Bahamians had been told to expect an announcement of the company selected to manage the Bahamas Electricity Corporation (BEC) shortly after Prime Minister Perry Christie returned to The Bahamas from China. That has not happened, and now the announcement has been delayed yet again.
The government sought to suggest that this delay is somehow "in the best interest of the Bahamian people". Deputy Prime Minister Philip Davis, who as minister of public works has Cabinet responsibility for BEC, has deferred any announcements about BEC until after interventions and discussions coming out of an energy security summit to be hosted by United States Vice President Joe Biden in Washington, D.C. early this week. At that summit, Biden will deliver the policy position of the U.S. as regards energy security for the Caribbean.
Davis on Friday said, "The prime minister has indicated that he's having a meeting next week with the vice president of the United States of America where energy will be discussed as the topic and he thought before they make the announcement perhaps he should hear what they are saying about this aspect of energy in the whole Caribbean."
"So we think we are where we want to be and it's only a question as to those things happening."
Th decision to restructure BEC was taken in 2013, at which time the Corporation was to be partially privatized. The government then announced in 2014 that it had discarded the initial plan to split BEC into separate power generation and power distribution businesses.The new path announced was that the government would instead retain 100 percent ownership of BEC and hire a management company to run the Corporation, in much the same way Vancouver Airport Services Ltd. was hired to run the Lynden Pindling International Airport.
The resultant partnership, Nassau Airport Development Company (NAD), is the model the Christie Administration intends to pursue with BEC. It was rumored that there were three companies on the shortlist, and recent rumors had suggested that China State Construction and Engineering Corporation had won the contract. Christie said he had "intervened for the NAD model" as a means to deal with BEC's $450 million legacy debt, which he said ought to be the priority rather than generation and distribution.
At a recent energy summit, Davis elaborated on the government's intention to 'ring-fence' the legacy debt: the government plans to issue what they are calling 'rate-reduction bonds' in connection with the debt. These bonds involve the securitization of a revenue stream to be created by charging utility users a fee.
The IMF defines securitization as the process in which certain types of assets are pooled so that they can be repackaged into interest-bearing securities. The interest and principal payments from the assets are passed through to the purchasers of the securities. Davis admitted at the energy summit that the government's plan in effect means that the consumer will pay the $450 million debt.
As to the delay, the Davis said over the weekend that getting the undertaking right is well worth the wait.
"First of all, it is a monumental step we are taking and I think we want to ensure that what we are doing is in the best interest of the Bahamian people," said Davis.
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