Madam Speaker,
This Government came to office with a clear ambition for the energy future of The Bahamas.
We want every Bahamian household and business, on every island, to have power that is affordable, reliable and increasingly clean.
We want a resilient electricity system that we can rebuild quickly after a hurricane comes to our shores, that no longer rises and falls with every movement in world oil markets, and that becomes a reason for investors to choose The Bahamas rather than a reason to look elsewhere.
That ambition carries a price, and this administration has chosen to embrace it.
This period represents the largest programme of energy investment ever undertaken by any administration in the history of our country.
The reform programme we set out carries more than $1.1 billion in targeted investment, with $820 million directed to New Providence and $324 million to the Family Islands.
In August, the Inter-American Development Bank independently described it as the most ambitious energy reform in our history.
The acquisition of the Grand Bahama Power Company was a part of that ambition, and so is the Resolution now before the House.
Madam Speaker, the Resolution is grounded in the Public Debt Management Act, 2021, which authorises the Minister of Finance to borrow for the purpose of refinancing existing public debt and which requires that certain changes in the form of the public debt come before Parliament.
The Government is therefore seeking the authority of this House, as the law requires and as good governance demands.
As Members will recall, as part of our national energy policy to reduce the electricity costs to Grand Bahamians, the Government acquired the ordinary voting shares of the Grand Bahama Power Company through a Government-owned special purpose vehicle, the Grand Bahama Energy Company.
On the 23rd of March this year, this House approved a resolution authorising the Government to guarantee the borrowings of the Grand Bahama Energy Company through a US$200 million syndicated loan with Standard Chartered Bank and Scotiabank (Bahamas) Limited. The Grand Bahama Power Company also had existing loan facilities totalling $131.8 million dollars.
The Resolution asks this House to authorise the Minister of Finance to borrow for the purpose of refinancing those facilities, which together amount to $331.82 million.
The Minister may do so through Government loan agreements or lines of credit, through the issue of securities, or through other debt instruments.
I want to be precise at the outset, because precision has been in short supply in some of the commentary of recent days.
This resolution is not about adding new debt, authorising new spending, or buying a new asset.
This resolution will allow us to take debts that already exist at commercial bank rates, and asks this House to allow us to place them on better terms within our national debt portfolio, where they can be managed with the scale and discipline that we manage our sovereign liability.
As part of the Government’s broader debt financing exercise for this fiscal year, the Ministry of Finance is preparing to approach the external bond market for a facility sized to meet both the central Government’s refinancing needs and these Grand Bahama obligations.
By consolidating them in that exercise, the Government expects to reduce annual debt service and to secure certainty about future interest payments.
Any Bahamian family that has consolidated several expensive loans with a single loan will recognise the logic.
The benefits to the two companies are considerable.
Once these facilities are retired, the Grand Bahama Energy Company will be left with only its working capital facility to service, which substantially reduces its debt burden and improves its financial flexibility.
The Grand Bahama Power Company will shed significant debt service costs, and savings that would have otherwise gone to the banks can be directed instead to the maintenance, operational improvements and capital works on which the people of Freeport, Eight Mile Rock, West End and East Grand Bahama depend.
A utility relieved of that weight should require less support and fewer subventions from its holding company, which is the outcome every taxpayer wants.
Members opposite have asked why the Government first guaranteed the acquisition loan and now proposes to refinance it as direct debt.
It is a fair question, and the answer is straightforward.
In March, our priority was to complete a transaction with a willing seller on a timetable that protected the people of Grand Bahama, and a guaranteed bank facility offered the fastest and most certain route to closing. The sale closed on the 12th of May.
The sensible next step is to replace short-term commercial financing with longer-term financing at the lower cost the sovereign can command.
The rating agency whose report Members have quoted so freely expressed concern about contingent liabilities sitting outside the Government’s direct accounts. By bringing these obligations onto the Government’s own books, in full view of this House and of the public, we address that concern openly.
That same agency affirmed our rating with a stable outlook only a few weeks ago.
I would invite those who have already declared a downgrade inevitable to allow the evidence to arrive before they announce the verdict.
It has also been suggested that the Government concealed these loans.
Madam Speaker,
The legacy obligations of the Grand Bahama Power Company were identified in the Government’s public debt figures for June of this year, which are published for anyone to read.
They belong to a company the Bahamian people now own, and they must be serviced whether or not this Resolution passes. The real question before the House is whether they are serviced expensively or sensibly.
Let me turn now to the working capital, because on this subject the public has been told something that is inaccurate.
It has been reported that the $80 million approved by Parliament has vanished, that the Grand Bahama Power Company has received nothing, and that critical repairs and battery storage have been put on hold.
I understand why those reports troubled the employees of the company and the businesses of the island, and I respect the people who raised their concerns.
The facts are these.
An $80 million working capital facility is available at the Grand Bahama Energy Company. The Grand Bahama Power Company received its first disbursement from that facility in the third quarter of this year, and it will receive further disbursements as they are required.
A well-run facility is drawn down as the work demands, in the way a careful manager uses a line of credit, rather than emptied on the first day to sit idle and accrue interest.
Since the Equity Rate Adjustment took effect following the close of the sale, no capital project at the Grand Bahama Power Company has been paused or cancelled for lack of funding.
The working capital the company has received is funding work at the generation plant and across the transmission and distribution system, together with improvements in customer service, information technology, security, and buildings and grounds.
On battery storage, the company has recently issued an Expression of Interest, with the intention of procuring storage capacity from 2027.
That storage will support the solar plants already serving the island, so that power produced in daylight can serve homes after dark, and it will allow new solar generation to connect over the next three years in support of our national target of thirty percent renewable energy by 2030.
On reliability, the business community in Freeport has said it is accustomed to power that works and fears losing it. I share their ambition to keep it and to improve upon it. The Grand Bahama Power Company is on track to beat its five-year average for system reliability, which would make this its best year for reliability since Hurricane Dorian.
On bills, it is worth remembering where we began.
Before the acquisition, a household in Pineridge could pay about $200 for 495 kilowatt hours, while a family on Long Island using the same amount paid about $121. Under the Equity Rate Adjustment, a Grand Bahama household using 200 kilowatt hours a month has seen its bill fall from about $78 to about $40, and the large majority of residential customers are expected to pay no VAT on their electricity.
Madam Speaker, the acquisition did more than bring a utility into public hands. Through the Grand Bahama Energy Company, it created the instrument that will bring coherent strategy to the whole of our public electricity sector.
The Government has since expanded the company’s mandate beyond its role as parent of the Grand Bahama Power Company to include corporate oversight of all the Government’s interests in the public utilities, Bahamas Power and Light among them.
The Grand Bahama Energy Company will set enterprise-wide strategy, policies, standards, frameworks and controls, while Bahamas Power and Light and the Grand Bahama Power Company remain accountable for implementation and operational performance.
It will provide fuel hedging and procurement, asset management, long-term capacity planning and procurement, consolidated financial reporting to the Government, debt management, capital allocation, risk management, governance and compliance, and capacity building.
The wider programme is moving forward on every front.
In June, the financing for the liquefied natural gas transformation closed at $379.2 million, which its lead arranger described as the largest local financing on record in this country.
In July, ground was broken on the LNG terminal at Clifton Pier. Natural gas is scheduled to reach Clifton early in the new year and Blue Hills late in 2027, and the retirement of expensive rented generation will begin in January.
The Inter-American Development Bank is financing $90 million for smart meters and outage management, so that faults can be located in minutes rather than hours.
In the Family Islands, hybrid microgrids combining solar, battery storage and natural gas broke ground in Abaco and Eleuthera in April, and similar systems are planned for Long Island, San Salvador and Cat Island.
Madam Speaker, every Member who votes on this Resolution should also weigh the alternative, because the choice before us is between investment and the status quo.
The status quo means remaining almost entirely dependent on imported fuel, with fuel alone accounting for around half of the total power bill.
Until this administration acted, renewables supplied barely a fraction of one percent of our power, and the grid still loses more than a tenth of what it generates before it reaches a customer.
The status quo also means the Grand Bahama of 2024, when ageing engines failed, load shedding became routine, and residents were asked to accept a rate increase in the midst of the outages.
It means remembering that Hurricane Dorian inflicted more than $130 million in damage on our power sector and flooded the generating plant on Grand Bahama, and then rebuilding the same vulnerable system in the same vulnerable way.
And it means telling every investor who considers Freeport or the Family Islands that the cost and reliability of power will remain a reason to go elsewhere.
This Government will not accept that status quo. We will not leave the next generation an energy system that was already failing the last.
Madam Speaker,
When it is complete, the base of our power in New Providence will come from natural gas in efficient modern plants, supported by large solar installations feeding a strengthened grid.
Bills will become more predictable as less of what Bahamians pay is tied to oil markets we cannot control, and the investor who once hesitated over the cost of power will find a country that has done the difficult work of reforming it.
None of this pretends that the work is finished or that the transition will be painless. There will be days when the grid falters while it is being rebuilt, and when that happens we will say so and we will fix it.
I would rather this Government be judged on the courage to build than excused for the comfort of standing still.
Madam Speaker, this Resolution is a careful and responsible step within that larger programme. It replaces costly debt with less expensive debt, gives the Grand Bahama Power Company room to invest, and places the management of these obligations where it belongs, with the Ministry of Finance under the authority of this House and in full public view.
This Government is building on progress, and by God’s grace we will deliver to the Bahamian people an energy system worthy of their ambition.
I commend the Resolution to this Honourable House.