Moxey: Savings from new engines will offset cost of bond
Bahamas Power and Light (BPL) has renamed its rate reduction bond the National Utility Investment Bond and is stressing the idea that the cost savings it hopes to see from the use of heavy fuel oil in its new Wartsila engines – which are expected to come online on December 15 – will offset the introduction of the bond, BPL Chairman Dr. Donovan Moxey said yesterday.
Moxey, who was speaking to reporters at the Bahamas Institute of Chartered Accountants’ (BICA) Accountants Month seminar at the Melia Nassau Beach resort, noted that the bond rate is expected to remain constant throughout its maturity. Every BPL user will be required to pay a fee when the bond comes into effect next year.
“When you think about a traditional rate reduction bond, it basically is structured in a way that the rates get adjusted every 30 days… this is not that kind of bond,” Moxey said.
“That’s why we looked at renaming it the National Utility Investment Bond.
“In terms of the consumers’ total bill, we’re working hard to have zero or very little impact on that bill. Net cost to consumers… we’re working hard to have that be extremely low due to more efficient engines.”
He added that those calculations are still being carried out as the company is still going through the very first steps of securing the bond.
“We had the meetings with the rating agencies and now have to wait and see what they come back with and the market will set the rates,” Moxey said.
He said Bahamians will clearly see the bond cost reflected on their BPL bills.
“We’re going to be very transparent with respect to what this cost or this investment is to the Bahamian people.
“What we’re asking Bahamians to do is essentially pay what we consider to be a short-term cost for a long-term benefit, when we look at restructuring and rebuilding our grid.”
The National Utility Investment Bond will spread the cost of the refinancing of its $321 million legacy debt through the raising of $350 million, over 20 to 25 years, so the cost of the bond does “not significantly impact our customers”. He said energy rates will be fixed for the tenure of the bond.
“We are committed to fixing BPL once and for all,” Moxey said.
“Our intention is to keep whatever that rate is to be a flat rate throughout the bond… bring as much cost certainty to people’s electric bills.”
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