Bahamas Government Reiterates Commitment to Deal With Electricity Problems

NASSAU, Bahamas – Prime Minister Philip Davis says “hundreds of millions of dollars” would be needed to fix the aging systems at the Bahamas Power and Light (BLP) company following a series of blackouts that hit The Bahamas in recent months.

In a nationwide radio and television broadcast on Tuesday night, Prime Minister Davis recalled that in April last year, he provided Parliament with “the most complete accounting of our energy system that any government had ever given,” adding “I did not soften it then, and I will not soften it now”.

He said  that BPL had been carrying more than half a billion dollars of debt, and another hundred million in unfunded pension obligations. US$600 million in total, on the shoulders of a company that could not pay for its own repairs.

“Engineers told us we needed $500 million in critical upgrades to prevent a complete failure of our electrical infrastructure. Not an inconvenience. A collapse,” he said, noting that the company was running 29 power stations across 17 islands with equipment from different manufacturers.

“Some engines so old that no one still makes the parts to fix them. More than 60 per cent of the generation equipment in New Providence needed replacing.  In the Family Islands, that number was 80 per cent,”  Prime Minister Davis said, adding that “to keep the lights on at all, we rented engines for over US$40 million dollars a year”.

He described the situation as “money out the door, and not one dollar of it buying an asset we would own at the end,”  adding “the system we inherited was not designed for the country we have become”.

Davis said that some of the equipment and cables were installed and laid down pre-independence, and a lot of it is more than a generation old and that no government prior to his administration had taken the “bold position to rebuild a system that was made for the 21st century, taking into account rising temperatures, more violent and destructive hurricanes, and an economy that is growing faster than the time needed to complete the upgrades”.

Prime Minister Davis said that while “big changes are underway, the country is still quite a way from that reality” given that the energy system is made up of two separate, but connected parts, namely transmission and distribution

“Transmission and distribution are the poles, the wires, the substations, the transformers and the cables that carry that power from the generators to your street and into your home.

You can have every engine in the fleet running perfectly, and if an overhead or underground cable fails or a transformer catches fire at a substation, the lights will go out,” Prime Minister Davis said, adding “that is what happened on the 30th of July.”

He said that a transformer failure at one of the substations took the whole island down, insisting that it was not a shortage of engines.

Prime Minister Davis told the population that this is not an excuse, but an explanation and that they are entitled to know why “although it does not ease the misery we all felt.

“These challenges are compounded by the global heat wave we have been experiencing because of El Niño. The demand on the system has broken our previous peak twice this season. Heat not only raises demand and increases the strain on the equipment; it accelerates its deterioration.

“We are operating an old system in a new climate reality. And we do this on a chain of islands in the path of an increasingly violent hurricane season, in a world where energy supply chains are strained, and traditional short-term lead items have become long-term lead items and long-term lead items have become longer-term lead items as governments around the world race to upgrade their energy infrastructure.”

Prime Minister Davis insisted that this is a climate and geographic reality and not a complaint. “It is the terrain on which we are building….I do not say this to point fingers. The responsibility to act is ours.

“We are not here to manage decline. We are not here to defend the status quo. We are transforming the whole system,  generation, fuel, transmission, distribution, metering, finance, and governance. What we inherited is not what we will leave behind,”  he said, adding a crisis is an opportunity to fix what does not work.

Davis said that for the first time in The Bahamas’s history, the country has a comprehensive, nationwide plan to modernise how it generates, stores and distributes electricity across the whole archipelago.

“That plan is not a press release. It is under construction right now. We separated generation from transmission and distribution, because that is how serious energy systems around the world are run. ”

He said that the Bahamas Grid Company was established to take on New Providence’s transmission and distribution, and it has delivered a US$130 million foundational upgrade to the grid.

He said at BPL, the work has been just as hard and far less visible, but that the Equity Rate Adjustment saved consumers US$11.5 million last year.

Davis said that as a result of the improvements, the US-based rating agency, Moody’s has upgraded the country’s credit outlook twice in the span of one year, after not doing so in nearly two decades, citing the energy reform as one of the major reasons.

“That is how a crisis becomes an opportunity: we stop spending only to survive the next emergency and start investing to prevent the next emergency. BPL will continue restoring dependable generation while moving from rented, temporary units to permanent, efficient capacity.”

He said last year BPL spent approximately US20milliononovertimedespitethefactalltransmissionanddistributionworkistheresponsibilityofBGCandthatinasingle12-monthperiod,threeemployeesinonedepartmentreceivedmorethanUS600,000 in overtime between them.

“The overwhelming majority of BPL’s workers are decent, skilled Bahamians who keep our lights on and go out in storms when the rest of us are told to stay inside. They have my respect and my thanks. This is not about them.

“This is about a system that permitted this type of abuse. A failure of management, of controls, of oversight, going back many years and across administrations. It is not credible that a person works 24 hours straight, three days running, and does safe work. It is not fair to the ratepayer, who funds every dollar.”

Prime Minister Davis reminded the population that he said in Parliament that his administration will not accept the status quo, adding “I meant it then, and I mean it now.

“Righting this ship requires more than engines and cable. It requires a utility properly governed, staffed, financed, and held to account. It requires management that answers for performance. That work is underway.

“It will not be comfortable, and it will not always be popular. But it is the only route to a country where the power is stable, reliable and inexpensive,” he said, saying that the last general election provided the government with a renewed mandate “to build on progress and to confront the problems that others found too difficult or too costly to solve”.

He said building a grid that can carry the country forward “is the hardest infrastructure challenge our country has faced in 50 years of independence.

“We will finish what we started. Not because it will be easy, but because the alternative is another generation of Bahamians living in the dark and being told to wait. You have waited long enough. What we inherited is not what we will leave behind,” Prime Minister Davis added.