Political interference has resulted in "low operating efficiency" and "misuse" of the Bahamas Electricity Corporation (BEC) - says Consultant's Report

BEC 'misused' from political interference


By NEIL HARTNELL
Tribune Business Editor


Political interference has resulted in "low operating efficiency" and "misuse" of the Bahamas Electricity Corporation (BEC), a consultant's report has confirmed, urging that it be allowed to operate as a commercial, profit-driven business supervised by an independent regulator.

Fichtner, the German consultants hired to perform an overview of the Bahamian energy sector's ownership and regulatory structure as part of an Inter-American Development Bank (IDB) funded project, recommended that there be "a basic change in the institutional set-up and the existing framework of the regulatory sector".

Noting that BEC was currently under government control, with the administration and BEC effectively regulating itself, the Fichtner report concluded: "The existing direct relationship between the Government of the Bahamas and BEC.... creates direct political influence on the provision of services, which very often results in the misuse of the Corporation for political targets, low operating efficiency due to missing efficiency incentives and low accountability of the utility."

Consultants:

As a result, the consultants urged that going forward the Government had to confine itself to setting policy and strategies for BEC and the energy sector, overseeing their implementation.

An independent regulator, likely the Utilities Regulation & Competition Authority (URCA), was also recommended for the Bahamian energy sector, with BEC charged to "operate as a profitable, commercial enterprise" regardless of whether it is publicly or privately owned.

Fichtner's report also noted that BEC had a "quasi monopoly" under the existing Electricity Act, as no other person could produce power exceeding 250 kilowatts (kWh) without prior approval from the relevant minister. The only exceptions to this were back-up generators.

"The Electricity Act, as the major piece of sector legislation, does not address the relevant issues that are required to implement the objectives of the Government of the Bahamas as set out in the National Energy Policy," the report said. "In fact, the Electricity Act adversely affects the implementation of such policy, and is therefore suggested to be replaced."

Wednesday, April 06, 2011

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