The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Foreign investors have unanimously cited energy costs and reliability as the “main deterrent” to coming to the Bahamas, a leading private sector executive yesterday describing BEC’s latest woes as “absolutely ridiculous”.

Edison Sumner, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chief executive, warned that the persistent power outages were “handicapping” much of the business community, costing them revenues they were unable to recover.

Suggesting that the Bahamas was “flying by the seat of our pants” when it came to energy infrastructure planning, Mr Sumner urged the Government to complete the Bahamas Electricity Corporation (BEC) reform process - and selection of a management partner - “post haste”.

However, the most damning indictment of the Bahamas’ escalating energy crisis was served up by a group of foreign business leaders at the recent CEO Summit of the Americas in Panama.

“I spoke to a number of private sector businesses who might have an interest in doing business in the Bahamas,” Mr Sumner recalled of the Summit.

“The main deterrent for them, the main issue for them, in not coming to the Bahamas was the cost and supply of energy.

“Every investor I spoke to raised the cost of energy in the Bahamas, and the security and reliability of energy supply. They felt the cost of coming to the Bahamas was prohibitive.”

Energy costs in the Bahamas are typically recognised as being double those in the US, and sometimes five to six times’ more expensive. This lack of cost competitiveness has been blamed for turning away investors and businesses that could help diversify and grow the economy.

Mr Sumner said the foreign business leaders he met at the CEO Summit suggested that the ‘ease of doing business’ elsewhere in the Latin American region was superior to that of the Bahamas.

The BCCEC chief executive added that they cited lower labour costs, and “a quality of output as good or better than the Bahamas’”, as other factors key to directing their investment dollars away from this nation.

The Bahamas’ only seeming advantage was its proximity to the US, a feature that continues to be eroded by its perception as a high cost, inefficient economy when it comes to the key metrics that attract investors.

“The cost of doing business, the cost of energy here, were seen as one of the pivotal reasons why these businesses have gone no further in coming to the Bahamas,” Mr Sumner told Tribune Business.

“They all had the very same initial observations in their assessments of doing business in the Bahamas. The cost of energy was considered to be the major deterrent to doing business in the Bahamas.”

Mr Sumner said the types of businesses he had spoken to at the CEO Summit included manufacturers, information technology (IT) providers and business processing/outsourcing firms.

He added that the findings from his Panama meetings had merely reinforced previous BCCEC research and member surveys, which all cited energy costs and impediments to the ‘ease of doing business’ as the critical obstacles to private sector growth.

Mr Sumner said all this should cause the Government, especially those with direct responsibility for BEC, to “pay attention” and address this nation’s energy woes as rapidly as possible.

Yet Leslie Miller, BEC’s executive chairman, yesterday warned Bahamians to expect load shedding and intermittent power outages for a week, due to a generation capacity shortfall.

Problems at its Blue Hills plant, coupled with maintenance at Clifton Pier, have left BEC around 10 Mega Watts (MW) short of the generation needed to meet current New Providence demand levels.

BEC is spending $8-$9 million to hire 40 MW of temporary rental generation capacity to meet this summer’s expected demand, but is uncertain whether this will be enough given that the $3.5 billion Baha Mar project will soon come online.

With the temporary load shedding outages having already begun, Mr Sumner told Tribune Business: “I think the position we find ourselves in is absolutely ridiculous.

“We have been in this place so many times before that it is so frustrating for businesses, especially in New Providence, to bear with this inefficient energy supply system in this country.

“The fact we were down for much of the weekend, and had an outage on the first day of the working week, is certainly a frustration to businesses. We are left basically handicapped.”

Most Bahamian businesses, especially small and medium-sized enterprises, did not have back-up generators to rely upon, he added, which created “very unsatisfactory working conditions” when IT and communications systems were knocked out.

“Even with generators, in this day and age we should not accept load shedding,” Mr Sumner told Tribune Business.

“We should not accept we’re going to be without power at some stage in the working week. At this stage in our development we should be beyond that.”

Expressing frustration with the Bahamas’ seeming lack of infrastructure planning, he added: “We seem to be flying by the seat of our pants. Everything seems to be ad hoc, and to me there seems to be no planning in place to address the issues going forward.

“It’s costing businesses. For any business trying to generate revenues through the sales of goods and services, and having to close down for two to three hours a day, it’s a cost to them. There’s no way to recover those lost revenues.

“You can’t plan your business properly. This just doesn’t just happen once or twice; it happens repeatedly. That’s no way for us to run businesses in this country.”

Emphasising that BEC’s 40 MW of rental generation capacity were no long-term fix for its generation woes, Mr Sumner called on the Corporation to “do better”.

And he urged the Government to make a decision on BEC’s restructuring and selection of an operating partner “post haste”, adding: “This is a discussion we have been having for years, and there is no logical reason to still be having them.

“We’ve been talking for 30-40 years, and it’s time to move from dialogue to action and implement a national energy policy.”