The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Using gas piped from Florida as the Bahamas Electricity Corporation’s (BEC) primary fuel source would boost the increased economic output from energy reform by 150 per cent, amid renewed calls for this to be the Government’s “number one priority”.

This finding, contained in a report by Oxford Economics, was released yesterday by the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chairman to bolster its contention that successful energy reform would release “billions’ in savings and investments into the economy over a 25-year period.

The report, based on and conducted for the power plant project proposed by the Caribbean Power Partners/Bahamas Generation and Utilities Corporation group, one of the five bidders on the BEC restructuring, left the Chamber defending itself against claims it was now actively supporting this group against the four rival offers.

However, one source familiar with the report said “sufficient independence” exists between the bidder and the BCCEC, with the latter’s chairman explaining that the Government had effectively left it with no choice but to ‘piggyback’ on the Oxford Economic study.

Robert Myers explained that after the Government refused to co-operate with the private sector and provide it with the necessary data to conduct its own energy sector study, it was left with “no option” but to turn to credible, willing parties who could assist.

“It’s not the way we’d have liked to have it, but given the circumstances there was no other option available to use,” the BCCEC chairman told Tribune Business.

The Oxford Economics study is effectively an extension of the initial 2012 study conducted for Caribbean Power Partners, which was previously reported in Tribune Business last year.

The revised report, though, analyses the economic impact from both using ship-imported liquefied natural gas (LNG) and gas piped into the Bahamas from the US as BEC’s primary fuel sources - both generating a much greater effect than the baseline study’s use of diesel fuel.

While the Bahamian economy’s gross economic output was projected to increase by $10.1 billion over a 25-year period using diesel fuel, the Oxford Economics report projected this would rise to $13.2 billion employing LNG, and by some 150 per cent to $25.2 billion using piped gas.

The income earned by Bahamian workers over the same period would increase by $2.8 billion over the same period using diesel fuel, according to Oxford Economics, and by $3.4 billion and $6.5 billion using LNG and pipeline gas, respectively.

And, the report predicted, full-time job creation would jump from 1,700-6,200 per year using diesel fuel to 12,400-13,500 under pipeline gas, as it was a much cheaper source of fuel.

Mr Myers told Tribune Business that the Oxford Economics study findings had confirmed everything the BCCEC and private sector had previously said when it came to energy reform.

Calling for the Government to give it equal treatment with Value-Added Tax (VAT) and fiscal reform, he said: “It should be our number one priority right now.

“It’s our largest potential to release disposable income, to offset increased taxes, to make us more competitive as a nation and allow us to grow. In my mind, VAT is important, and this is equally important.

“The impact is billions of dollars. It’s hundreds of millions of dollars per annum depending on which way you go.”

Mr Myers said that while the notion of using a pipeline to supply gas fuel to the Bahamas (BEC) from the US “may sound scary to some people, tens of thousands of miles” of such infrastructure existed around the world.

“Now we can see just how critical it is and how big it is,” Mr Myers added of the potential energy reform impact. “You can see there’s significant dollars available. It would significantly impact our GDP growth, cost of operations and everything else.”

The BCCEC, in a statement issued yesterday, warned the Government that “time is of the essence” if Bahamian businesses and households were to see “significant reductions” in energy costs within two years.

“It is integral that action be taken in the medium term (two to three years) to reduce the costs of energy to the private sector, the Government and the general public,” the BCCEC said.

“As stated in our fiscal reform position paper, it is critical that decisions that will reduce energy costs are implemented as soon as practically possible in order to lessen the long-term negative effects on disposable income as a result of the introduction of Value Added Tax (VAT), along with other increased taxes and costs implemented in the past 18 months.

“While there will be no immediate dramatic decrease in electricity costs, the selection of appropriate sources of energy generation and service providers, along with upgrades in transmission and distribution channels, could provide significant reductions in costs in less than two years. Time is of the essence.”

Referring to the BEC reform process, which was launched last August, the BCCEC said delays in bringing this to a conclusion had “led to poor quality power, damaged equipment, brown-outs, blackouts, unacceptable levels of pollution and rates amongst the highest in the Caribbean and immediate surrounding region”.