The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

Amid intense criticism of the pace of New Providence electricity supply post-Matthew, the Opposition’s deputy leader believes Bahamas Power and Light (BPL) and its management company were “set up to fail”.

K P Turnquest told Tribune Business: “There is no question that BPL was set up to fail. There is no way that it could continue to operate the way it was operating. Even with jettisoning the legacy debt, they are still straddled with a very inefficient plant.

“Unless the private entity owns the facility, they are not going to put any skin in the game. They are not going to invest in any new equipment. They are going to do their technical assessment and advise you, the shareholder, that if you want an efficient plant you are going to have to put in money.”

Rather than sell the former Bahamas Electricity Corporation (BEC) via a privatisation exercise, the Christir administration transferred all its assets to a new operating subsidiary, BPL.

It then hired Carolinas-based PowerSecure as BPL’s management partner on a five-year deal worth a minimum of $10 million, and maximum of $25 million, depending on whether it hits performance and success targets.

But, following a summer in which New Providence has been plagued by more energy blackouts, BPL and PowerSecure have come under further fire for what many perceive as the protracted restoration process post-Matthew. Some areas have taken more than two weeks to be re-energised.

Some have suggested the restoration would have been much faster under the ‘old BEC’, and claimed the monopoly utility’s efforts lacked sufficient manpower (help from outside contractors) and co-ordination.

BPL, though, has said it is dealing with numerous wires downed by Matthew, while the devastation and proximity of surrounding tree branches has complicated efforts to rebuild its transmission and distribution network.

“BPL asked for a rate increase and the Government said no. You’re set-up to fail; you’re stuck. It’s no secret they were not able to respond the way they wanted; they don’t have the resources. Old, inefficient equipment and a rate structure that is unsustainable,” said Mr Turnquest.

BPL appears financially-strapped, and PowerSecure has its hands tied, until the Government refinances BEC’s legacy debt via the promised issuance of a rate reduction bond (RRB).

That bond is designed to refinance $650 million, including legacy bank and other debt; BEC’s pension deficit; environmental liabilities; redundancies and other problem areas.

The refinanced debt will be removed from BEC’s balance sheet via a special purpose vehicle (SPV), paving the way for PowerSecure and BPL to raise new financing - such as the funds needed for a New Providence power plant.

There has been no indication from the Government, though, on when the RRB will be placed, thus forcing BPL and PowerSecure to continue to muddle through as best they can.