A former chairman of the Bahamas Electricity Corporation (BEC) is challenging claims that the company will break even in 2012. Al Jarrett, the retired banker and former chairman, said based on current figures there is no way BEC will come even close to turning a profit. In fact, it will be lucky if it manages to stay afloat amid rising debt.
"I don't know how they are going to pay it," he said. "Let's deal with reality. When you take into consideration they are not correcting their receivables, not to mention the fact they had to rent a 20-megawatt plant to assist them with the power generation this summer. BEC is not making a profit." Jarrett also referred to a $30 million debt from FirstCaribbean, taken on to pay the company's oil bill for October and November. BEC also owes an additional $200 million in debt, he said, which will reach maturity in August.
In response, Michael Moss, the current chairman, told Guardian Business that the company should see the return of stability in 2012. The turnaround, he said, will come despite the corporation being cash starved for years prior to his tenure, which in turn caused BEC to rack up massive debt. "We are slowly bringing it back around," he explained. "These are facts. It is a historical fact that when you cash starve an organization, you create a scenario where it can't meet its expenses."
In regards to the debts, Moss did not dispute the sums, but said "you can borrow up to the hill and that won't impact profitability". Going forward, chipping away at this debt and improving efficiency should mean stabilization in 2012. In particular, he pointed to the five percent increase in tariffs for electricity consumption. That tariff will provide up to $12 million in added revenue this year. Meanwhile, the government has recently taken on the responsibility of street lights, accounting for $12 million more in savings. Recent strides in efficiency improvements should add another $8 million to the bottom line in 2012, Moss argued, resulting in $32 million in incremental funds flowing into BEC "that was not there before".
Moss said this three-pronged approach is central to the recovery of BEC. When asked about the company relationship with its oil suppliers, the chairman described it as "good, not great". Whereas the bill to the oil supplier once stood at $200 million, he told Guardian Business it now rests at around $120 million. "It's a working relationship. Anytime there is a significant debt owed to a supplier, relations could be a little strained," he said. "But it's a good relationship and they have seen we've taken strides to make our payments."
Back in November, the chairman of the PLP, Bradley Roberts, claimed that BEC's oil supplier refused to discharge cargo due to high debt and overdue charges. Moss told Guardian Business that the Public Treasury did pay $30 million to Shell, BEC's fuel supplier, on behalf of the company back in 2009. Since then, no further payments have been made to Shell by the Public Treasury, he said.
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