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Legitimate answers on BPL deal in short supply

THE government is firmly set on its path to reform BPL – like it or lump it, it would seem.

There remain plenty of questions to ask – albeit there are few coherent answers coming from the Energy Minister.

Yesterday, JoBeth Coleby-Davis’ response to questions raised by Opposition leader Michael Pintard amounted to well, the FNM should have fixed it during the Minnis administration. She’s not wrong, but then the same can be said about the Christie administration, and so on, and so on down the years.

What she did not address was the substance of Mr Pintard’s claims – that essentially we are not getting anywhere near value for money in this deal.

Under the deal, BPL will put down its transmission and distribution (T&D) network in exchange for shares in a new company, a special purpose vehicle called Bahamas Grid Company.

That network will in return get The Bahamas a minority share in the company – 40 percent. The value, purportedly, of that network is about $30m in the government’s reckoning.

Meanwhile, management company Pike Corporation will raise $130m from private investors for the remaining shares. Now a quick look at the maths on that seems uneven to begin with – if $30m is 40 percent, then 60 percent is not $130m. Clarification there would be helpful for starters.

Meanwhile, Mr Pintard is calling this a bad deal, saying that the T&D assets are actually worth well above $100m.

One would think an audit of the assets would have been a valuable thing to do before putting them on the table – and if one was done, it should be tabled in the House of Assembly.

If one was not done, then how do we know the real value of the assets involved?

Mr Pintard says that this is a sweetheart deal for the private partner – being able to get $20m a year for an investment of only $30m while being able to go out and borrow $100m from other partners.

His suggestion was instead of transferring the assets, have a long-term service agreement where the company manages the assets and buys new equipment as needed.

In today’s Tribune Business, we further report that the country will be able to buy back the assets at the end of the management period – but at market value, whatever that might be at the time.

Muddying the waters in all of this is concern over whether the government truly cast its net wide enough to find the best partner for the deal, considering they ended up with a company operated by a man who is a business partner of a prominent PLP supporter.

The fact that BPL staff still seem to be largely left in the dark over what their future might bring does nothing to encourage confidence in transparency over the arrangement.

And the news, again in today’s Tribune Business, that companies are doing their own sums and realising they are going to end up paying more under the new arrangement shows what a gamble this will be for the government as it moves towards the latter part of its term in office and the next election, whenever that arrives.

If the deal pays off, and people see savings and reliable energy, then perhaps it will be cheers all round. If it doesn’t, and we’re still paying through the nose for a service that falters every summer, then people will wonder why we have parted with the family silverware, and what we really got in return.

Politics is of course a knockabout sport – but Mr Pintard has valid points to make about the BPL deal. That the best rebuttal there has been from the Energy Minister is that the opposition should have sorted it while they were in office shows that the answers are in short supply.

Comments

birdiestrachan 3 weeks, 5 days ago

We do remember the cruise port the shipping port and the post office who were those people ?.?. They spent about 40 Million or more dredging the cruise port before they handed it over. BTC what a mess it is, now the shares , the wife and the husband is in the midst of this one is it called conflict of interest or Sunday treats

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