Mr. Ingraham was making his contribution to a debate on Tuesday on a resolution to refinance the loan which is being made possible through a consortium of banks, including Scotiabank Bahamas, Citibank, FirstCaribbean International Bank, Royal Bank of Canada and the Bank of the Bahamas.
“Either BEC is unable to or choses not to, but it is my view that BEC ought to have been able to refinance this loan without the Government of the Bahamas guaranteeing the loan because BEC has advanced, in my judgment, to that point where it is able to borrow on its own using its own balance sheet, assets and profitability,” Mr. Ingraham said.
Mr. Ingraham pointed out that current interest rates internationally are now at their lowest levels in over 40 years and many companies and individuals have taken advantage of the low interest environment to refinance debt and thereby put them in a position to have more cash flow and lesser payments to make.
“And so it makes good sense to refinance a loan taken out in the 90s, tied to interest rates and it makes sense of course to realize a savings for the corporation and hence a savings for the Bahamian people,” he said.
Refinancing the loan would result in a $5million savings for the corporation, according to government officials.
Mr. Ingraham pointed out that the IDB has been “good to The Bahamas” and has assisted in basic infrastructure throughout the country.
“It has helped us with funding fundamental infrastructure development and they continue to do so,” he said. “And so the fact that we are now able to pay off many of our loans with them early does not represent The Bahamas saying to the IDB that ‘we don’t need you any more’ because we do. But in this particular case, as there may be in a couple of other cases, it may be in the best interest to refinance the loan and pay less. We do so with our gratitude remaining intact.”
While commending the government for the recent decrease in electricity rates, Mr. Ingraham, however, questioned the authority by which those reductions came about.
He noted that there was an amendment by the Free National Movement administration in 2000 to give the Public Utilities Commission (PUC) power to reduce electricity rates.
“We wanted to take it out of the hands of ministers,” he said. “Is that law effective?”
“Is the PUC Act chapter 306 the law of the land and if so, do they now have the responsibility to set rates for utilities such as electricity or is there something that prevents them from doing so?” Mr. Ingraham questioned. “If it is not effective, when does it propose to make it effective or does it not propose to turn the responsibility for fixing rates to an independent utilities commission? That’s certainly what the law has intended and that law has not been changed?”
Prime Minister Perry Christie pointed out that the PUC does not yet have the jurisdiction to deal with BEC.
Additionally, it was revealed that when BEC received a loan of $109 million in 1990, the IDB imposed some terms on the Bahamas.
Mr. Ingraham pointed out that if the government could have done better, it may not have accepted some of the terms laid out by the IDB.
Back in those days, electricity bills were issued quarterly, however, Mr. Ingraham said one of the conditions of the loan was that BEC began billing consumers monthly. He added that other conditions included electricity rates being increased “substantially” and the government paying off its electricity bills that it had with BEC.
“The PLP did its utmost to restrict the impact of the rate increases on consumers,” Mr. Ingraham said. “The government had some public meetings and they decided at the end of it that in order to meet the IDB’s conditions for rate increases, it had to be spread out over a five year period. Every year for five years, BEC increased its electricity rates in order for the government to comply with the loan.”
He said that the rates remained at the same levels for 10 years before being decreased effective October 1. Mr. Ingraham pointed out that there were no increases under the Free National Movement’s administration, although two rate increases left in place by the PLP came into effect under the FNM.
By Hadassah Hall, The Bahama Journal
