After being apprised by Bahamas Power and Light’s (BPL) board of its planned rate reduction bond (RRB), Minister of Works and Utilities Alfred Sears said the feasibility and rationale behind the measure needs to be explained.
The utility company had hoped to place the RRB to raise more than half a billion dollars before the end of the year, but first needed Cabinet approval and legislative amendments to facilitate the fund-raising activity.
However, former Prime Minister Dr. Hubert Minnis dissolved Parliament and called a general election before those changes could be made.
“It would be premature to make a conclusion at this point,” Sears told reporters outside Cabinet yesterday when asked about the likelihood of the RRB actually going through.
“But I have spoken with Dr. Donovan Moxey [BPL’s chairman], yesterday in fact and I’ve asked for certain documents so that I can be appraised as to the rationale, the feasibility of the RRB and also in the context of the commitment of the social contract that now exists between the government and the electorate of The Bahamas.”
The $535 million BPL is hoping to raise is intended help pay off more than $300 million in legacy debt, as well as fund future capital projects.
BPL is seeking to go to international markets for the majority of its bond placement, however the Davis administration’s borrowing policy involves securing more funding domestically, which could influence whether it approves the RRB in its current form.
“I’ve been getting a briefing from BPL, I met with BPL’s board last week and they have presented to us some timelines that they are seeking to meet. The difficulty is that this matter was presented to the Cabinet, I understand, right before the election and the urgency of the matter had been pushed to the Cabinet, I am informed, by the board and Dr. Donovan Moxey. The Cabinet did not grant the approval,” Sears said.
“We have come in on September 16th and I’ve been briefed, bringing myself up to date. A quarter billion dollars isn’t a decision that a country, especially one seeking to pivot from the sole reliance on fossil fuel towards increasing integration of renewable energy – as promised in the Blueprint for Change – should take lightly. So, we will be having some meetings possibly this Friday with the Ministry of Finance, so that we can get the benefit of the advice of the Ministry of Finance in terms of how to proceed, so that is where we are at this point.”
In its Blueprint for Change, the Progressive Liberal Party (PLP) pledged to cause a review of BPL operations to reduce the cost of electricity, maintain a reliable supply and enter into contractual arrangements which would put BPL on a solid financial footing within the first 100 days.
The PLP has also pledged to incentivize solar energy via tax incentives and transition to LNG (liquefied natural gas) or some other form of efficient, cleaner fuel.