The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE Bahamas Electricity Corporation (BEC) currently owes its major fuel supplier more than $86 million, its executive chairman revealed yesterday, adding that the monopoly energy supplier was paying Shell West excess of $18 million a month “just to keep going”.

Leslie Miller, speaking at a meeting of the Rotary Club of West Nassau, said BEC, which spent $386 million on fuel in 2012, was looking to enter a contractual agreement with a major oil producing entity to reduce this spend.

“Your fuel surcharge directly reflects what BEC pays for fuel,” Mr Miller said. “BEC gets its fuel from a company called Shell West, located in Barbados. Right now, we owe them about $86 million.

“Every month we pay Shell West in excess of $18 million just to keep going. Last year, BEC spent $386 million on fuel. The Board is now looking at trying to procure a long-term contract with an oil producing entity.” 

Mr Miller added: “BEC  this year will have to sign a contractual agreement to procure three 42 Mega Watt (MW) engines at Clifton Pier, meaning that Clifton would generate about 90 per cent of our electricity.

“Once that takes place you would see your bill go down by no less than 20-25 per cent, and we would use Blue Hills just as a stand-by station. That is what needs to take place, and we need $285 million for those three engines.”

Mr Miller said the lack of proper maintenance at the Clifton Pier power station over the past few years was a significant contributor to the Corporation’s high operational costs.

“Clifton is the base station for electricity in New Providence,” he added. “Clifton is supposed to generate 65-75 per cent of the electricity we use in New Providence. Clifton also uses the cheaper Bunker C fuel.

“Blue Hills is really supposed to be the peak producing plant. In other words, when we reach that peak, Blue Hills is supposed to come on stream. Over the last there years, the former Board made the decision because of the tough economic times not to have those engines serviced on a yearly basis.

“Clifton must be serviced every 12 months, and Blue Hills is normally serviced every 18-24 months. The problem is that when they neglected Clifton for three years, it cost the Bahamian people in excess of $25 million more for fuel because Blue Hills burns a lot more fuel than Clifton.”

Mr Miller also noted that BEC was renting units from the Aggreko company to the tune  of $1 million a month.

“On May 4, just before the general elections, someone made the decision to purchase another engine, a gas turbine that’s going to cost us an extra $20 million in fuel alone,” he said.

“You’re paying for fuel because the price has gone up almost 200 per cent over the last several years. When I was Minster of Trade and Industry, oil was around $30 per barrel. It’s now about $97 per barrel. You’re paying for that directly,” said Mr Miller.

“As a Board we took over a Corporation that was struggling to break even financially. As a matter of fact, it incurred an $18 million loss for the fiscal year 2012, and has experienced a $12.7 million loss for the first three months of this fiscal year. If we stay on this track, losing $12 million a quarter, we could lose up to $40 million a year but that’s not going to happen. The first quarter is usually the most difficult one. It’s a cycle at BEC.”