Progressive Liberal Party (PLP) Leader Philip Brave Davis yesterday questioned the government’s need for a rate reduction bond to finance Bahamas Power and Light’s (BPL) new and unspecified power generation assets.
Minister of Public Works Desmond Bannister tabled the Rate Reduction Bond Bill in the House of Assembly earlier this month in an attempt to tackle the power company’s more than $300 million legacy debt. BPL said an additional $350 million will fund the installation of “modern power generation that is cleaner, more efficient, reliable and ultimately will lead to cheaper electricity costs”.
Davis, however, noted that the government has already signed deals with two companies for generation on New Providence.
“Shell Bahamas had entered into an arrangement [with BPL] to provide generation for BPL to the tune of some $200 plus million by way of what they call a public-private procurement exercise,” he said.
“While that was being refined, we then understand that another arrangement was entered into with Wartsila, one where BPL was going to purchase a $95 million generator.
“And the question is: How do you then marry the arrangement with Shell, who is going to outlay the $200 million to build a plant with your having to take $95 million of your own money and build another plant? So, what is going on here?”
He added, “So, now you have this other intervention now of the rate reduction bond. That’s why I thought they had forgotten about that exercise.
“I thought they had parked that because the route and path that they were on would not have been consistent with a path that would have led to trying to raise bonds in the market through the Rate Reduction Bond Bill.
“You entered into a contract with Shell. Now you entered into another contract with Wartsila. So what’s the need for the rate reduction bond?
“It may be necessary, yes, for your legacy debt, but why would you need it for generation?
“And, so, it is right to be inquisitive about this extra $350 million. What is this all about? What is this for?”
The rate reduction bond has been contentious since BPL Chairman Dr. Donovan Moxey warned electricity consumers should brace for additional charges to their bills in order to repay the bond.
Minister of Finance Peter Turnquest, however, has warned that if BPL does not increase light bills, the government would have to raise taxes to deal with the power company’s debt.