By NEIL HARTNELL
Tribune Business Editor
BAHAMAS Power & Light (BPL) incurred a $63.876m total comprehensive loss for the year to end-June 2020 with auditors reaffirming that its parent’s solvency remained endangered by “negative cash flows” and constant losses.
The energy monopoly’s latest annual reports, tabled in the House of Assembly, revealed that BPL suffered a more than-$100m negative bottom swing into ‘the red’ as the COVID- 19 pandemic’s first months impacted the ability of customers to continue paying their bills.
Revenues from the sale of electricity dropped by 24.2 percent, falling by almost $134m year-over-year to $419.931m compared to $553.842m in 2019. The top-line drop off was greater than the $92m decline in BPL’s fuel costs, which were aided by a reduction in global oil prices as energy demand dropped due to COVID lockdowns and other associated restrictions.
However, KPMG, the external auditors, again warned that the perilous financial position of BPL’s immediate parent, the Bahamas Electricity Corporation (BEC), meant there remained a “material uncertainty” over whether the enterprise is still a solvent going concern.
“BEC has experienced negative cash flows, continued operational losses and its inability to meet all of its obligations when due,” BPL’s 2020 financial statements affirmed. “These events or conditions... indicate that a material uncertainty exists that may cast significant doubt on the parent’s ability to continue as a going concern.
“The company [BPL] settles certain obligations on behalf of the parent such as debt service, its proportional share of the pension related expenses and other operating expenses. The company [BPL] has experienced negative cash flows and an inability to meet some of its obligations when due.”
BPL’s 2020 financial statements highlighted just how important its proposed $535m rate reduction bond (RRB) refinancing was to paying off legacy debts at both the energy provider as well as at BEC, and enabling it to make investments to enhance generation capacity and lower fuel and operating costs.
That RRB issue has been shelved, or placed on hold, after rising global interest rates meant market conditions became increasingly unattractive. The financials, though, confirm that Bahamian taxpayers via the Government were continuing to finance the utility’s capital projects rather than its customers or BPL itself.
“Two such ventures occurred during the year ended June 30, 2020,” the financial statements said. BPL received some $30m from the Government during the 12 months to end-June 2020 to assist with restoration of its Abaco infrastructure post-Hurricane Dorian, with the then Minnis administration having pledged support worth up to $90m.
However, close to two-thirds of BPL’s Dorian losses were not covered by insurance. “The company is pursuing an insurance claim to recover some of the losses incurred by Hurricane Dorian,” the financial statements said. “The loss totals $34.749m, of which $25.877m related to transmission and distribution assets that are not covered by the insurance.
“As of June 30, 2020, the insurance claim has not yet been finalised due to the magnitude of the damage and travel restrictions with COVID-19. However, the company continues to work with the insurers to settle the claim. In December 2020, the company received a commitment for partial claim settlement in the amount of $10m of which $6.4m was received as of February 2021.”
BPL also received a further $27.34m from the Government (Bahamian taxpayers) that same financial year to fund the installation of a General Electric (GE) gas turbine at its Blue Hills power station, thus taking total taxpayer support for the year to more than $57m.