BPL fuel hedging to provide 80 percent fuel needs

BPL fuel hedging to provide 80 percent fuel needs
BPL Clifton Pier plant (file photo)

NASSAU, BAHAMAS — Bahamas Power & Light’s (BPL) fuel hedging arrangement will provide for 80 percent of the company’s total fuel volume needs, the company’s top executives said yesterday.

There will reportedly be a leeway of 20 percent as a ‘buffer’ if adjustments become necessary.

According to BPL chairman Dr Donovan Moxey, fuel hedging was always in company’s plans this year.

“That was always a part of our plan. The question was when do we pull the trigger, this spring/summer,” said BPL chairman Dr Donovan Moxey.

“This board had hedging on mind from day one. It is our goal and intention that as part of the of strategic plan we put forward, this company continues to hedge going forward and give Bahamian consumers stability in pricing. Low cost and reliable electricity is a game change for this economy.”

BPL chief executive Whitney Heastie further noted that although BPL’s board of directors had approved a fuel hedging strategy prior to the onset of the COVID-19 pandemic, the pandemic did affect the timing of its introduction.

“What happened during COVID-19 was the world got turned upside down,” Heastie said.

“To hedge there are a few things you must know. You must know the volume of fuel you are going to go out and hedge and what the sales are you are going to receive.

“No one knew when COVID-19 came around what the volume of fuel sales would be for the foreseeable future and volume. The country was shut down and so to go out and hedge in March would have been very dangerous.

He said: “We took March and April to really understand what the fuel consumption and sales forecast would be and make some intelligent suggestions going forward and intelligently hedge.”

Heastie expressed confidence that BPL will consume the fuel and see the necessary sales to offset the cost of that fuel.

“We took a conservative look at sales and said we know that sales post-COVID-19 are not going to rebound to where they were pre-COVID-19,” Heastie continued.

“When we went out to hedge we only hedged 80 percent of the total volume we need.  That gives us 20 percent leeway that if sales are not what they should be or there is a change in volume because of circumstances we do have 20 percent leeway.

“We took a conservative approach to sales to ensure that we are not being to aggressive on hedging. We did factor in some growth back to normality but we didn’t factor in 100 percent growth back to pre-COVID-19 levels.”