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BEC's 'serious financial crisis'

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Published On:Friday, May 21, 2010

By CHESTER ROBARDS

Business Reporter

crobards@tribunemedia.net

RECOMMENDATIONS to turnaround the loss-making Bahamas Electricity Corporation (BEC) could be completed by September, as the Government prepares to implement an average 5 per cent hike in its base tariff - a move that comes as its payables dwarf receivables by some $66 million.

Phenton Neymour, minister of state for the environment, said independent studies of BEC, penned by Fichtner and Emera, will finally give the Government some direction. He said yesterday, though, that a 5 per cent rate hike for consumers will have to come on stream in order to help turn around BEC's losses.

Mr Neymour added, though, that the rate increase will not solve BEC's problems by itself, and the Government will have to assist in someway.

"There will have to be a component addressed by the customer and a component by the Government to assist BEC with regard to services like street lighting, and there will be the requirement for BEC to be more efficient in order for it to return to profitability," said Mr Neymour.

"BEC has fast become a very challenged entity, is facing a serious financial crisis and is in dire straits."

Mr Neymour said the company's receivables for the month of April 2010 stood at $113 million, while its payables were $179 million.

He said late last year the Government was forced to pay Shell/Focol a one-time chieque of $30 million to simply keep oil coming into BEC for power generation. At the same time, the Government was forced to seek refinancing for the Corporation to the tune of $211 million.

Mr Neymour said this underscores the urgency in increasing tariffs to underwrite BEC's growing expenses.

Mr Neymour claimed that BEC's woes began when the former government reduced its base tariff. He said that when the tariff was decreased in 20o3, the utility began to lose $20 million per year.

And while the corporation has struggled to be profitable under the weight of Family Island power generation, which is financed by customers in New Providence, the Government is forced to build new plants on those islands.

According to Mr Neymour, the problem with Family Island generation is that the Government has a universal tariff that keeps rates consistent across the islands, though the cost of generation on islands outside of New Providence is substantially higher.

When Emera's study of BEC is complete, the Government will essentially have an action plan focused on streamlining the utility and fixing operational and financial challenges.

Reader Comments - 9 Total

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Posted By: Yes Sir On: 5/23/2010

Title: time to collect from the other ministries

I am sure there are huge oustanding bills owed to BEC from all the other Ministries and political cronies. If they were running it properly they would be making a big profit just like Cable Bahamas did last month ($22mil.) When I see one person digging a ditch and 10 others watching him and getting paid overtime for it. Bahamas Scare is the same, too many employees during one persons job. They only know how to waste our money.

Posted By: Erasmus Folly On: 5/22/2010

Title: Nothing will change unless...

Cut pay to BEC workers... stop messing around. Businesses are already hurting and this government keeps raising the cost of doing business and the cost of living. Every 5% is another potential employee let go. These politicians are STUPID! The whole lot of them. They need to help Bahamian businesses, not hurt them, if people are going to be able to find jobs down the road. Companies don't hire in an environment where government seems more concerned with its bottom line than with the health of its country's economies. Our government DOES NOT CREATE WEALTH FOR ANYONE. It simply takes wealth from others and makes it harder for others to create wealth. If government reduced its 'foot print' by firing at least 30% of the completely unproductive bureaucrats, then the private sector, in a lower tax environment, would again start to flourish. Investment would increase, companies would hire and we would be back on solid ground. Lawyers are horrible businessman! Bahamians must demand lower customs duties NOW if they want to see this country turn around! STOP SHOPPING IN MIAMI! You are literally killing the life blood of this economy! We are a nation of idiots, run by idiots it seems. We shoot ourselves in the foot constantly and then go, oh, we got it bad. We make it bad for ourselves by tolerating this stupidity we call government - both PLP and FNM. Visionless, rudderless... embarrassing!

Posted By: SMT On: 5/22/2010

Title: YAWN!

YADDA YADDA YADDA

Posted By: BIM On: 5/21/2010

Title: B.E.C.

I'm told that B.E.C. buys its oil at cents cost and by the time the % is added from the companies here itsabout $3.00

Posted By: Bystander On: 5/21/2010

Title: BEC

Just looked up BEC on the web and found the most recent annual statement of 2003! Can't find wages and so forth but did see where BEC contributes 13% to 19% of basic salary to their pension plan. 60% of employees opt for early retirement. I wonder what the figures were between 2003 a nd today.

Posted By: Bystander On: 5/21/2010

Title: Overtime and so forth

At the risk of showing my ignorance is there anywhere in the public records that shows a BEC financial statement history? I would love to see the % of salary and wages, overtime, vacation pay, sick pay, company paid pension dues etc etc as it compares to gross income and as a % of total expenses as well. I hear rumors of 5 week vacations, 6 week paid sick leave along with non-contributory pension of 5%. Is this factual and what does this equate to in $$$?

Posted By: Sam Duncombe On: 5/21/2010

Title: Time for renewable energy

Maybe they should invest in renewables and they we won't be paying the BEC and oil companies millions of dollars every year - why is it that we can partner with Consolidated for our water but we can't partner with green companies to give us energy?

Posted By: Bay Street On: 5/21/2010

Title: Reality

You will hardly ever see the word government and the words profitable/efficiency used int he same sentence.

Posted By: Karl On: 5/21/2010

Title: ??????

5%?? They have a MONOPOLY (NO COMPETITION) how can you still "lose" when theres no one else competing, maybe they should take a 5% pay-cut until performance improves.

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