Govt to borrow $246 mil. to repay BEC loans

NASSAU, BAHAMAS – The government has tabled a resolution to borrow $246 million to refinance two Bahamas Electricity Corporation (BEC) loans, dating back to 2009.

Prime Minister Dr. Hubert Minnis read and laid the document nearing the end of yesterday’s Parliament sitting.

The resolution notes that BEC (now Bahamas Power and Light) entered into two Facility Agreements, one on October 2nd, 2009 for $211 million and another on August 24th, 2014 for $35 million.

In December, the maturity date on both agreements was extended June 11, 2020.

The resolution states that the lenders of the loans have agreed to extend the extended maturity date to July 24, 2020, provided that obligations and commitments under both loans are assumed by and transferred to the government.

Additionally, all principal sums and interest due under the loans on the new maturity will have to be discharged from the proceeds of the government’s entry into and drawdown of a separate credit facility authorized by the Minister of Finance.

“Be it resolved that this House authorizes the Minister of Finance to raise by means of a loan the sum of $246 million in order to discharge the obligations under the $211M Credit Agreement and the $35M Credit Agreement on the New Maturity Date,” the resolution reads

“…and authorizes the Minister of Finance to enter into a new credit agreement with the $211M Lenders and the $35M Lenders (and any other lender who may become part of the syndicate0, on such terms, pursuant to this resolution, as are mutually agreed between the parties thereto.”

In December, the government passed the Electricity Rate Reduction Bond Act, 2019 which will allow BPL to restructure more than $320 million in inherited debt, and secure more than $350 million in new funding to address longstanding issues.

BPL’s customer base will be relied upon to service the bond issue.

In early January, BPL announced the average household would see a $27 per month increase in their electricity bill.

The rate reduction bond funding was expected to close by mid-February and would be for a period of 20-25 years.

As a result of the global coronavirus (COVID-19) pandemic, BPL suspended disconnections for the duration of the government’s emergency orders and deferred payment for three months for customers impacted by the virus.