Editorials

Davis does not inspire confidence on BPL

Bahamas Power and Light (BPL), a wholly-owned subsidiary of the Bahamas Electricity Corporation (BEC), was established by the Electricity Act 2015 to “secure a safe, least cost, reliable and environmentally sustainable supply of electricity within The Bahamas; oversee and monitor the electricity supply system within The Bahamas; and to establish plans for the modernization and development of the electricity supply system in The Bahamas.”

Seven years later, it can be argued that Bahamas Power and Light has achieved none of those things.

What is certain is that we still have expensive, unreliable and an environmentally non-sustainable supply of electricity in The Bahamas.

The negligence, gamesmanship and partisan political shenanigans that have taken place at BPL are legendary, with successive administrations racking up a shameful list of failures and subsequent finger-pointing since 2015.

What has become clear is that, like the hotel business, the government of The Bahamas is not a capable operator in the energy sector.

It should stick to making laws and leave the regulating to entities like the Utilities Regulation and Competition Authority.

It was under the oversight of then-Deputy Prime Minister Philip Davis, who was also minister of works and utilities, that Bahamas Power and Light was formed.

Davis then handed over management of BPL to PowerSecure International, a reputable US company that was paid $2 million a year to manage the entity with a compensation bonus of up to 150 percent of the base fee.

PowerSecure’s executives were also paid and received benefits beyond what former executives of the power company received.

Davis told the House of Assembly in 2016 that with PowerSecure,”…The Bahamas can enter the next phase of its energy sector transformation.”

Memorably, Davis told the House, “For many years now, consumers have had to deal with extremely high electrical bills and far from satisfactory services from an inefficient and debt-ridden Bahamas Electricity Corporation. This agreement is another step in creating a new, vibrant, efficient, and lower cost utility provider.”

He continued, “As we are all too aware, BEC is a completely unsustainable operation and unable to continue to operate under its existing structure. In particular, BEC is close to being insolvent without the support of a government guarantee. Our country’s foreign currency reserves have been depleted to the tune of over $300 million a year in the purchase of imported fossil fuels for generation and other equipment, services and supplies.”

The Christie administration also included a rate reduction bond mechanism in the law to allow much of BEC’s legacy debt to be settled and inject new cash for generation and transmission and distribution upgrades.

Under PowerSecure there were still frequent blackouts during the summer months, BPL still bled money and the transmission and distribution network remains a shambles on New Providence to this day.

Also, no rate reduction bond has been implemented for BPL and the company survives by government assuming and refinancing its debt.

All of the many failures that occurred at BPL cannot be placed at the feet of Davis.

The Minnis administration undertook many senseless and unproductive measures at BPL with former Minister of Public Works Desmond Bannister also making a mockery of the corporation by engaging in an embarrassing public battle with board members he fell out with.

A massive fire destroyed one major engine and sidelined another.

And they allowed Wartsila to build a plant inside Clifton Pier Power Station under the guise that it was the beginning of the end of New Providence’s generation woes.

Yet, the lights still go out, BPL remains the single largest consumer of fossil fuels in the nation and we are now being told that not only will the fuel charge rise, but tariffs may also go up after remaining static for 10 years.

Davis is now prime minister and BPL has a new board with a chairman that has so far failed to inspire confidence and a new chief executive that has a great deal of experience, but will likely be hamstrung by politics given the messaging coming out of the entity in recent months.

Perhaps Davis and Minister of Public Works and Utilities Alfred Sears will turn BPL around and make it what the Electricity Act intended.

However, given what has come before and the ease with which the current administration unwisely dealt with the fuel hedge facility the former administration put in place – which was perhaps the one thing it did right – Davis cannot expect anyone to have faith that things will not get much worse before they get better.

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