The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Cabinet minister has voiced optimism that Bahamas Power & Light's (BPL) initials will no longer be "a bad word" as it readies to break ground on its latest power plant once a $535m bond is placed.

Desmond Bannister, the deputy prime minister, told Tribune Business that the Government plans "to be in Parliament very soon" with changes to the Rate Reduction Bond Act that will make BPL's mammoth financing more attractive to potential investors.

Confirming that the proposed amendments are being studied by various attorneys, who he declined to name, Mr Bannister expressed confidence that BPL's imminent rate reduction bond issue will obtain sufficiently low interest rates to ease the debt servicing burden that will be imposed on Bahamian consumers despite the market factors working against this.

While not going into detail on the proposed changes to the Act, he told this newspaper: "There are any number of reforms that are going to make it more palatable to investors and give us the flexibility that we need.

"BPL has the opportunity to get extremely low rates in this market notwithstanding the market conditions, notwithstanding what other rates may have been obtained. BPL has an opportunity to get very low rates. We will come with the legislation very, very soon."

The passage of the Rate Reduction Bond Act reforms is among the final key steps to facilitate BPL's refinancing and planned infrastructure improvements. Given that interest and principal repayments to investors will be financed by an additional charge to BPL bills, consumers and businesses will be praying the utility and its advisers achieve Mr Bannister's pledge of low bond interest rates.

Many observers believe this will be extremely hard to achieve given COVID-19's impact on the capital markets; BPL's already-precarious financial situation and $90m monthly customer receivable; and The Bahamas' recent sovereign downgrades and high interest rates paid by the Government on its latest borrowings.

When Tribune Business pointed out that many Bahamians would be sceptical about BPL's planned turnaround, Mr Bannister said of the naysayers: "I am sure they are always there, and I'm sure we've shown them over the last two years what we can do with lower bills. We will show that we can continue to do better.

"We've been through some tough times where BPL, those initials, were almost a bad word. Now it's starting to be different, and people are noticing."

Dr Donovan Moxey, BPL's chairman, told Tribune Business that the state-owned energy monopoly will be "breaking ground" on its latest $70m-$80m power plant at Clifton Pier "as soon as the rate reduction bond closes".

Estimating that the plant, which will provide around 90 Mega Watts (MW) of power for New Providence, will take around 17-18 months to construct, he added that BPL's bond offering was likely to slip beyond the end-January target for its issuance due to the wait for Parliament to pass the necessary legal changes.

"We're still working as hard as we can to get this done as soon as possible," Dr Moxey told this newspaper. "Our intention was to get this closed by January. There might be some slippage in the date. the parliamentary approvals on the legislative changes are key. We're working with the Attorney General's Office to get those changes finalised so they go through the appropriate procedural steps.'

Besides the $70m to $80m for Clifton Pier's 'Station D', a further $30m from the bond issue will be used by BPL to finance implementation of advanced metering infrastructure (AMI). Around $25m will also be invested in improving BPL's grid stability, so utility-scale and roof-top solar energy can be integrated with it, with a significant sum also earmarked for upgrading its transmission and distribution (T&D) network.

"We've developed a five-year plan, and intend to complete a significant amount of this, if not all of this, in five years," Dr Moxey added. "The plan began a year ago, and we're in the second year, and we're looking to move everything forward between now and the beginning of 2025."