BPL ‘shambles’: We pay now or pay later

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Power & Light (BPL) “shambles” will only get worse the longer critical reforms are delayed, an ex-Chamber chairman is warning, as he added: “We pay now or we pay later.”

Robert Myers, who headed the private sector body when it sought to quantify the impact of high energy costs, told Tribune Business that the “hundreds of millions” sucked away from businesses and households over the past two decades to pay BPL bills is “absolute insanity”.

Speaking just prior to revelations by Ryan Pinder KC, the attorney general, about the “dire” condition of the state-owned energy monopoly’s generation plant and transmission and distribution network, he warned that the impact will only become “more taxing” unless private sector operators who can “produce power at a reasonable rate” take over BPL’s operations.

The Davis administration’s Electricity Bill 2024 appears designed to facilitate just that by paving the way to break BPL into potentially three separate entities, with private sector partners providing capital and management expertise via outsourcing and public-private partnership (PPP) agreements.

Mr Myers told this newspaper that BPL and wider energy sector reform cannot come early enough, saying: “I just think the longer we wait to get somebody in that actually can produce power at a reasonable rate, the more and more taxing it is on the whole country.

“The problem is it’s only getting worse because they are losing more. A lot of what we are having to pay for in our power bills is the decades of deficits, losses and debt. It gets to the point where nobody takes it or the taxpayer has to pay for a big write-off so somebody actually buys it.

“It’s a shambles. You pay now or you pay later, but you are going to pay. We are paying for massive inefficiencies and it just seems like the same old thing. We’ve got to get somebody in there who knows how to run these things, run transmission and distribution services. BPL has got to get efficient. They’ve got to figure out how to run efficiently.”

Mr Pinder last Thursday told the Senate that BPL needs more than 400 mega watts (MW) of new generation capacity to address a “dire” situation requiring between 60-80 percent of its existing plant to be replaced within five years.

He sought to justify the Government’s plans for fundamental energy sector reform by affirming that both BPL and the Public Treasury “cannot afford” the estimated $291m required to invest in new generation engines nationwide.

Mr Myers recalled the saying that “insanity is doing the same thing over and over again and expecting different results”, arguing that this applied to the approaches adopted by successive FNM and PLP administrations towards BPL by delaying the inevitable reforms.

“Everybody’s scratching their heads wondering what the problem is. Talk and don’t act,” he added of past policies. “It adds to the existing fiscal condition of the country and where are we going? It’s not going in the right direction. Hats off to them if this administration makes the decision. At least they made a decision. Let’s hope they do it.”

Mr Myers recalled that BPL’s high energy costs, unreliable supply and inefficiencies were all “critical ten years ago” when the Chamber sought to measure these impacts on the private sector and wider economy as part of its studies on VAT’s introduction.

“It was almost a $1bn saving to everybody’s bottom line if we got things moving in the right direction,” Mr Myers said of those studies. “It was a significant number if we got power down to 11 cents per kilowatt hour. They [the Government] had offers on the table to do that.

“It would have been a massive contribution to everybody’s bottom line. It was millions of dollars per year in savings to the Government, the private sector, to everybody. That money would instead have gone to everybody’s bottom line, so rather than paying for oil, it goes into the economy and would be a massive shot in the arm to the rest of the economy.

“It adds free cash that people can spend on expanding their business or building their office or building their own home. Think about what we all could have saved and put into our pocket if that power was at 11 cents per KWh. Think about the hundreds of millions of dollars that could have gone into other things than buying US or Middle Eastern oil,” Mr Myers continued.

“It could have gone into building schools, paving roads and equipping the police. Think about how many hundreds of millions the Government could have used for the development of the nation, and how that could have gone into the economy and expanded businesses. It’s absolute insanity. It’s hundreds of millions of dollars. It’s absolute insanity. It’s been going on for far too long.

“The electricity bills that people are trying to pay, it’s just killing them. You’ve got people paying electricity bills almost as high as their mortgage. It’s nuts.”

Mr Pinder, last week affirming that 60 percent of New Providence’s existing generation capacity, and 80 percent of what is present in the Family Islands, will be “at or near the end of their useful life” by 2029, added that BPL’s financing needs to effect change for Nassau alone are some $211m.

He said BPL’s reliance on rental generation for 113 MW of power on New Providence, and 32 MW in the Family Islands, is costing the state-owned utility an “unsustainable” $42m per annum that it is unable to fully recover from household and business customers.

And, with BPL needing to replace some 72 percent of its own “peak load generation” capacity for New Providence over the next five years, and energy demand anticipated to increase by an average 5 percent per annum, the Attorney General argued that the “status quo” was untenable given the financial numbers involved.

“BPL has severe generation constraints, and the picture is not looking any better going forward under the status quo,” Mr Pinder said. “It is a safe estimate that 60 percent of BPL’s plant in New Providence and 80 percent in the Family Islands needs to be replaced within the next five years due to the generation engines being at or near the end of their useful life.

“Accounting for contingencies, at least 340 MW is needed in New Providence. This is to account for peak load, which was 281 MW in 2023 plus what’s called the N-2 contingencies in case you lose your two largest generators. We also anticipate a 5 percent growth in generation demand each year going forward.

“As to the generation needs, BPL requires replacement for 113 MW of rental generation and 203 MW of aged or obsolete generation fleet. Look at those numbers again: More than 40 percent of the peak load generation is rented by BPL, and over 72 percent of peak load generation that BPL owns needs replacement in the near future,” he added.

“It is estimated in New Providence alone, BPL anticipates needing more than $211m to replace the ageing fleet, to incorporate renewables and to facilitate maintenance/overhauls and other auxiliary needs.”

Comments

Sickened says...

The problem is no political party wants to reduce the flow of funds going to the oil cartel here in The Bahamas. Senior members of both parties benefit from the extra tens of millions we pay in unnecessarily high electricity costs. Money flows up - and the politicians like it this way. The destruction of the country while the right people benefit is exactly according to plan.

Posted 13 May 2024, 2:19 p.m. Suggest removal

ExposedU2C says...

Bingo!

It seems Myers is happy to have Davis pave the way for the local oil cartel to rule supreme with their foreign partners over all aspects of our country's electrical energy needs. And if he thinks our electricity bills are too high now, just wait until the existing local oil cartel and their foreign friends are put in the driving seat of determining a rate structure based on perceived ability of the customer to pay the rate. That's just plain outright discrimination which will have the wealthier in our country shutting down their businesses and fleeing with their families to other nations. These idiots would be shocked to know how many wealthier Bahamians have more than one passport with close ties to another country.

Posted 13 May 2024, 3:09 p.m. Suggest removal

ScubaSteve says...

Here's an easy solution: Why don't we approach our new BEST friends (China) for a special loan to help finance the cost of the upgrades to the power plant? We already agreed to have China help finance the cost of the new hospital on New Providence. Why stop there?! In fact, let's have them help with the roads, schools, and airport upgrades on the Out Islands too.

Posted 13 May 2024, 5:53 p.m. Suggest removal

ScubaSteve says...

Point of clarification. Before everyone loses their marbles -- my comment above was purely sarcasm. Or was it???? LOL!!!

Posted 13 May 2024, 5:55 p.m. Suggest removal

DWW says...

UNION

Posted 14 May 2024, 1:51 p.m. Suggest removal

stillwaters says...

So, what was all that money we were paying for electricity last summer all about????????

Posted 14 May 2024, 2:52 p.m. Suggest removal

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