The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The FNM’s finance chief yesterday said he is in the dark over why the proceeds from hiking Bahamas Power & Light’s (BPL) fuel charge by up to 163 percent have seemingly not been used to cut its $184m debt.

Kwasi Thompson, former minister of state for finance in the Minnis administration, told Tribune Business that the Opposition has “very serious questions” over the fact that BPL’s debt to the Government has been reduced by so little compared to the $192.3m peak it hit in March 2023.

The Ministry of Finance’s just-released public debt bulletin shows that outstanding sum was slashed by just $8.3m during the nine months to end-September even though BPL’s fuel charge ‘glide path’, which generated howls of protests from businesses and households due to the triple-digit percentage increases imposed on them last summer, was supposed to generate funds to pay this off.

Simon Wilson, the Ministry of Finance’s financial secretary, could not be reached for comment before press time last night. However, Mr Thompson told this newspaper: “What jumped out at me was the amount that BPL... remember, BPL borrowed that $110m and, at the time, Alfred Sears, who had ministerial responsibility, said the fuel charge was being increased to pay back those amounts the Government loaned to BPL.

“What we saw, although the [light] bill went up and the fuel charge went up to the complete detriment of the public, the monies don’t seem to have been repaid. We have very serious questions with respect to this. That is very troubling.”

Mr Sears, then-minister of works and utilities, on Wednesday, October 5, 2022, confirmed that BPL’s fuel charge was being increased to both pay back the Government’s loan to the state-owned electricity provider and clear debts owed to its fuel provider, Shell. Laws and regulations passed in 2020 require that the fuel charge by used solely to cover BPL’s fuel expenses as a pass through to consumers.

“The Government has been assisting BPL through various financing mechanisms to cover the arrears owing by BPL to Shell,” Mr Sears told the House of Assembly then. “A firm arrangement has now been arrived at whereby as of October 1, 2022, the Government will make a monthly subvention of $10m to Shell to be applied to BPL’s arrears.

“This arrangement will continue to June 2023. It is important to note that BPL, as it has been doing, will continue to meet current charges from Shell. The net effect of these arrangements will be the elimination of arrears, while remaining current with payments for fuel from Shell.”

Mr Sears branded the economic and financial pain that BPL’s fuel hikes would cause as “a necessary sacrifice to achieve the objective of energy independence and greater reliance on renewables; to give BPL a chance to modernise its operations and to improve the competitive index of The Bahamas so that the cost of doing business in our country is less burdensome and more attractive”.

Describing BPL as being “on the precipice of financial fall-out if we do not act immediately to align the fuel charge with current global oil prices”, Mr Sears said the utility is now “at a crossroads” after diesel fuel prices jumped by some 100 percent.

“We are cognisant that an increase in the fuel charge may not be popular at this time,” he added. “However, I assure you that deferring it or refusing to do it will create greater hardships down the road or, worse case scenario, result in the catastrophic failure of BPL - something no right-thinking Bahamian could ever consider.”

Mr Thompson, though, in a statement issued yesterday, said the figures relating to BPL’s loans and debts in the latest Ministry of Finance publication “raise critical unanswered issues that the Government must address.

“Primarily, this administration must come clean and explain why, after doubling and tripling the BPL fuel charge this past year, little of those funds have been applied to pay down the loan to BPL that was supposed to be paid off by the spike in the fuel charge,” he argued.

“Minister Sears, then responsible for BPL, told the Bahamian people in February of last year that the $150m in loans to BPL to pay off fuel arrears would be ‘repaid from the funds recovered via the fuel surcharge’. According to the Government, that was a part of the reason why the fuel charge had to increase by up to 163 percent.

“After taking massive sums in additional fuel charge from struggling Bahamians, the report indicates that BPL’s indebtedness to the central government has remained virtually unchanged since the imposition of the fee hike, despite collecting tens of millions of dollars from Bahamian consumers expressly for that purpose,” Mr Thompson continued.

“Bahamians are left to demand: What did BPL do with the funds that were supposed to pay off this loan from the taxpayers? Or, if BPL paid it, what did the Government do with the funds?.. It is inexcusable that, after more than a year, we do not know the details of the loan transaction. Bahamians have struggled to pay the surcharge so why should we be left to guess and speculate where the money went?”

Mr Thompson also queried the $249m line of credit that the Government accessed from Deutsche Bank in September. “Yet again, although this new foreign overdraft was done in December, yet again, the Government..... did not tell the Bahamian people the interest rate, terms and conditions of this line of credit,” he added.

“Where did the proceeds go? Is it a short-term or long-term facility? Was any portion of the IDB-supported $500m loan used to pay back any advances from the credit line?