By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamas Power & Light (BPL) has suffered a "frightening" multi-million dollar March revenue drop that threatens the energy provider's very existence if it continues, a Cabinet minister has revealed.

Desmond Bannister, minister of works, told Tribune Business that customer payments on their March electricity bills were "lower than they have ever been for the past five years" as the tourism shutdown, coupled with the COVID-19 lockdown, leaves thousands of businesses and households struggling to meet their obligations.

Declining to give either a dollar or percentage figure for the decline, Mr Bannister said the Government was now faced with "making some policy decisions" with regard to BPL although he declined to detail what those options might be.

He confirmed that BPL's bond refinancing, lasts pegged at $580m and viewed as critical to finally placing the cash-strapped energy monopoly on a sustainable financial and operational footing, was "unlikely to happen any time soon" due to the COVID-19 turbulence in the international capital markets.

The minister, who has Cabinet responsibility for BPL, also acknowledged that its financial state meant the utility faces "a real challenge" to continue its suspension of disconnections beyond March 31 even though many of those impacted - businesses and households - will likely be unable to pay because of almost 100 percent income loss due a combination of the shut down, unemployment and reduced hours.

And he affirmed that BPL's near-bankrupt state also represented a potential obstacle to it taking advantage of the drop in global oil prices below $30 per barrel, as it needed "to be able to pay if it wants to play".

Mr Bannister agreed that the global oil price drop could "ease a lot of the pain" for Bahamians in terms of lower energy and transportation costs, but indicated that BPL was still some way off being able to exploit hedging and other techniques that could give consumers certainty when it comes to the fuel costs that form 50-60 percent of their monthly bills.

"That's a challenge. It's a real challenge. The Government is going to have to look at it from a policy perspective," Mr Bannister responded, when asked by Tribune Business if BPL will be able to maintain its disconnection suspension beyond tomorrow.

"BPL's collections this month are down; lower than it's been for any of the past five years for March. Given the precarious state of the corporation, it cannot continue to operate, cannot continue to exist, in that circumstance.

"The Government is going to have to take some policy decisions with respect to BPL. The BPL Board will have to make some decisions, and the Government is going to have to guide them and see how it can assist from a policy point of view."

Confirming that he had been presented with BPL's March 2020 revenue and collection figures on Friday, Mr Bannister declined to detail precisely how much they were off compared to prior years. "I can tell you millions. I won't tell you the figure. It's by millions," he added. "It would not be fair to BPL to give a figure, but it's down by millions and that's frightening.

"The corporation still has to exist, employees have to be paid, and that's going to be a real challenge if we continue the way we are. It's very difficult, and what happened this month cannot continue."

The seemingly-sharp drop in BPL's revenues is not unexpected given that the Bahamian economy has largely ground to a halt, due to a combination of the tourism industry shutdown and resulting mass lay-offs together with the nationwide COVID-19 lockdown that has closed many other sectors.

This will only have served to exacerbate the state-owned energy monopoly's monthly accounts receivables, which measure the debts owed to it by customers, as these traditionally stand at between $90m to $100m.

Mr Bannister, though, said BPL's problems were being made worse by the failure of customers who can pay not doing so. "If we are in a circumstance where only people unable to pay don't pay, the losses would not be so great," he added.

"BPL has challenges with consumers able to pay but who do not pay. That creates a challenge for the rest of us. It's always been a challenge to ensure some consumers pay their bills, and pay their fair share - that those who can pay, pay their fair share. When we go to smart metering that will change, but with the way the bond market is that's going to be a huge challenge."

Some $30m of the projected $580m proceeds from BPL's bond refinancing has been earmarked for the roll-out of smart meters, which will enable the utility to instantly disconnect bill duckers' services rather than having to visit their homes.

However, with the COVID-19 turmoil sending share prices tumbling across the world, BPL's plans have had to be placed on hold for the time being. "I don't see it happening any time soon," Mr Bannister said of the bond refinancing, "as the markets are now going to be a challenge.

"We have no idea when it will happen bearing in mind that these challenges are unforeseen and unprecedented. If you had told me early last week that I'd wake up and Boris Johnson [the UK prime minister] would have caught coronavirus, I would not have believed you. Everybody, everything... we are all in the unknown and we don't know where it's going to take us.

Reduced global economic activity, and the oil supply war between Russia and Saudi Arabia, has provided one small bright spot for The Bahamas amid the economic gloom with prices at some gas stations in The Bahamas now below $4 per gallon.

The main global oil indices, as Tribune Business went to press last night, showed per barrel prices at between $25 to $27, but Mr Bannister said BPL's parlous financial condition might leave it hard-pressed to take advantage of a key opportunity to reduce energy costs for all Bahamians.

"The oil prices in the market today could be a good opportunity for The Bahamas," the minister conceded to Tribune Business. "It could ease a lot of pain, but we have to be able to pay if we want to play.

"BPL wants to take advantage of the market, but that in itself is a challenge. BPL has to get involved in hedging, and has to get the money to be able to do that. BPL is looking to see if it is at all possible to get involved in hedging practices, and if they can do so it will change everything for them.

"They could put a lid on all fuel costs for the next three years, and protect against any increases in prices for five to six years, maybe even a decade."

Still, despite the likely financial crisis created by COVID-19, Mr Bannister pledged that BPL will provide "exceptional service" this summer due to the recently-installed Wartsila and General Electric (GE) engines that were purchased to end load shedding and blackouts on the generation side.

"We're going to have the power mix to do what we need to do for the Bahamian people," he added. "This is a huge priority. We know what we've been through with energy for the last two decades, and just as we anticipated making a difference for the country we have to face the possibility of not having the funding to do what we have to do.

"Nobody would have anticipated what we're facing today. It's so amazing."