Bahamas Power and Light’s (BPL) rate reduction bond will likely result in a 20 percent increase in electricity, Prime Minister Philip Brave Davis said yesterday.
The utility company had hoped to place the rate reduction bond to raise more than half a billion dollars before the end of the year, but first needed Cabinet approval and legislative amendments to facilitate the fundraising activity.
However, former Prime Minister Dr. Hubert Minnis dissolved Parliament and called a general election before those changes could be made.
While providing an update on the matter yesterday, Davis said, “This long-awaited offering 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.
“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.”
He said he was advised that the cost associated with the attempt to obtain the bond is “far in excess of $20 million”.
East Grand Bahama MP Kwasi Thompson, who serves as shadow minister of finance, yesterday dismissed the prime minister’s claims.
“If members of the press and the public would recall, the reduction in electricity came as a result of the hedging program that our government put in place,” he said.
“The hedging program actually benefitted thousands of Bahamians because at that time when the cost of fuel increased, it stayed the same for BPL customers.
“What will happen is the hedging will come to an end and it is the hedging coming to an end that will result in the cost of electricity going up because the cost of fuel has now gone up.”
Thompson said the prime minister has “not told the full story”.
The $535 million bond BPL is hoping to raise is intended to help pay off more than $300 million in legacy debt, as well as fund future capital projects.
BPL is seeking to go to international markets for the majority of its bond placement.
However, the Davis administration’s borrowing policy involves securing more funding domestically, which could influence whether it approves the RRB in its current form.
“I’ve been getting a briefing from BPL. I met with BPL’s board last week and they have presented to us some timelines that they are seeking to meet,” Minister of Works and Utilities Alfred Sears told reporters recently.
“The difficulty is that this matter was presented to the Cabinet, I understand, right before the election and the urgency of the matter had been pushed to the Cabinet, I am informed, by the board and Dr. Donovan Moxey. The Cabinet did not grant the approval.
“We have come in on September 16th and I’ve been briefed, bringing myself up to date. A quarter billion dollars isn’t a decision that a country, especially one seeking to pivot from the sole reliance on fossil fuel towards increasing integration of renewable energy – as promised in the Blueprint for Change – should take lightly.”
In its Blueprint for Change, the Progressive Liberal Party pledged to cause a review of BPL operations to reduce the cost of electricity, maintain a reliable supply and enter into contractual arrangements which would put BPL on a solid financial footing within the first 100 days.
It has also pledged to incentivize solar energy via tax incentives and transition to LNG (liquefied natural gas) or some other form of efficient, cleaner fuel.
The post PM: BPL rate reduction bond will likely cause electricity bills to increase by 20% appeared first on The Nassau Guardian.
source https://thenassauguardian.com/pm-bpl-rate-reduction-bond-will-likely-cause-electricity-bills-to-increase-by-20/
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