The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

GRAND Bahama’s Chamber of Commerce president is warning that taxpayers may ultimately be “saddled” with more than $400m in debt repayment obligations linked to the island’s electrical utility as he voiced concern over whether its “90-95 percent” supply reliability will endure.

Ralph Hepburn said it was “shocking to me” after Tribune Business revealed on Friday that Grand Bahama Power Company has yet to receive the $80m in capital works funding approved by Parliament prior to the May 12 general election.

He added that this is “creating more questions in the business community” over the reliability and cost of the island’s energy supply, including whether the utility has sufficient funding to complete vital network repairs and upgrades.

And the GB Chamber president also queried why the Davis administration, having just months ago obtained Parliament’s approval to borrow $200m to finance GB Power’s purchase from Emera, and only closing the deal in early May, was returning so swiftly to gain permission to not only refinance that sum but also an extra $131.82m representing loans left on the utility’s books by the previous owner.

Mr Hepburn, asserting that the Government would have been aware of the pre-existing debt from the due diligence it conducted on GB Power prior to the acquisition, not only challenged why this is being publicly disclosed now but said that - when the $80m capital works borrowing is added in - Bahamian citizens in their role as taxpayers are now being called upon to guarantee repayment of almost $412m in borrowings.

The fate of the $80m, which was to be borrowed from Royal Bank of Canada (RBC), and why it has yet to be made available to GB Power despite Parliament approving the Government guaranteeing its repayment, has yet to be disclosed. “When I saw the news report, my first question was what happened to the $80m?” Mr Hepburn told Tribune Business.

“They initially came to Parliament to borrow $200m for the shares and $80m for the operations, repairs and refurbishment of GB Power. My question was: What happened to that?” Mr Hepburn then decried the lack of consultation with the Chamber, the wider business community and Grand Bahama residents over the Government’s GB Power purchase ever since the deal was unveiled by the Prime Minister in early 2026.

Pointing out that the announcement, plus Parliament’s debate over the initial $280m worth of borrowing and government guarantees, took place without consultation, the GB Chamber chief added: “Now, five months after the sale was completed and the initial requirement for $280m, they are coming back for $331m to refinance $109.82m in Bahamian dollars and $22m in US dollars.

“As a business person, one of the first things when you are purchasing or taking over any company, you do due diligence on the assets and liabilities. How come you are coming back just give months later to buy out these liabilities? In the first half of your fiscal year, you are going to absorb more than 50 percent of the purchase price of the company to pay off debt.

“You are increasing your debt of $200m by $131m, which is more than 50 percent of the amount you needed [to buy it]. It’s going to pay off debt. For us, looking forward to a reduction in power bills, we are saddled with the additional burden of paying off the original $280m plus now the additional $131.82m, which is more than $400m. That is what we as taxpayers will be left to pay.”

The latest GB Power borrowing resolution, tabled in the House of Assembly last week will - if approved - convert the $200m previously borrowed by the Government to finance the acquisition from a guaranteed contingent liability into direct taxpayer debt. And the $131.82m in legacy GB Power loans, left behind by Emera, will be transferred from a former privately-owned company and converted into direct Bahamian taxpayer debt.

No mention is made in the new resolution of the $80m capital works financing that was supposed to be sourced from RBC. Refinancings, such as this $331.82m, are typically done if the borrower, in this case the Government and Bahamian people, can obtain better terms and conditions - in particular, a lower interest rate and reduced debt servicing costs.

The refinancing will also remove debt liabilities from both GB Power and Grand Bahama Energy Company, the Government-owned special purpose vehicle (SPV) that financed the acquisition, leaving them with clean balance sheets albeit switching the repayment obligations to Bahamian taxpayers. The Government has yet to unveil its strategy for GB Power, although this is likely to involve switching to LNG and solar energy similar to BPL.

Mr Hepburn, though, said the GB Chamber and many in the private sector are wondering how to make GB Power “what it needs to be and take it beyond that” given that the utility has been nationalised and is now publicly owned. He added that many in Grand Bahama had become used to a utility that was seen as relatively efficiently run, dependable and reliable, with regular equipment upgrades and replacements, at least in comparison with BPL.

“Grand Bahama Power Company traditionally maintained a constant system of improvements in terms of maintenance, upgrades and advancing infrastructure, and keeping us in the loop regarding when they were doing maintenance and repairs in certain areas,” Mr Hepburn told Tribune Business.

“Without a level of funding, how will they continue to do that and, if they do not have aggressive maintenance and preventative maintenance due to a lack of financing that’s pulled away on debt, we could be in a position where the reliability we came to rely on is pulled away and we could be just another Nassau.

“We are used to at least 90-95 percent of the year our power functions properly, no issues. We are now concerned how that is going to happen.” Mr Hepburn said the switch to Bahamas Power & Light’s (BPL) tariff structure, via the so-called Equity Rate Adjustment, has done Grand Bahama’s private sector no favours as it has exposed businesses to higher GB Power fuel charges.

Most companies, the GB Chamber chief said, use more than 800 kilowatt hours (KWh) per month, which pushes them into the higher 21 cents per KWh fuel rate as opposed to the previous 17 cents. “That needs to be revisited as well,” Mr Hepburn added. “Most companies are not happy. Most companies say they have not seen a drop in their bill.

“Consumption has gone up, but the bill has not dropped. The base rate has gone down, but the fuel charge has gone up. The residents are the ones that benefit from the rate change; the businesses are not.”

“All this is doing is creating more questions in the business community as to what is going on,” Mr Hepburn added. “There are other important issues we feel the Government should be looking at - completion of Grand Bahama International Airport, completion of the Freeport Medical Centre and hospital, finding out what is going on on the Lucayan Strip (Grand Lucayan) as it relates to the tourism segment.

“There is financing of future capacity for people to meet demand coming on from cruise tourism and cruise developments. We need to find some way to draw people out of these developments to patronise local businesses. Those are the things that we feel we should be focusing on, not increasing the debt burden on us.”

Mr Hepburn was backed by his immediate predecessor as GB Chamber president, Dillon Knowles, who said his concerns about the impact on GB Power’s profitability and financial sustainability if it adopted BPL’s rate structure without any matching reduction in costs appear to be being realised.

“That’s exactly what I predicted was going to happen,” he said, “and, unfortunately, it’s playing out as I predicted. That does not bode well for the future because one of the things the business community wants to do is develop Grand Bahama’s economy further than it is now, which means even more capital expenditure is needed [by GB Power] - not just to restore capacity we have but build capacity for the future economy we have on the island.

“If we cannot fund maintenance of the existing capacity, how are we going to fund its expansion?” Mr Knowles also questioned why the Government appeared to be going in the opposite direction in Freeport, compared to the rest of The Bahamas, by nationalising GB Power when it is outsourcing much of BPL’s generation capacity to private investors.

“We don’t understand why they insist on nationalising the Freeport system but obviously that’s not going to work for us in Freeport, so we have to look at it again,” Mr Knowles added, pointing out that Emera had previously sought approval for a rate increase to finance much-needed network upgrades.