The Tribune

By NEIL HARTNELL 

Tribune Business Editor 

nhartnell@tribunemedia.net

THE Prime Minister yesterday pledged that further details on wide-ranging energy reforms will be revealed “as soon as the ink is dry”, promising that Bahamians will not be “left in the dark”.

Philip Davis KC, in concluding the 2024-2025 Budget debate in the House of Assembly, spent much of his address justifying the Government’s approach to changing Bahamas Power & Light (BPL) and the wider energy industry while conceding that not all aspects of the deal have been publicly disclosed because they are still being negotiated.

BPL, and the Government’s, new private sector partners are Bahamas Grid Company, which with its Island Grid/Pike Electrical manager, will oversee the transformation of New Providence’s energy grid, plus Bahamas Utility Company, the FOCOL Holdings subsidiary, which will be responsible for constructing a new 177 Mega Watt (MW) liquefied natural gas (LNG) generation plant at Blue Hills.

Mr Davis acknowledged the unanswered questions surrounding the deal with key details yet to be agreed with BPL’s selected partners, including the preferred bidders for the New Providence and Family Island renewable and solar generation contracts.

Referring to Jobeth Coleby-Davis, minister of energy and transport, he said: “The leader of the side opposite [Michael Pintard] asked many questions about the BPL reforms, which the member for Elizabeth addressed during her contribution.

“The member was forthright and disclosed the facts that she had on hand. She explained that negotiations were ongoing in certain respects, and details of those negotiations would be disclosed when finalised. And I can assure you that as soon as the ink is dry on those agreements, the details will be shared with the Bahamian people.”

Most Bahamians and observers would agree that reform at BPL and in the wider energy sector has been needed for almost two decades, dating back to at least 2006-2007, and Mr Davis yesterday asserted that this cannot be postponed any longer otherwise the country’s state-owned power provider and energy grid will be at the point of collapse.

“BPL has needed major reforms for many years. Much of the existing infra- structure and machinery have needed to be replaced and modernised for decades. At this point, we are facing the prospect of an energy crisis as crucial parts of our aging power grid are in danger of collapse, which would literally leave us in the dark,” the Prime Minister argued.

“Let’s be honest. There’s a reason that governments have kicked the can down the road, hoping and praying that band-aids and patches could hold our electricity grid together, declining to do the hard and challenging work of comprehensive reform. Fixing BPL ain’t for the faint of heart, and no one says it’s going to happen overnight. But it’s happening – finally.”

Mr Davis said the $1bn required to fix BPL, with $500m needed to cover its legacy debt and a further half a billion dollars to fund necessary capital infrastructure upgrades, is three times’ greater than

the Government’s $344.5m capital spending Budget for the 2024-2025 fiscal year.

“To put that in perspective, our entire capital expenditure budget for this upcoming fiscal year, which is spread across all ministries, would not even make up one third of the amount needed just for BPL,” he added. “The entire capital expenditure budget, that is only one-third of what is required for BPL.” Hence the need to attract private sector partners who can access the financing required.

“So we had three paths to choose from,” Mr Davis said. “The first option was to continue business as usual. To continue, in other words, with the status quo — using patchwork fixes as things break, and pray that nothing major goes down. With this option, we would continue burning dirty, expensive fuels that pollute our air, make climate change worse, and making electricity bills more expensive.

“The status quo path would also mean continuing to let debts rise, and leaving BPL’s finances in disarray, threatening employee pensions and preventing the company from rolling out real solutions.

“This might – and I emphasize might – because we must remember the real possibility of catastrophe; this might have cost us less in the shorter term, but that’s the way only short-term thinkers think. Not the way people who actually understand the true risks and consequences of the status quo think,” the Prime Minister continued.

“The second option was to pay the full bill for modernisation and upgrades ourselves. No private partners, just putting the expense on the backs of the Bahamian public. This would require us to add $500m in debt on top of the $500m in legacy debt.

“It would take many years for these changes to be rolled out, which means that it would be years before bills could be lowered and the power grid could be strengthened and expanded to prevent failures and make load shedding a thing of the past,” he added.

“Even after all the reforms and upgrades were in place, the $1bn in debt we’d incur would limit the amount we could decrease electricity bills by because, ultimately, BPL would have to generate the money to pay that $1bn back. Taking this option would come at the cost of delaying energy reforms, holding back our economic growth and putting an even bigger bill on the Bahamian people.

As a result, Mr Davis said his administration has opted for comprehensive energy reform through partnership. “The decisions we made to select our energy partners are based on the recognised need for urgency. Our power grid doesn’t have years to wait for our resources to catch up with our needs,” he added.

“We partnered with a wide range of local solar providers to ensure that solar solutions could be fine tuned for each island and implemented simultaneously. The selections were made based on a full RFP process that included competitive bidding and objective standards for selection. In cases where we used alternative procurement processes, such as single sourcing, the appropriate official justifications and selection channels were used.”