The new board of Bahamas Power and Light (BPL), in conjunction with the Ministry of Finance, will need to negotiate a new fuel hedging deal if Bahamians want to continue to enjoy lower electricity bills, Minister of Works and Utilities Alfred Sears said yesterday.
Sears, who made the remarks during a press conference announcing the new BPL board, said with oil prices on the rise, Bahamians can rest assured that there will be some fuel hedging deal put in place as the current one comes to an end.
“Hedging is one of the first things the new board will have to tackle,” said Sears.
“Clearly with the price of oil rising daily, one mechanism to provide price stability for the end-use consumer is hedging, so there will be some hedging mechanism.”
The current 10.5 cents per kilowatt hour flat fee is set to expire in June of next year, after which prices could increase.
When BPL began hedging last year, its customers saw vast reductions in the cost of electricity. Now, the key is for the power company to attempt to keep rising costs at bay.
The Inter-American Development Bank (IDB) assisted The Bahamas in the brokering of its oil hedging transactions, designed to ease the strain on the government’s budget and allow fiscal headroom during the ongoing COVID-19 pandemic.
Hedging last year allowed the country to take advantage of low oil prices on the international markets.
Last year, global crude oil prices dropped to historic lows at the onset of the COVID-19 pandemic, prompting BPL to look to hedging to lower its costs.
The IDB facilitated the first hedging transaction in July of 2020.