IN the wake of criticism about increases to Bahamas Power and Light bills, the Office of the Prime Minister released a statement last night explaining why the course of action was taken.
“When the current administration came into office, we were faced with an historic economic, unemployment, and fiscal crisis,” OPM said.
“Notwithstanding the severe fiscal constraints, we took a number of steps to provide direct relief to families. But the most important task before us was to get the economy moving again. Throughout the first year in office, the Bahamian economy has continued to add jobs.
“Early in 2022, Bahamas Power and Light requested that an increase in fuel charges to be charged to customers, reflecting the huge leap in global energy prices following Russia’s invasion of Ukraine.
“The prime minister understood that despite the fact that the economic recovery was underway, a great number of Bahamians were still looking for work. In addition, gas prices were rising, and global inflation was driving prices up across the board – making life even more unaffordable, especially for the unemployed.
“He decided to delay the increase, so that Bahamians did not have to shoulder all these burdens simultaneously, so that more Bahamians would have an opportunity to find work, and so that summer electricity bills (when usage typically rises substantially) would not be too expensive for families to afford,” OPM said.
The statement said several measures have been put in place to “ensure that the increase was handled as carefully as possible”.
“For a large majority of BPL customers, this initial increase will be less than $20 a month. If the needed increase had been rolled out all at once, as suggested by some, the resulting surge in monthly electrical bills would be far higher. Instead of approving a sudden increase, the fuel charges are being increased in stages to allow the Bahamian people to prepare and adjust their electricity consumption patterns.
“In addition, we will raise the VAT ceiling from $300 to $400. This means that Bahamian households whose monthly electric bills are below $400 will not be paying VAT on their bills. This will offset some of the costs associated with the monthly increase, especially for lower-income households.”
OPM said the increase was implemented when the weather is cooling down and electrical consumption is decreasing as a result.
“The corresponding decrease in electric bills that typically occurs during this time of year will partially absorb the fuel charge increase.
“The destruction caused by the Clifton plant fire in 2018 and issues with the installation of the Wärtsilä engines created a situation where we were forced to rely primarily on diesel-powered engines instead of engines that ran on the more affordable heavy fuel oil. “This resulted in cost overruns that the savings from the fuel hedge facility introduced in 2020 could offset. As a result, when we assumed office in 2021 it was clear that new investments were needed to strengthen BPL’s financial situation.”
The statement also said “contrary to reports, the hedge funding initiative continues to be used to generate savings where possible”.