FOR a number of hours over the weekend, residents in the Winton area experienced a power outage. It wasn’t load shedding this time, rather that the substation there had tripped offline – but for residents sitting with no lights and no air conditioning, there was little difference.
It is also not the only outage that residents have experienced recently – and will likely continue to experience. Power generation has not been Bahamas Power & Light’s only issue – with its distribution network creaking at the seams with age and the need for investment.
BPL’s chairman, Dr Donovan Moxey, has conceded as much – telling Tribune Business last week that “there are certain parts of the network not working optimally”. They are trying to fix the network “given the limits in funding”.
Now, more than ever, the question is – where will that investment come from?
The finances at BPL were looking perilous even before COVID-19 hit the economy. Now BPL has taken a look at the plummeting amounts of revenue, and announced that it is going to resume disconnections. Already voices have urged for disconnections to be the last resort – Chamber of Commerce director Debbie Deal among them last week, warning of the difficulties for business to get restarted if they are cut off, and for the large numbers of unemployed to be able to pay at all as they wait for the economy to restart and money to be put back in their pockets.
The effects of COVID-19, however, are not the root of the problem – the problem goes back further than that.
BPL had a plan to refinance – but it was a plan that didn’t win the backing of investors. A significant part of that was that the loan wasn’t going to be backed by the government. If you’re a lender and you see a utility looking for money backed by the government, that adds confidence that come what may, your loan will get paid back. If you see a utility – particularly one that has had a rollercoaster history such as the power provider for The Bahamas – without that backing… well, it’s perhaps no surprise there were few takers for the deal.
Add a shortage of people paying their bills because of COVID-19 on top of that financial situation, and it’s bad news piled on top of bad news.
Where does this leave BPL? It’s obviously unsustainable commercially to continually have not enough money coming in to cover the costs of supply. Hopefully, as the economy starts to move back up the gears, that situation will become easier. That won’t fix the underlying problem though – of finding the finance it needs to restructure and pay for the upgrades to the distribution network.
For that problem, the government may need to be the one to step in – either to give its backing, essentially using its support to underwrite the loan, or to be the lender themselves. That would have a cost to the public, of course, but part of the original plan would have seen a bond added to the BPL bill each month in order to repay the costs.
If that plan was deemed to be good enough to offer to investors, is it not good enough for the government to be the investor?
More to the point, as we report today, the government has already been pumping “millions” into BPL during COVID-19’s peak to make up for the shortfalls in payments from customers – so we’re already paying out money to keep the utility going.
There are two problems here – the short-term one of providing power to people who presently cannot pay for it, and the long-term one of an electric grid that doesn’t meet the needs of the nation. Both problems need money to solve them. One has already seen government intervention, so perhaps it’s time for the second to see the same.
One thing is for certain – the time to solve both problems is now, not kicking the can down the road again. That’s how we got here in the first place.