FNM blasts govt over BPL’s $150M arrears

Opposition renews calls for Sears to resign

The Free National Movement (FNM) yesterday renewed its call for Minister of Works Alfred Sears to resign over what it insisted has been the “bungling” of the affairs of Bahamas Power and Light (BPL) as evidenced by a revelation in the government’s newly released Fiscal Strategy Report 2022 that the utility has arrears of $150 million.

The report, which Prime Minister Philip Davis tabled in Parliament on Wednesday, states under the government liabilities section at the end of the document, “The recent disclosure of approximately $150 million of payment arrears of Bahamas Power and Light represents a significant unbudgeted liability of the government.

“To ensure continued provision of essential electrical services to the public, the government has committed to ensuring payment of this liability by the corporation.”

The opposition party has sought to link the BPL arrears to the Davis administration’s decision to reject recommendations made by BPL’s fuel hedge committee in the fall of 2021 for the government to execute fuel hedge trades to lock in oil prices and keep the BPL fuel charge stable.

The FNM has contended over months that the failure to conduct those transactions, and the prime minister’s decision to reverse a BPL fuel charge increase announced by BPL last February, directly resulted in consumers having now to stomach a substantially higher fuel charge which is being rolled out over months.

The FNM has taken particular aim at Sears, who has told conflicting reports in Parliament over the BPL matter, initially stating that he had had no briefing nor received any advice on the hedging program.

Sears more recently acknowledged that he in fact was privy to such advice, and that it was the minister of finance who decided against executing the trades – a claim Davis, who is minister of finance, has denied.

While the government has not provided a full accounting on the arrears, the opposition said in a statement yesterday, “We are horrified to learn at the back end of the just-released Fiscal Strategy Report 2022 of a statement indicating that BPL has arrears of $150 million that are now listed as a ‘significant unbudgeted liability of the government’.”

The FNM noted that the Bahamian people were told of $90 million in BPL arrears.

Back in October, Sears told Parliament the government intends to make $10 million payments to Shell each month for nine months to satisfy BPL’s debts to its fuel supplier.

Sears said with this arrangement in place, BPL’s arrears with Shell will be eliminated while the incremental increase in the fuel charge in the country announced by the prime minister last October allows BPL to meet fuel bill obligations.

The FNM said yesterday, “We demand that the government provide a full accounting of what this $90 million represented and whether or not it represented the full cost to the taxpayer due to the government’s inept handling of the matter.

“Now in the back pages of a fiscal report, we are learning of a $150 million liability of the government. Is this in addition to the $90 million bill outstanding to Shell? Is it something different?

“We hasten to add that even with this $150 million bill, that the electricity bills of BPL customers will continue to increase dramatically through the summer.”

The FNM insisted, “The government must give a full accounting to the Bahamian people for this ongoing fiasco and all those public officials that have foisted this disaster on the taxpayers must face the consequences of their actions.”

Despite stepping in to prevent a rise in the fuel charge for electricity consumers, which would have taken effect last March, and promising to “brainstorm” ways to avoid it altogether, the prime minister announced increases in October.

It means the fuel charge will nearly double for smaller consumers in less than a year and larger consumers will see their fuel charge nearly triple.

BPL and government officials admitted at the time that the government had paid “tens of millions” to stave off the fuel increase but that position was no longer sustainable.

To recover those costs, consumers will pay increased fuel charges for the next year, with the prime minister labeling the increases as “short-term”.

When asked at the October press conference if the seven-month delay of the fuel charge hike made the situation worse, BPL CEO Shevonn Cambridge said there was an accumulation of arrears “which we’re now seeking to recover through the glide path strategy”.

In light of the revelation in the Fiscal Strategy Report, and in light of the government’s failure, to date, to provide a full explanation on the arrears, critical questions remain on this matter:

What exactly does the $150 million represent?

Does it include the mentioned $90 million for Shell or is it in addition to that?

When the government said the sum was previously undisclosed, who didn’t disclose it? The new board has been in place for over a year and the minister has been in place since September 2021.

Does the amount represent monies owed to BPL for fuel or is it other obligations?

If the government has taken on the $150 million, where is it being funded in the budget?

One observer asked yesterday, “Why is it we are finding about it in a fiscal strategy report when this is a very critical matter for which an accounting was never given? It is a material sum that was never disclosed by BPL or the policymakers. It came as an aside in the report.”

With further increases in the fuel charge set to take place in coming weeks, the government is likely to face increasing calls for a fulsome accounting on financial matters connected to BPL.

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