The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE Bahamas Chamber of Commerce and Employer’s Confederation (BCCEC) yesterday reiterated its call for “full articulation” of the Government’s National Energy Policy, noting that to initiate a request for proposals process (RFP) without outlining its national energy policy in advance is like “putting the cart before the horse”.

In a statement yesterday the BCCEC said that it welcomes the announcement that the Government is considering the privatisation of the energy sector which “has the potential to bring much needed efficiencies, reduction of costs and to create a competitive market for the production of energy”.

Prime Minister Perry Christie revealed earlier this week that the Government will be issuing a request for proposals to seek “a partner or partners to assist us in turning around our energy sector”.

“Given the ambitious timeline, it will be important that the Government ensures full transparency and public education on the various elements of the modernisation of the sector. The need to ensure full opportunities for participation by the Bahamian business community and a full understanding of the environmental, economic and social impacts cannot be overstated. The Chamber notes that an end of year timeline is targeted, but would want to ensure that time is sufficient to ensure that the process moves fluidly with maximum opportunities for participation and public awareness. We are eager to see how this privatisation of the energy distribution and management ties into the broader national energy policy, which still needs a full articulation and which we have called for on numerous occasions. Indeed a comprehensive energy policy requires participation and input from all of the stakeholders including the business community and environmentalists. We are of the view that a request for proposal should comply with the National Energy Policy which in an ideal scenario should be outlined in advance. To do otherwise would be analogous to “putting the cart before the horse”, the Chamber said.

The chief private sector organisation, which represents 90 per cent of Bahamas-based businesses, noted that a proper energy policy would help to avoid a “repeat of the BTC drama, which became a political football of successive Governments, for more than a decade”.

“In a truly liberalised environment it would follow that any person or entity would apply for a licence to generate or transmit and distribute energy. The system of approvals ideally should be done by an independent regulatory body responsible for licences, tariff setting and customer protection. While we do not have all of the details of the Government’s plans, the announcement seems to suggest a private monopoly with a single licensee generating and another transmitting and distributing. If care is not taken, this outcome may have the unintentional result of higher prices and continued poor service. We await further details on the Government’s plan,” the BCCEC said.

Prime Minister Christie revealed that the Government intends to create two new BEC entities into which the relevant assets, liabilities and operations of the Bahamas Electricity Corporation will be transferred.

The first is company, a new transmission and distribution company (“NewCo”) will be wholly owned by BEC and will be responsible for the operation, maintenance, repair, and expansion of NewCo’s electricity transmission.

The company will also be responsible for distribution systems, billing, collection, customer services and other relevant services across The Bahamas. The second company will be a new generation services company. Mr Christie said that this company will be responsible for the operation, maintenance, repair, financing of BEC’s current electricity generation facilities and certain other assets located across The Bahamas, as well the development of new power generation plant. It will enter into a Power Purchase Agreement with Newco. Through an RFP request for proposal (RFP) process the Government will seek to identify “financially and operationally credible parties or consortiums”.

“It is our intent to enter into management agreements with the successful party, or parties, to operate the two new companies, and in the case of the new generation company, a management agreement and/or a Joint Venture Agreement. Our new partners will be expected to assist the Government in transitioning the relevant assets, liabilities, operations and personnel from BEC to the new companies, and to assist the Government in driving performance improvement and upgrading the various systems to the highest standards,” Mr Christie said.

Mr Christie said that the Government remains “absolutely committed” to introducing renewable energy into the generation mix for The Bahamas as well as the advancement of a residential energy self generation programme to be implemented by mid-2014, with a goal of meeting up to 10 per cent of the country’s power needs over time. The Government is also seeking to have 30 per cent of the country’s energy sector’s power generation come from renewable energy sources by 2030.

“Outside of the specific initiative to privatize generation, what other specific policy instruments are being employed to reduce reliance on expensive fossil fuels and to maximise exploitation of renewable energy resources. We are a nation blessed with endless sunny days and solar energy - in particular - must be a key component of any medium and long term strategy to reduce reliance on oil generated energy. There are already members of the private sector willing and ready to invest in both wind and solar. The unreliability of the supply provided by BEC has been the source of great frustration to the business community who has endured a significant loss of productivity and/or the cost of maintaining a back-up power supply. The cost of electricity being one of the highest in the hemisphere contributes significantly to the cost of doing business and the cost of living in the Bahamas. Any positive, transparent, well-executed initiative that efficiently addresses these concerns is applauded by the Chamber. The Chamber looks forward to completing a thorough review of the government’s proposals and will provide additional comments/suggestions at the appropriate time,” the BCCEC said.