A recent Inter-American Development Bank (IDB) report on infrastructure development across the Caribbean has found that even though public sector investment in infrastructure in The Bahamas is high by international comparison, it is not enough.
IDB economist Dr. Allan Wright in his contribution to the IDB’s Caribbean Region Quarterly Bulletin on Infrastructure Development for the Caribbean, pointed to what he called serious challenges that lie in aging maritime, airport and energy systems, which require a transformation to deliver adequate services.
“The provision of incentives, airlift subsidies and tax concessions to encourage varied-scale private capital projects, primarily in the tourism sector, are critical drivers to attract capital investment. Changes in investor confidence and sentiment represent risks to capital inflows and have resulted in lower inflows since 2006, except for 2014 with the building of a mega resort hotel,” the report notes.
“Time-consuming administrative requirements, the rising cost of electricity and an inadequately trained labor force constitute hindrances to investment opportunities. However, as discussed above, important infrastructure gaps persist. Expenditure levels of public capital outlays average roughly 2.3 percent of GDP except for periods of hurricane reconstruction. In FY2018/2019, the compression of capital spending helped reduce the deficit.”
But given The Bahamas’ current “restricted fiscal space”, Wright noted in the report that private sector involvement in infrastructure provision is necessary.
“The government of The Bahamas distributed a policy document on the likely benefits of employing public-private partnerships (PPPs) to effectively use state-owned assets, such that PPPs are efficiently delivered in a way that realizes value for money both for the government and service users,” he said.
“The policy document also guides the private sector on what it can expect in developing and executing PPP projects with the government. The government aims to use PPPs to expand renewable energy, primarily within the outermost islands; build maritime and airport facilities; improve road systems and transportation; and enhance technological innovation, communications, and urban development.”
As for Bahamas Power and Light (BPL), the report notes that electrification and electrical outage indicators are below expected performance levels according to the most recent data from the World Bank.
“With old power-generating infrastructure and production shortfalls, The Bahamas suffers from frequent power outages. According to Complete Caribbean’s 2014 Productivity, Technology and Innovation in the Caribbean survey, Bahamian firms experience an average of 2.2 outages per month, above regional averages. The average duration of such outages, measured in hours of a typical outage, was highest in Jamaica (1.30), Suriname (1.0), The Bahamas (0.9), Barbados (0.6), and Trinidad and Tobago (0.50),” the report notes.
“The government of The Bahamas has recently appointed a new management board at Bahamas Power and Light (BPL) and is developing plans to build a new thermal generating plant with a capacity of 132 MW. The BPL will issue a bond of US$650 million to help refinance its legacy debt and fund system upgrades. With minimal penetration of renewable energy, The Bahamas has set an ambitious goal of increasing renewables to 30 percent of the energy mix by 2030.”
The report also notes The Bahamas is still lagging behind much of the Caribbean and Latin America with regards to communications.
It points out that mobile and broadband price rates are among the highest in the world.
“Despite recent advances in information and communications technology (ICT), challenges in telecommunications remain that affect e-commerce. The Bahamas ranks 22nd in Latin America and the Caribbean (LAC) in mobile telephone penetration and 15th in wireless broadband penetration with mobile penetration rates measured at roughly 85 percent, which indicates substantial room for improvement in the development of technological solutions, especially regarding further improvements in financial inclusion,” the report notes.
“Mobile broadband penetration is increasing steadily, but the country’s geography presents significant challenges for the deployment of fixed-line infrastructure.”
The report also points to the country’s geographical vulnerability to weather which it said demands climate- resilient infrastructure to better protect fragile ecosystems.
“The nation’s infrastructure challenges show that advancements are needed in the water and sanitation, energy, air and maritime, the road network and transport sectors. Establishment of a disaster relief fund, along with the development of preparedness and risk reduction policies, will advance current climate-reliant infrastructure. Improved customer interaction tools and the establishment of automation processes in meter reading will help reduce waste while improving access to sewerage and sanitation facilities,” the report notes.
“Applying dynamic renewable energy policy and improving current systems will reduce outages and lower consumption costs to commercial and residential customers. The outermost islands appear to be the area in greatest need, as maritime and airport infrastructure will have to be raised to comply with international safety standards.”