Bahamas Electricity Corporation (BEC) is simply a disaster

D’Aguilar: BEC is a Disaster

By Jones Bahamas:

A leading businessmen is urging the government to tackle energy reform.  Super Wash President and member of the Coalition for Responsible Taxation Dionisio D’Aguilar said that today’s electricity costs are twice what they should be and said the Bahamas Electricity Corporation (BEC) is simply as a disaster.

“BEC is in just an absolute horrendous condition.  I’m a former director of BEC.  I was on the board of BEC until the last general election and I can tell you it is a disaster, it is bankrupt and if they won’t tell you, that’s what it is, they have no money,” he said.

Mr. D’Aguilar’s comments came during a recent Rotary luncheon meeting.

He said that BEC is plagued by a vicious cycle and questioned how the power company would support the demand from the upcoming mega Baha Mar resort.

“People don’t pay their bills, you don’t get the parts, so you don’t get money in to buy the parts in order to fix your generators so you can't do advance purchasing, so your generators are constantly down,” he said.

“When Baha Mar kicks in we’re going to be in an even worse position.  When you speak to the people at BEC, their essentially generating what we demand now.”

Earlier this month, customers took to social media outlets to vent their frustration over repeated power outages after BEC experienced three engine failures.

At last report, BEC Chairman Leslie Miller renewed calls for the government to invest in a new $200 million power plant in an effort the meet the increasing demand for electricity.

He also told the Bahama Journal that the power company is looking to bring in more generators to meet the additional demand from Baha Mar.

Due to the numerous engine failures at Clifton Pier, Mr. Miller also said that Bahamians can expect to see an increase in their electricity bills by next month.

“The surcharge is going to go up appreciably due to the fact that we had to rely more on Blue Hill than Clifton Pier.  Every day that we have to rely on Blue Hill over Clifton with the total output at Blue Hill – it cost us an extra quarter of a million dollars per day for fuel, its $10,000 an hour, its approximately $250,000 a day extra that compute out to as much as five sets per kilowatt hour on your next electricity bill,” he said.

In an effort to get the ball rolling on tackling energy reform, last month, The Bahamas Chamber of Commerce and Employers Confederation (BCCEC) along with the Coalition for Responsible Taxation presented the Christie Administration with a report on how the government can efficiently generate energy.

The report lays out an action plan to reduce electricity cost within the next two to three years and the construction of new power plant by 2016.

The report emphasised the critical importance of reducing energy costs in an effort lessen the long term negative effects on disposable income due to the implementation of Value Added Tax (VAT).

15 September, 2014

Jones Bahamas

Bahamas Electricity Corporation (BEC) is in crisis... ...The dysfunctional state of the corporation is having harmful effects on The Bahamas... ...And now BEC’s debt burden could hurt the country’s credit rating

BEC and the government’s debt position

The Nassau Guardian Editorial

The Bahamas Electricity Corporation (BEC) is in crisis. It has a quarter of a billion dollars in debt the government has to back, it may lose $50 million this year and it is unable to provide enough power to keep the lights on in the high-demand summer season.

Successive political administrations have made all kinds of decisions over the last decade that have brought BEC to its knees. The dysfunctional state of the corporation is now increasingly having harmful effects on The Bahamas.

The high cost of power produced by BEC serves as a large across-the-board tax on Bahamians, increasing the cost of goods and services. The summer blackouts inconvenience businesses and homeowners. And now BEC’s debt burden could hurt the country’s credit rating.

Moody’s is warning the government that rising debt held by public sector corporations such as BEC could hurt the country’s rating going forward. According to its latest credit opinion, The Bahamas retains its negative outlook due to the difficulty in achieving fiscal consolidation necessary to stabilize debt and increase revenue in the short term. A failure to reverse the recent trend of rising debt will place downward pressure on the country’s future rating, the report added, particularly with the “crystallization” of liabilities held by BEC.

The Bahamas’ bond rating was downgraded to Baa1 from A3 last December.

The government says it has 60 energy proposals before it and it is in the process of reviewing those proposals. One of those proposals is from SGI Global Holdings Ltd. It is represented by attorney John Bostwick and thinks a power barge concept makes far more sense than any of the other energy proposals before the government.

Executives from the firm have drafted a proposal arguing it could slash the average cost of electricity from $0.40 per kilowatt-hour to $0.28 per kilowatt-hour (kWh) in the first year if allowed to enter the marketplace. In year seven, the international firm says it could reduce the cost of electricity to $0.25 per kWh.

At some point, the government has to make a decision on the “major change” it will create in the local energy sector. The status quo is a barrier to economic growth, an annoyance to the public and it harms the Bahamian credit position.

If private firms are able to enter the market and assist the government by providing energy at lower rates than BEC, why not quickly move to allow private firms to assist?

We are at the end of the first year of this Progressive Liberal Party (PLP) term. It went by quickly. Despite all the talk thus far about BEC and energy, under the PLP BEC continues to spiral. A paradigm shift is needed in the Bahamian energy sector.

If the PLP waits too long to decide on this change The Bahamas will be further harmed, more money will be wasted and the change desired may not take effect until after the next general election, as energy plants take time to set up.

We hope the Cabinet understands that success in bringing down the cost of power is as much a priority now as our crime and unemployment problems.

April 20, 2013

thenassauguardian

Caribbean Blog International

Corruption Rocks The Bahamas Electricity Corporation - BEC

Corruption Rocks BEC

ByCandia Dames

candiadames@hotmail.com

Nassau, Bahamas

10/02/2004

 

 

The Bahamas Electricity Corporation lost about $100 million over the last five years as a result of businesspersons and BEC employees working in cahoots in an unscrupulous practice that involves meter tampering.

 

New figures reveal that BEC lost $18.54 million in 2003 in non-technical losses.  New Providence accounted for $14.79 million in losses and the Family Islands made up for the remaining $3.75 million.

 

This serious leak in the corporation's revenue has reportedly been having a direct negative impact on the corporation's profitability for decades.

 

As a result, BEC is in the process of installing new electricity consumption meters, which can be read remotely and automatically, reducing errors and consequential queries.

 

The meters will be installed at all residences in the Bahamas and in the Family Islands that get their electricity from BEC.  The corporation is also putting in place a more high-tech system to cut back on the losses suffered when BEC workers under read the meters of commercial clients reportedly for kickbacks.

 

BEC officials expect that this will also result in reduced labour costs, a reduction in the need to estimate bills and a reduction in customer service queries as well as an improvement in revenue.

 

The losses occur as a result of wrongful actions taken by some employees in reading residential meters, but primarily among commercial clients, the Journal has learnt.

 

According to documents obtained by the Bahama Journal in a recent investigation, over the last five years, BEC's operating and administrative expenses had an average increase of 42 percent.

 

But the corporation's revenues increased by only 37 percent during the same period.

Actuaries have warned that the disparity in those two figures would create serious concerns for BEC unless the problem is arrested.

 

Corporation officials, who have put in place aggressive measures over the last year to make BEC more efficient, are said to be concerned as well about abuse of overtime and stealing within the corporation.

 

The Journal has learnt that while BEC still has a lot of house cleaning to do, some turnaround is already evident.

 

According to documents, accounts receivables improved by about $40 million as of the end of September 2003, standing at about $60 million, compared to $104 million the year before.

 

But while BEC makes what management has called much-needed strides to improve efficiency, it is faced with reaching conclusion on a new industrial contract for members of the Bahamas Electrical Workers Union.

 

The union is making several demands, including wage increases and improved pension fund benefits. BEC employees make no contributions to their pension fund.

 

As it stands now, the corporation contributes what would amount to 13 percent of each worker's salary to the fund.

 

But a recent actuarial report determined that the plan is under funded to the tune of $22 million. The corporation this year plans to make up that shortfall by increasing contributions to 16.6 percent.

 

This would amount to an annual increase in contributions made by the corporation from $4.5 million to $5.7 million.

 

However, the union is reportedly demanding that that amount be raised to 26.2 percent, which would mean a contribution of $7.6 million.

 

Because of the increases it plans to make as a result of actuarial realities, the corporation says it is in no financial position to address the union's request for a change in the actuarial rate.

 

Both sides are also said to be locking horns over a proposed merit pay system, which would reward employees, beginning in the third year of the contract, salary increases between 3 percent and 8 percent according to their on-the-job performance.

 

The corporation estimates that the new industrial contract would cost BEC an additional $16 million over a four-year agreement; but the union is reportedly demanding a $26.9 million increase.

 

Now faced with mounting pressure from the BEWU's leadership, BEC's board executives continue to point to what they say are realities they simply cannot ignore.

 

But the board, led by former banker Al Jarrett, continues to highlight its key accomplishments, like refinancing Inter-American Development Bank multi-currency loans, which will save BEC tens of millions of dollars in interest and exchange rate costs.

 

Other achievements are an historic reduction in electricity rates throughout the Bahamas, which executives say has had a major economic impact on the entire Bahamian economy.

 

There is also now a 3 percent interest payment on all customer deposits; Major savings in oil storage facilities from the signing of a new five-year contract last July; and major savings from the signing of a new five-year oil contract.

 

Mr. Jarrett, who came to the corporation promoting a partnership between BEC's management and union, is now facing increasing accusations from union leaders that he is anti-union.

 

At a recent corporation function, the Chairman said, "We must pay closer attention to the issues that divide us by creating more dialogue with staff members at all levels. We must listen more - be more focused on the vision and the mission, rather than tearing down each other."