Focus | BPL’s promise should be very big news, but…
The lower cost of electricity and reliability are very big promises being made by Chief Executive Officer of Bahamas Power and Light (BPL) Whitney Heastie. If delivered, they would be one of the greatest achievements of the Minnis administration and progressive developments for BPL, having positive benefits for the entire economy for years to come. As exciting as this should be, the roll-out of the promises seems a bit cagey. CEO Heastie made the announcement of a $95 million contract with Wärtsilä, a Finnish Group, to build a tri-fuel 132-megawatt engine plant. Wärtsilä is a 180-year-old company headquartered in Helsinky, Finland. It manufactures power plants and marine propulsion systems as well as provides maintenance services for the same. It had $5.5 billion in gross revenue in 2017, $608 million in operating revenue and $424 million in net income. It had $6.3 billion in total assets and $2.7 billion in total equity. The point is that Wärtsilä is a huge company, capable of delivering what it promises.
But promises are the issue here. The plant that Wärtsilä is contracted to build will, no doubt, be built. Where it gets cagey is where Heastie got a bit vague with the details of the project itself. To sign a contract worth almost $100 million requires a capital development plan that lays out a comprehensive set of financial plans as well as operating forecasts. It should include the benefits that the project will deliver to the company, namely cost and reliability benefits. When asked about these, Heastie is reported to have been unwilling to discuss such details. This is odd, to say the least. BPL is a public company and the funds to be expended by it are ultimately coming from taxpayers. If investments are to be made on the public’s behalf, then letting the public know the benefits of those investments can only inspire confidence in the exercise. If consumers can see, for example, a 20 to 30 percent reduction in cost of electricity and a 40 to 50 percent increase in reliability, then they can walk away thinking that the substantial spending on the new plant offers meaningful benefits to them. If, however, it is only, say five to 10 percent reductions, they may have a different view of the handsome investment. Whatever the calculation, it is worth informing the public about it and this should be something the leadership of BPL — indeed the government — is willing to do.
One of the public policy shortcomings of the government of The Bahamas over the years — decades now — has been its tendency to be cagey with the public about what it is doing on its behalf. This tendency to treat the public on a “need-to-know basis” stifles confidence. Public trust is important to gaining the support needed to move forward with important policy reforms. It is not always possible to achieve, but earnest effort should be put forward to gain it. Given the significant benefits the BPL power plant installations promise, I suggest the BPL team comes back to the public and provides further details of these important projects it is pursuing. They seem like really good news. Among the details to provide should be the following:
(i) the total megawatts needed to comfortably supply the public with reliable electricity, especially at peak times;
(ii) the present megawatts supplied by BLP’s power generation;
(iii) the number of megawatts to be added to BPL’s generation, net of retiring facilities and new facilities;
(iv) the present cost per kilowatt of electricity generation, versus the cost when the plants are completed and brought online; and
(v) the cost savings for consumers and reliability improvements over time.
If this information is provided, it will be possible to make a better assessment of what the company seeks to do. If the gains promised are significant and delivered, the economy and people of The Bahamas will be great beneficiaries.
• Zhivargo Laing is a Bahamian economic consultant and former Cabinet minister who represented the Marco City constituency in the House of Assembly.