The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Opposition’s leader yesterday accused the Prime Minister of “not telling the full story” after the latter confirmed the Government is “spending millions each month” to minimise electricity costs for households and businesses.

Michael Pintard told Tribune Business that Philip Davis QC was giving Bahamians a misleading impression that his administration was saving them “a substantial amount of money” by using taxpayer dollars to subsidise Bahamas Power & Light’s (BPL) fuel costs.

On the same day that Shevonn Cambridge, BPL’s chief executive, last week declined to confirm to this newspaper whether the Government is subsidising the state-owned utility’s multi-million dollar monthly fuel bill, Mr Davis on Thursday effectively affirmed this is the case via a tweet on his personal Twitter account.

“Helping Bahamians cope with high prices is a priority,” Mr Davis wrote. “Among other steps, we’ve reduced import duties on dozens of food items, we’re building more affordable housing and we’re spending millions each month to make sure higher electricity costs are not passed along to consumers.”

The Prime Minister gave no figure for these “millions”, but Mr Pintard said he had been informed the Government was using between $3m-$5m worth of taxpayer dollars per month (up to $60m per year) to subsidise BPL’s fuel costs and part-pay its supplier, Shell - to whom he alleged it now owes $50m in unpaid bills.

The Opposition has previously charged that such subsidies are illegal under regulations passed in 2020 for BPL’s fuel hedging initiative, something Mr Pintard reiterated yesterday. And he called on the Utilities Regulation and Competition Authority (URCA), which has supervisory oversight of BPL, to “weigh in” on the fuel cost issue and whether it is supposed to be fully paid by consumers as opposed to being subsidised by the Government.

While emphasising that the Free National Movement (FNM) “do not wish for electricity rates to go up”, he argued that Bahamian households and businesses will have to pay either way - either as taxpayers or BPL consumers - for these subsidies which would not have been needed the Davis administration had executed the September and December 2021 trades associated with the fuel hedging initiative it met in place upon taking office almost one year ago.

Asserting that he wished to “go as far as” suggesting Bahamians will have to pay increased taxes as a result, Mr Pintard urged the Government to lay out a “coherent” alternative plan for resolving BPL’s financial and operational woes given that it was seemingly uninterested in proceeding with the $535m Rate Reduction Bond (RRB) refinancing and fuel hedging left in place by the former administration.

And he also accused the Prime Minister of “always avoiding having these conversations with the public” over the “tough decisions” that will be required to address The Bahamas’ post-COVID economic and fiscal woes, which include the $12bn-plus national debt and National Insurance Board (NIB) as well as BPL.

Mr Pintard, speaking after Mr Cambridge confirmed to Tribune Business on Friday that BPL’s refinancing and New Providence power plant deal with Shell North America are both “in abeyance”, again admitted it was “regrettable” that the Minnis administration in which he served as a Cabinet minister failed to pull the trigger on the Rate Reduction Bond in particular.

With the Davis administration “moving away” from that financing mechanism, seemingly fearing it would place an unbearable financial burden on Bahamians if executed now due to the unfavourable global interest rate environment, the FNM leader demanded that the Government lay out an “alternative” and said: “We are still awaiting as a public a plan, a coherent plan, for how to deal with the issues at BPL. They are duty bound to lay out a plan, ideally with timelines.”

Tribune Business reported last week that the Government had to be subsidising BPL’s fuel charge as the latest electricity bills for August shows this is still at 10.5 cents per kilowatt hour (KWh) - the same level it was at prior to June 2022 when, under regulations enacted two years ago, it is supposed to be adjusted to account for prevailing global oil prices.

Arguing that the Davis administration was not being “transparent” on the matter, Mr Pintard said the “millions each month” referred to by the Prime Minister would not have been required had it executed the necessary trades for BPL’s fuel hedging initiative in time.

While the hedging structure enacted under its Minnis predecessor remains in place, the Opposition leader charged that the missed trades in September and December last year had exposed a portion of BPL’s fuel needs to oil market volatility with Brent crude prices last night still at $101 per barrel.

“If you have only hedged 50 percent of your fuel needs, you have to pay the spot price for the rest. They did nothing to lock in a preferential price, and the public is paying back as taxpayers and consumers for their failure,” Mr Pintard told this newspaper. “We are costing the taxpayer in a substantial way.

“What the Prime Minister is not saying to the public is the reason the Government is doing what it is doing now, which is a violation of the law, is as a result of his administration not taking good advice in its first week on the job. The failure to execute the hedge made us vulnerable to unforeseen price escalations. We are subject to the vagaries and volatility in the oil market.

“He is in no position to boast about what he’s doing. He has forced the country into paying $3m-$5m a month for fuel. This is something he has brought on the country for failure to take advice.... The Prime Minister is giving Bahamians the impression he’s saving a substantial sum of money without telling the whole story. He’s caused the public to be in the position they are in,” the Opposition leader continued.

“The public will still pay for it. One way or another, the taxpayers will pay. The question is when and how. BPL does not have the money, the Government does not have the money. The present course of action is not sustainable. My understanding is that they already owe Shell more than $50m fuel in any event. The failure to execute the hedge is causing you to subsidise.”

Mr Pintard queried where the unbudgeted spending is coming from, although a line in the Ministry of Finance’s Budget - entitled Budget Reserve Appropriations - is understood to be a “reserve” for unplanned contingencies and could have been called upon. This more than doubled year-over-year, rising from $23.25m to $54.25m for the 2022-2023 fiscal year - a $31m or 133 percent.

The Opposition’s leader, meanwhile, called out URCA over the Government’s subsidising of BPL’s fuel costs and if this may violate the Bahamas Electricity Corporation (Amendment) Regulations 2020 that stipulate these must be passed on in full to end users.

“URCA has a responsibility in this,” Mr Pintard told Tribune Business. “URCA does not have the luxury of being quiet on the course of action the Government is taking, and ought to weigh in. Failing to weigh in raises the question about whether their are exercising their responsibility for oversight on how the Government handles the fuel pass through and all matters associated with BPL.

“This comes on the heels of URCA’s electricity regulation head [Mr Cambridge] recently taking the helm at BPL. The public ought to be reassured that URCA has the capacity to operate independently against the backdrop of him recently becoming chief executive at BPL.”