NASSAU, BAHAMAS- Government initiatives, including the acquisition of the Grand Bahama Power Company, have amounted to $475.9 million in additional guarantee commitments beyond those originally budgeted, the Fiscal Responsibility Council (FRC) has warned, cautioning that the increase elevated contingent fiscal risk and could affect medium-term fiscal targets.
“The recent issuance of additional Government guarantees outside of the budgeted amounts could impact the timeframe for the achievement of the medium-term goal, while increasing the fiscal risks from this source,” the Fiscal Strategy Report (FSR) 2025 stated in its mid-year review.
At the centre of the exposure was the restructuring and acquisition of the Grand Bahama Power Company through Grand Bahama Energy Company Ltd., a special purpose vehicle. Guarantee resolutions included $80 million “to support the company’s capital expenditure and working capital,” and $200 million “for the purchase of the GBPC (all ordinary voting shares).”
The Government of The Bahamas and Emera Inc have announced an agreement for the acquisition of all outstanding shares of Grand Bahama Power Company through the Grand Bahama Electricity Company, a special purpose vehicle established for this transaction. The acquisition is financed through a loan from Standard Chartered and Scotiabank, guaranteed by the Government of The Bahamas. Under the agreement, the employment and benefits of existing Grand Bahama Power Company employees are protected, with Bahamian management remaining in place. Grand Bahama Power Company will adopt the Bahamas Power and Light tariff schedule for services provided to customers
in Grand Bahama.
The FRC also noted that ACMLC Grand Bahama Limited received a US$1.9 million loan from the African Export-Import Bank (AFREXIM Bank) for the development of an integrated Afro-Caribbean Marketplace on Grand Bahama, with a stated purpose “to boost trade, investment and connectivity between Africa and the Caribbean.”
Bahamas LNG Partner Ltd., established to represent Government interests in a Terminal Development and Use Agreement (TDUA) for an LNG Regasification Terminal in New Providence, carried guarantees totalling $160 million. This included a $30.0 million performance letter of credit “to support fuel supply obligations under the LNG Sale and Purchase Agreement with Shell NA LNG LLC,” a further $30 million performance letter of credit linked to the TDUA, and a $100 million revolving line of credit “to finance LNG fuel purchases.”
Separately, the Public Hospitals Authority (PHA) received an additional $34. million guarantee “for the purchase of Doctors’ Hospital Harbourside,” which the PHA targeted for use as a medical facility “with a full physiotherapy department.”
The FRC noted that while these initiatives aligned with Government priorities—including energy sector reforms under the “New Energy Era,” trade diversification, and healthcare expansion—they collectively expanded contingent liabilities beyond what had been budgeted for the fiscal year.
However, the Council emphasised that Government guarantees “represented a significant source of contingent risk,” and classified them under the Fiscal Risk Assessment Tool (FRAT) as having “high fiscal impact risk, with a low probability that risks will be realised.”
It further observed that the guarantees related to Grand Bahama Energy Company Ltd. and Bahamas LNG Partner Ltd. were consistent with the Budget Communication for FY2025/26, while ACMLC Grand Bahama Limited aligned with trade diversification objectives and the PHA guarantee supported healthcare improvements.
Still, the FRC noted that these initiatives resulted in $475.9 million in additional commitments not included in the listed guarantees for the fiscal year, warning that such issuance beyond budgeted levels increased overall fiscal risk exposure.
