinet responsibility for BPL, also acknowledged that its financial state meant the utility faces "a real challenge" to continue its suspension of disconnections beyond March 31 even though many of those impacted - businesses and households - will likely be unable to pay because of almost 100 percent income loss due a combination of the shut down, unemployment and reduced hours.

And he affirmed that BPL's near-bankrupt state also represented a potential obstacle to it taking advantage of the drop in global oil prices below $30 per barrel, as it needed "to be able to pay if it wants to play".

Mr Bannister agreed that the global oil price drop could "ease a lot of the pain" for Bahamians in terms of lower energy and transportation costs, but indicated that BPL was still some way off being able to exploit hedging and other techniques that could give consumers certainty when it comes to the fuel costs that form 50-60 percent of their monthly bills.

"That's a challenge. It's a real challenge. The Government is going to have to look at it from a policy perspective," Mr Bannister responded, when asked by Tribune Business if BPL will be able to maintain its disconnection suspension beyond tomorrow.

"BPL's collections this month are down; lower than it's been for any of the past five years for March. Given the precarious state of the corporation, it cannot continue to operate, cannot continue to exist, in that circumstance.

"The Government is going to have to take some policy decisions with respect to BPL. The BPL Board will have to make some decisions, and the Government is going to have to guide them and see how it can assist from a policy point of view."

Confirming that he had been presented with BPL's March 2020 revenue and collection figures on Friday, Mr Bannister declined to detail precisely how much they were off compared to prior years. "I can tell you millions. I won't tell you the figure. It's by millions," he added. "It would not be fair to BPL to give a figure, but it's down by millions and that's frightening.

"The corporation still has to exist, employees have to be paid, and that's going to be a real challenge if we continue the way we are. It's very difficult, and what happened this month cannot continue."

The seemingly-sharp drop in BPL's revenues is not unexpected given that the Bahamian economy has largely ground to a halt, due to a combination of the tourism industry shutdown and resulting mass lay-offs together with the nationwide COVID-19 lockdown that has closed many other sectors.

This will only have served to exacerbate the state-owned energy monopoly's monthly accounts receivables, which measure the debts owed to it by customers, as these traditionally stand at between $90m to $100m.

Mr Bannister, though, said BPL's problems were being made worse by the failure of customers who can pay not doing so. "If we are in a circumstance where only people unable to pay don't pay, the losses would not be so great," he added.

"BPL has challenges with consumers able to pay but who do not pay. That creates a challenge for the rest of us. It's always been a challenge to ensure some consumers pay their bills, and pay their fair share - that those who can pay, pay their fair share. When we go to smart metering that will change, but with the way the bond market is that's going to be a huge challenge."

Some $30m of the projected $580m proceeds from BPL's bond refinancing has been earmarked for the roll-out of smart meters, which will enable the utility to instantly disconnect bill duckers' services rather than having to visit their homes.

However, with the COVID-19 turmoil sending share prices tumbling across the world, BPL's plans have had to be placed on hold for the time being. "I don't see it happening any time soon," Mr Bannister said of the bond refinancing, "as the markets are now going to be a challenge.

"We have no idea when it will happen bearing in mind that these challenges are unforeseen and unprecedented. If you had told me early last week that I'd wake up and Boris Johnson [the UK prime minister] would have caught coronavirus, I would not have believed you. Everybody, everything... we are all in the unknown and we don't know where it's going to take us.

Reduced global economic activity, and the oil supply war between Russia and Saudi Arabia, has provided one small bright spot for The Bahamas amid the economic gloom with prices at some gas stations in The Bahamas now below $4 per gallon.

The main global oil indices, as Tribune Business went to press last night, showed per barrel prices at between $25 to $27, but Mr Bannister said BPL's parlous financial condition might leave it hard-pressed to take advantage of a key opportunity to reduce energy costs for all Bahamians.

"The oil prices in the market today could be a good opportunity for The Bahamas," the minister conceded to Tribune Business. "It could ease a lot of pain, but we have to be able to pay if we want to play.

"BPL wants to take advantage of the market, but that in itself is a challenge. BPL has to get involved in hedging, and has to get the money to be able to do that. BPL is looking to see if it is at all possible to get involved in hedging practices, and if they can do so it will change everything for them.

"They could put a lid on all fuel costs for the next three years, and protect against any increases in prices for five to six years, maybe even a decade."

Still, despite the likely financial crisis created by COVID-19, Mr Bannister pledged that BPL will provide "exceptional service" this summer due to the recently-installed Wartsila and General Electric (GE) engines that were purchased to end load shedding and blackouts on the generation side.

"We're going to have the power mix to do what we need to do for the Bahamian people," he added. "This is a huge priority. We know what we've been through with energy for the last two decades, and just as we anticipated making a difference for the country we have to face the possibility of not having the funding to do what we have to do.

"Nobody would have anticipated what we're facing today. It's so amazing."

Comments

observer2 2 months, 1 week ago

A good example of visionless and poor leadership.

BPL has an accounts receivable problem but (1) the government won’t tell us exactly how much (2) they have not decided what they will do about the problem (3) we delayed the international rate bond issuance so much that it can’t be done anymore (4) even ppl that can pay their bills are not because there is a “do not disconnect list” for the politician (5) we have done zero solar which is virtually free to protect the lucrative import of global warming fossil fuels for the big shots (6) oil has dropped from $70 to $20 but we have no money to buy future supplies (7) we have done zero grid upgrades and hurricane season starts in 2 months.

3

Well_mudda_take_sic 2 months, 1 week ago

Minnis should never have appointed Desmond Bannister minister of works or given him any portfolio as a cabinet minister for that matter. And the people who voted for Bannister in May 2017 should be most ashamed of themselves for having subjected our nation (all of us) to his many serious shortcomings.

1

Millennial242 2 months, 1 week ago

The quickest way to enhance cash flow ----- make it as easy as possible for customers to pay you.

BPL should quickly adjust their policies to make sure it meets the current situation of their customers. Start making calls and put out mass communication on how to make payments during the COVID-19 dilemma....don't just wait until payments stop coming in.

Currently, there is an online portal that businesses can use to make payments, but it only works efficiently under the best of circumstances.

I know of multiple businesses that struggle to retrieve their bills timely and have challenges using the online portal because it was set up under an email address that is no longer available (i.e. a previous accounts clerk that no longer works for the company). Or, businesses that have multiple meters can't get their bills all at once or in the same manner because of some bureaucracy.

The entity needs to revisit their online payment process with a particular focus for the ease of businesses. In appearance, it seems to be well established, but in practice, it is not.

1

winstonbarry@coralwave.com 2 months, 1 week ago

On point Millennial242! Drives me crazy every month......

0

DWW 2 months, 1 week ago

For a millennial you seem to not be familiar with online banking?

0

Millennial242 2 months, 1 week ago

I am. It works seamlessly for 'some' of the banks, but not all. Not all businesses/customers bank with RBC or SBL. Again, lack of consistency. My feedback here is coming straight from dealing with multiple platforms.

0

Kofi 2 months, 1 week ago

I agree.. being able to pay online is very difficult. One should only need the account number to be able to pay, but they want you to call some jackazz who never answers, just to get started on this process. Meanwhile , one can do ecommerce around th World in as few as 2 clicks!!

2

bahamianson 2 months, 1 week ago

Yeah, because this is the 10th pandemic that we have seen in recent history, right? All of you , take a chill pill. It sounds like all of you have a great solution. If you do , please share with the rest of the world whom are dealing with this day by day. at this point, there is no wrong decision. we must tweek and adjust to each day.

0

Well_mudda_take_sic 2 months, 1 week ago

What part of dumping Bannister as an important part of any solution going forward did you not understand?

0

proudloudandfnm 2 months, 1 week ago

What does Bannister have to do with anything?..

Is this sickman? You still have not grown a brain little boy?

0

DWW 2 months, 1 week ago

simple everyone wears a mask outside or in public locations. BAM problem solved.

0

ThisIsOurs 2 months, 1 week ago

there can be lots of posdible wrong decisions just look at the US and Italy.

0

DKNOWLES 2 months, 1 week ago

The online system is not working. Many persons have been trying to access online accounts to no avail.The system is always down. Frustrated as hell. The telephones are not being answered even if persons are trying to seek help. Keep the inefficiencies up and the cooperation will see worst days.

0

DWW 2 months, 1 week ago

Here is the beginning of the end. When BPL can't buy fuel in 30 days, what gov't gonna do? borrow more money from the IDB and put the Bahamas into junkbond status. Britian just got downgraded to AA-. it will happen here and then we will be hoe-ing water and totting wood just like our southern neighbors.

2

concerned799 2 months, 1 week ago

Which is why this can not happen. BPL needs to be sold immediately to a private owner, so its off government books at least for going forward.

0

jrcw11136 2 months, 1 week ago

I am not surprised by this. On reading the article I checked and had not received my March bill. When trying to pay it, I discovered that BPL had changed the website and it is now impossible to pay the bill. Typical example of when it ain't broke, don't fix it. Previously it worked seamlessly and I never had a problem. Now goodness knows when it will be possible to pay

1

genetk44 2 months ago

jrcw11136.....Since March is not yet over you won't be able to access or receive your March bill until after April 1. I've been using the online system for years and in general it works well. I agree the changes they made recently are a pain in the butt and the new format of the actual online bill is not nearly as good as the old format, it doesn't seem to have qite as much details as before, it still seems to work ok.

0

Dawes 2 months, 1 week ago

It doesn't help that this was also the month where BPL did an upgrade on everyones online accounts and you had to reset your password to pay. It took me a long time of calling to get mine reset, to the point i was going to leave it as i know they are not allowed to disconnect. They need to get the basics straight and there rest will be easier to deal with.

0

avidreader 2 months, 1 week ago

I find myself hoping that this situation does not result in BPL ceasing work in Marsh Harbour in residential areas where they have erected new poles but have not yet completed installing insulators, lines and transformers where required. Things are bad enough without a further delay and uncertainty about a public power supply that can replace reliance upon private generators.

0

wellingtonpoitier 2 months, 1 week ago

Lets keep our borders closed permanently. Bahamas is for Bahamians - Kick out all non-Bahamians. Stop using the USD as our pegged currency - in fact, stop using money all together. Create a centralized utopia like Cuba has. Dr. Minnis can ration out food and medicine and electricity to everyone and we can live a simple lifestyle.

0

OMG 2 months ago

What are you smojing ?

0

observer2 2 months, 1 week ago

Having a credit bureau and “FICO” score for each Bahamian adult would go along to encourage Bahamians to pay their BEC bill.

With such credit monitoring systems if you don’t pay your BEC bill your score goes down so when you go to the bank for credit they will view you as a higher risk which would restrict your ability to trade.

BEC asks for a deposit which is inadequate because by the time they turn off your lights the deposit has long been exhaustived.

In developed countries deposits must be returned to customers after one year.

0

concerned799 2 months, 1 week ago

FICO Scores are good and bad, many horror stories abound in the US. Be careful what you wish for!

0

concerned799 2 months, 1 week ago

BPL needs to be sold ASAP so its off of the public books.

This process should occured years ago, we are so behind in terms of where we should be due to money going into things related to BPL that were totally non productive. Poor efficancy, super high rates, policital pressure to not collect all bills owed, the list goes on.

Rates will come down and it'll be on someone else to oversee BPL operations, the public voter has done a horrible job of it over the years to be totally honest. If people can not see that they must be blind.

0

rowdie 2 months ago

I have been trying to pay my bill but unable to do so on-line. Why would BPL do this in the midst of a crisis?? The programmers at BPL must the same ones at Cable Bahamas who programmed the new TV Guide. Fire the whole lot of them!! I can pay but unable because of their new system that is not working. Why was this issue not revealed in this article?? Poor reporting!!

0

Socrates 2 months ago

It seems all but certain that we will be at the door of the IMF within the next 12 months. BPL cant disappear, so we need to find a way to keep that going.. same thing for WSC. On the other hand, this may be the time to sell ir close bahamasair.. its a luxury a poor financially challenged country will no longer be able to support. May have to let ZNS collapse and slash those gluttonous pensions being paid to former politicians and civil servants and quasi-government corporations. The day of reckoning has arrived known as COVID-19.

0

Bahamianbychoice 2 months ago

Maybe if Bannister had allowed Shell NA To proceed as planned the business would not be cashed strapped and could have cut the consumers some slack. The country would be in a completely different state when it comes to power security. The Board decided otherwise...so now figure it out. Don’t frighten and use scare tactics when the country is in crisis. Bannister chose to get ride of the previous board and stood by while many competent staff were forced out. He chose to continue with the likes of Heastie...Rollins and Moxey and board....so now figure it out! You all so smart figure out how to give relief to the owners of the company...the Bahamian people!! No excuses!!

0

Sign in to comment