The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

The Government is still actively pursuing a ‘rate reduction bond’ to refinance the Bahamas Electricity Corporation’s (BEC) $450 million legacy debt, its main adviser telling Tribune Business there was enough credible interest to indicate the securities could be placed.

“The Rate Reduction Bond is still being actively pursued,” said Simon Townend, the KPMG (Bahamas) partner and head of its corporate finance arm in the Caribbean.

“We have very credible interest, and indications that the bond can be placed in the international and local capital markets from major banks. The intent is that by virtue of its structure, it will be much cheaper and more efficient financing than what BEC has today, which means a lower cost ultimately to the consumer, and with no recourse to the Government.”

Mr Townend added: “The intent is for this all to be ready, as the Deputy Prime Minister said, by November, with a final recommendation on a preferred bidder. Once the Government approves the recommendation we will be moving into implementation mode.”

Prime Minister Perry Christie recently told this newspaper that he felt it was best to prioritise management of BEC’s legacy debt, and said the Government was considering a firm with such abilities.

“I’ve intervened for the NAD model,” Mr Christie said, referring to the Nassau Airport Development Company, a private firm which manages operations at the Lynden Pindling International Airport (LPIA).

“What I said was, before I get caught up in all this ‘who is the best to generate, who’s the best to distribute,’ let me just get a management team in there with the capacity to deal with the legacy debt and that’s what we’re doing now. I’ve put a timeline until the end of the year.”

Last August, Mr Christie announced plans to divide BEC into two separate entities. He said it was envisioned that one company would run the transmission, distribution and customer billing, while another company would offer power generation.

Yet earlier this month, it was announced that the Government has reduced the bidding field for the BEC restructuring to three groups, and is seeking to complete the process by November 1 this year.

It was initially proposed that the Government would select the preferred bidders in the process by November 2013, undertake contract negotiations in November/December and execute contracts by January this year. The winning bidders would then have taken over BEC’s generation and T&D businesses back in May.