By KHRISNA RUSSELL
Deputy Chief Reporter
FINANCIAL crisis was cited as the reason government yesterday passed a resolution to borrow $211m to aid the Bahamas Electricity Corporation.
This undesirable situation, the resolution said, was caused by the high cost of fuel in 2018, funding of capital projects, a high expense ratio and reduced cash flows due to tariff reductions.
The move allows BEC to refinance existing loans by entering into a non-revolving term loan facility agreement with various banks.
The banks collectively include Scotiabank Limited, First Caribbean International Bank, Royal Bank of Canada, Bank of The Bahamas and Citibank. The resolution was debated in Parliament last week and passed yesterday.
It comes amid reports Bahamas Power and Light has earmarked $20m to pay out more than 300 employees who have expressed interest in taking voluntary separation packages.
"Whereas BEC has found it desirable for the better performance of its functions under the act to refinance its existing loans to enter into a non-revolving term loan facility agreement with various banks whereby the banks have made available to BEC as Borrower loan facilities in the maximum aggregate principal amount of $211m in currency of either the Bahamas or the United States of America together with interests thereon at the rate and upon the terms and conditions set out in the facility agreement," the resolution read.
It continued: "Whereas it is a pre-condition of the facility agreement that the government of the Commonwealth of the Bahamas guarantees to the banks the repayment obligations of BEC in respect of the principal of the loan and interest thereon under the facility agreement.
"And whereas by virtue of section 17 of the Act the government may guarantee in such manner and upon such terms as it may think fit the payment of the interest and principal or either of them any loan proposed to be raised by BEC.
"And whereas by virtue of section 17 of the Financial Administration and Audit Act, chapter 359, 2000 revised edition of the Statute Law of the Bahamas, no loans shall be raised by the government and no guarantees involving a financial liability shall be binding upon the government unless entered into with the prior approval of the House of Assembly signified by resolution thereof."
Last week, Chamber of Commerce's Chief Executive Edison Sumner said Bahamians must brace for "a very expensive summer" as global oil prices surged to $80 per barrel. He told Tribune Business greater renewable energy penetration and usage "can't come soon enough", with no Bahamian or business able to escape the impact of energy costs that are forecast to soon exceed $100 per barrel.
Virtually all companies and households will feel the impact in their Bahamas Power & Light (BPL) bills and at the gasoline pump.
Mr Sumner said there was little most Bahamians can do to mitigate the immediate impact, other than focus on energy conservation, as he renewed private sector calls for a regulatory framework that will better spur more rapid take-up of renewable energy technologies.
The Chamber is itself moving to improve access to renewable energy financing, with Mr Sumner disclosing it will shortly unveil an initiative to help persons fund the installation of roof-top solar panels.
In the meantime, he urged energy consumers to "use only what you have to', reiterating that it could be "a long, hot summer" with the Bahamas totally at the mercy of oil-producing countries and global political developments.