The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

The Opposition’s leader yesterday challenged the Prime Minister and his administration to clarify whether Bahamas Power & Light’s (BPL) fuel hedging initiative will be renewed given that the present structure is set to expire at month’s end.

Michael Pintard, also Marco City’s MP, sought to use his Budget debate contribution in the House of Assembly to call out Philip Davis QC and the Government, and put him on the spot, by raising multiple questions concerning BPL and the National Insurance Board (NIB).

Besides the ongoing fuel hedging controversy, Mr Pintard also asked the Prime Minister whether his administration - and BPL - had picked up its predecessor’s negotiations with Shell North America for the proposed liquefied natural gas (LNG) regasification/storage terminal at Clifton Pier and the utility’s proposed hand-over of generation to the global energy giant.

And he also asked Mr Davis to clarify whether an increase in NIB contribution rates will eventually be forthcoming, noting that the Prime Minister had pushed this down the road after his minster of state responsible for the social security system, Myles Laroda, said a rise was vital to ensure its survival. Mr Davis, though, did not take the bait, and was exiting the House chamber when Mr Pintard raised his questions.

The Opposition leader again returned to the charge that the Government, by failing to execute the necessary hedging trades when they came due at end-September and December 2021, had cost BPL taxpayers some $50m through increased fuel costs.

“This administration claims that it wishes to save the Bahamian people money. But yet BPL is presently experiencing expenses. That is due to the failure of this administration to continue to execute the hedge that was put in place by the Free National Movement,” Mr Pintard said.

“We locked in the price per kilowatt hour to somewhere around 10.5 cents per kilowatt hour (KwH), and the failure to lock in the price that we had on the global market - and failure to execute those trades - resulted in the Board, through its chairman [Pedro Rolle], reaching the point where they had to pass through the additional costs to the consumer. I think was something around 3.2 cents (per KwH).”

BPL’s fuel hedge was implemented in summer 2020 at COVID-19’s peak. The present structure is due to expire at month’s end, and the Government has given no indication as to whether it will be renewed and a new hedge put in place. However, some $29m worth of spending has been budgeted for the upcoming 2022-2023 fiscal year to cover what is described as “finance charges (hedging charges)”.

Given the increase in global oil price volatility, which yesterday left per barrel prices on the West Texas Intermediate and Brent Crude indices trading at $119 and $120.4, respectively, the fuel charge component of BPL bills will almost inevitably increase regardless of whether a new hedging structure is put in place.

However, Mr Pintard yesterday argued that the impact of rising fuel costs has been exacerbated by the Government’s failure to execute the hedging strategy. As a result, he voiced fears that the total electricity bills faced by consumers and households are set to soar over the August/September period when they traditionally peak due to the summer months.