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Government ‘working backwards’ on BEC

The government has been accused of “working backwards” in a way that will “increase the cost to Bahamians” by seeking to secure contracts with companies to take over the Bahamas Electricity Corporation (BEC) before it updates the legal framework supporting the energy sector.

Former Minister of State for the Environment Phenton Neymour also suggested that the government is closing opportunities for Bahamians to participate in the energy sector by specifically seeking two companies to take over BEC’s generation and transmission and distribution functions.

He called for the government to reform BEC along the lines of the Water and Sewerage Corporation, which sees 90 percent of potable water produced by a variety of private international and Bahamian companies.

Neymour’s comments come just under a week after Prime Minister Perry Christie announced a “fundamental realignment” of the Bahamian energy sector, with the government issuing requests for proposal (RFPs) for two separate companies to take over BEC’s generation function, as well as its transmission and distribution functions.

The government intends to enter into a management contract with the company which will assume control of transmission, distribution, maintenance, billing and related responsibilities, and into either a management contract or a joint venture with the company that will provide generation services.

The intention is to reduce the cost of energy to consumers, both residential and commercial.

In a timeline seen by Guardian Business, the government has committed to bringing in all relevant bids by September 13, 2013; to have contracts signed with the selected companies by January or February of 2014, and to enact new laws and regulatory oversight relating to the sector in March 2014.

Neymour said that having certainty surrounding the regulatory environment ahead of the submission of bids should be critical to ensuring the government and the public get value for money.

“To put BEC out for proposals without amending the regulations first I think is working backwards and will be to the detriment of the Bahamian people.

“First of all, we recognize that there needs to be a Renewable Energy Act to move forward in terms of improving the environment for renewable energy, but also a complete revision of the existing electricity acts (for New Providence and the Family Islands) to modernize and improve the sector.

“It would be unfair for any company to submit proposals without a true understanding of what the three acts will look like. The Bahamian people will pay for the uncertainty that the PLP government is placing on these organizations that may submit tenders, who will factor in additional contingencies.”

Neymour added that the model proposed by the government will create barriers to feasible Bahamian participation in the energy sector.

“For the PLP to use just two companies I think is not to the benefit of Bahamians. There was a formula that the FNM put in place that would work adequately. It would be similar to the Water and Sewerage Corporation (WSC), where we have companies submitting proposals for specific geographic areas and they can provide franchises for generation for those specific areas.

“They are leaving the game for the big boys. There are outer islands where Bahamians can provide power to those respective islands or geographic areas, although they would have difficulty doing the same for areas like New Providence,” said Neymour.

Last week, Chairman of the Bahamas Chamber of Commerce and Employers Confederation Chester Cooper urged that the government should not seek to create a “private monopoly” in power generation and called for transparency and consultation.

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