PLAN UNDER FIRE: PM decries $20 mil spent on BPL’s ‘floundering’ attempt at rate reduction bond

PLAN UNDER FIRE: PM decries $20 mil spent on BPL’s ‘floundering’ attempt at rate reduction bond
Bahamas Power and Light.

Davis suggests now is not the right time to issue RRB

Deal: It is ridiculous that the pursuit of this bond has cost us $20 million

NASSAU, BAHAMAS — Prime Minister Philip Brave Davis yesterday slammed as “totally disgraceful” Bahamas Power and Light’s (BPL) floundering attempt to secure a rate reduction bond (RRB).

Davis, while delivering a 2021/2022 supplementary budget statement in Parliament yesterday, noted that more than $20 million has been spent with still no bond placement after four years.

He also noted that the RRB promised a minimal increase in electricity costs to consumers to allow for improvements to BPL facilities, which, in turn, would reduce electricity rates over the longer term.

“I am advised that, due to the delays in the offering, issuing the bond now would increase electricity costs by as much as 20 percent,” said Davis.

Prime Minister Philip Brave Davis speaks in the House of Assembly yesterday.

“During a time when many Bahamians are still rebuilding their communities from Hurricane Dorian, at a time when many persons are still unemployed due to the impact of COVID-19, at a time when many Bahamians have little or no financial recourse, a 20 percent increase in the cost of a basic necessity such as electricity simply cannot be justified. 

“To add insult to this injury, the cost to-date facing this pot of gold at the end of the proverbial rainbow, the cost associated with this floundering attempt to obtain the bond, I am advised, is far in excess of $20 million.”

According to Davis, the Christie administration had left instruments in place to the issuance of the RRB at a cost far less than $20 million. 

“Why would you pay upfront for something you aren’t sure you are going to get? Usually these things are negotiated on a performance or success fee,” the prime minister noted.

Works Minister Alfred Sears, QC, recently revealed that the Minnis administration did not give BPL the green light to proceed with its RRB.

The bond offering was a part of the utility provider’s efforts to obtain the financing needed to refinance the company’s legacy debt and also fund major upgrades to its transmission and distribution network.

As previously reported by Eyewitness News, BPL was said to be in a “state of readiness” and awaiting government authorization to go to market with the RRB, with an expected close date of December 2021.

Debbie Deal.

Debbie Deal, chairperson of the Bahamas Chamber of Commerce and Employer’s Confederation’s (BCCEC) Energy and the Environment division, told Eyewitness News yesterday: “In my estimation, it is not something the government should sign onto.

“The lion’s share the bond is to pay off a historic debt. BPL has proven it will continue to borrow money and not pay it off. The Bahamian people should not deal with anyone who does not pay their bills and continues to borrow.

“In my view, BPL should pay off its historic debt by improving their system, getting a strategic partner to work on improving the grid, redo transmission and distribution in New Providence so that we have a solid energy system and then they can start making a profit to go and pay off its historical debt.

“The strategic partner would get money back through percentage of sales of electricity.”

She added: “I would agree with the prime minister that it is ridiculous that the pursuit of this bond has cost us $20 million.”