The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

PowerSecure’s business plan for the ‘new Bahamas Electricity Corporation (BEC)’ is tied to the Government’s National Energy policy goal of 30 per cent renewable penetration by 2030, it was revealed yesterday.

Simon Townend, KPMG Corporate Finance (Bahamas) managing director, and a key advisor on the energy reform process, said system reliability and low-cost fuel sourcing would also be important benchmarks for Bahamas Power & Light’s (BPL) new operator.

Addressing a Bahamas Institute of Chartered Accountants (BICA) seminar, Mr Townend said there were several targets outlined in PowerSecure’s business plan, including fuel hedging strategies, the frequency of outages, customer satisfaction and debt collections.

“Fuel prices have been decreasing but we can’t be lulled into a false sense of security over that; we need to find ways to ensure that we get a sustainable reduction in the price of fuel,” said Mr Townend.

“On the transmission and distribution side, the plan is obviously to go as electronic as possible and introduce best practices, GIS systems and data control systems, all with the view to reducing system losses.”

Bahamas Power and Light (BPL) is the new entity which, managed by PowerSecure, will take over operation of BEC’s existing generation, and transmission and distribution, assets with BEC retaining ownership of the real estate.

Mr Townend said the Government and PowerSecure are still working on finalising the five-year management services agreement, which should conclude shortly.

He added that the electricity rate reduction bond will help to refinance BEC’s $450 million debt, close to $100million are existing pension liabilities.

“We have to find a way to manage that debt and refinance it in a way that works for everyone. By doing it this way it allows us to remove the Government guarantee. Unfortunately, $246 million of Government debt is directly related to BEC. The debt has to be paid off.”

Mr Townend said the Government and its advisers are aiming to obtain an investment grade rating of at least ‘BBB’ from Fitch once the rate reduction bond is placed.

He acknowledged that BPL will requirean initial capital injection to cover its first six to 18 months. “There is going to be some additional capacity built into the rate reduction bond so, on top of the legacy liabilities, there will be some additional capital that would come through BEC and be invested into BPL as equity,” Mr Townend said.

He added that BPL itself will not have any debt, and will be able to borrow to invest in new equipment.