BPL ‘transitioning’ itself out of power generation business
NASSAU, BAHAMAS – Private sector customers owe Bahamas Power and Light $125 million, with $66 million representing bills that are more than three months old, according to its chairman Dr Donovan Moxey.
“Our customers now collectively owe us $125 million and that is our private sector customers,” he said.
“We have $66 million outstanding that is more than $90 days due. We have $46 million that is current and about $7 million that is 60 days in arrears.
Moxey continued: “The other challenge we have is that our customers don’t really like to pay their bills on time and that hurts cash flow.”
The BPL chairman also shot down suggestions that alternative power generating sources such as hydro and wind power were feasible in The Bahamas, stating studies have shown such options were not viable.
He was addressing the Bahamas Institute of Chartered Accountants (BICA) Accountants Month conference at the Meliá Nassau Beach Resort.
Moxey reiterated the beleaguered company’s plan to transition out of the power generation business, noting the utility provider has not done a good job with generation over the years.
“If you look at BPL’s performance over the years we have not done a good job with generation,” he said.
“The generation costs are too high. When you look at our head count we have about three to four times the personnel needed to run generation when you look at how plants are structured nowadays.”
Moxey continued: “When you look at our maintenance record it’s poor. That is why we are having these problems. When we get out of the generation business and we put in the gas to power facility of which Station A is Phase I of, we turn that over to an entity whose main goal will be to get the generators running.
“All we will do at BPL is pay a single flat fee, that’s it. When it comes to generation costs, those prices are set to the terms of the power purchase agreement. With the Shell deal for New Providence, BPL is transitioning itself out of the base load generation business.”
He added: “When we outsource our generation to third party companies they are going to hire Bahamians, they are going to contract with Bahamian companies and it provides a lot more economic opportunities in the power industry.”
Moxey noted 130 MW Station A will come online December 15 , adding BPL’s goal in next 12-18 months is to have zero rental generation on New Providence.
He said solving the power problems will be a game changer for the Bahamian economy, and pointed to a decision to cut the utility’s base rate tariff as being at the heart of its financial woes.
“We were doing pretty well as an organization until 2005,” Moxey said.
“BPL was making about $15 million a year in net income then all of a sudden, someone at BPL, someone who made decisions decided there would be a rate cut.
“They did that rate cut without a rate study. Anyone in the utility business will tell you that you do not adjust rates unless you do the proper study. They didn’t do that study.
Moxey said: “The very next year BPL started losing money to the tune about an average of $15 million a year. If you look at that average up to 2017 BPL essentially lost over $180 million in net revenue, money that could have been invested in our infrastructure.”
“In 2017 you see a spike in net income of around $30 million,” he said.
“The reason why we got that is because of Baha Mar. They accumulated a lot of bills and they finally paid them.”
According to Moxey, BPL is paying $35-$40 million a month on fuel, a cost which makes up the largest portion of consumers electricity bill.