Consumers now having to ‘pay the piper’ after decades of unchecked mismanagement
NASSAU, BAHAMAS- A former Bahamas Chamber of Commerce and Employers’ Confederation (BCCEC ) chairman has expressed concern that Bahamas Power & Light’s (BPL) $650 million refinancing presents an inherent conflict to its renewable energy thrust, suggesting that this could potentially put a further strain on consumers who rely solely on the utility.
Gowon Bowe, in an interview with Eyewitness News Online said that the sensationalism surrounding the Rate Reduction Bond should be debunked, while adding that the enabling legislation should not be touted as the solution to BPL’s problems.
“I think one of the first things we have to do is de-sensationalize the rate reduction legislation,’ Bowe said.
“All the legislation is doing is creating the mechanism which by law can charge customers and by law is required to remit those funds to a special purpose vehicle.
“It is unfair to tout the legislation as being the solution to the problem. The legislation in my view is only the enabler to the solution and it can enable a positive solution or a negative solution. What’s more important is that the plan and strategy for the ultimate reduction in bills to come.”
He continued: “Now matter how you look at it, one way or the other we were going to have to pay. The only other really concerning aspect is as we have new technologies emerging and the reality is we have an internet conflict because BPL will be fighting against persons seeking alternative sources.
“If BPL does not have its customer base maintained it is going to be an even greater burden for the remaining consumers. We have seen that conflict by the delay and unwillingness to allow persons to increase their solar usage or come completely off the grid.”
The Government last week tabled an Electricity Rate Reduction Bond Bill 2019 which will allow Bahamas Power and Light (BPL) to restructure more than $320 million in inherited debt, and secure more than $350 million in new funding to address longstanding issues.
The purpose of the ERRB 2019 Bill is to establish a legal framework for the organization of the Bahamas Rate Reduction Bond Limited (BRRBL) and the issuance of rate reduction bonds that will be secured by the property or other assets of the BRRBL for the sole purpose of indirect payment and satisfaction of the rate reduction bond financing liabilities.
The Bahamas Rate Reduction Bond Ltd, is the special purpose vehicle that will be responsible for issuing the bonds and making investor interest payments.
The legislation makes clear that BPL’s customer base will be relied upon to service the bond issue. The legislation, which will replace a similar Act passed previously by the former Christie administration, provides that the bond fee paid by consumers can be adjusted at a minimum semi-annually to ensure that the collection of such fee will produce sufficient revenues to pay all ongoing financing costs as the same become due and payable.
Bowe said: “In one sense, for consumers it’s a little bit like saying we are paying for our past transgressions if you want to because we as citizenry have allowed the situation to persist and worsen over successive administrations.
“This is the prime example of why we should be holding our policy makers and management accountable very early on. We have not effectively held governments to account for how they are going to fix it and allowed it to continue to deteriorate. We are now in a situation where we are having to pay the piper.”
He added: “While the consumer is naturally going to be annoyed I would look at it this way; if the government was to finance the acquisition of the new power plant and everything else without going to consumers what the government would have to do ultimately is raise taxes.
“While I would not say that we are directly responsible for the what has happened, by allowing an inefficient and ineffective corporation held by ineffective governments of the past we are just being held to account because there’s no white knight flying in to pay off our debt.”