PM Christie talks “Financial Services” at CHOGM forum in Malta

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This week in the Bahamas Commentary by Elcott Coleby: Nov 23 – 27

Ministers Strachan and Darville engaged in conversation with Prime Minister
Ministers Strachan and Darville engaged in conversation with Prime Minister

In addressing delegates at a Commonwealth Business Forum this week, Bahamas Prime Minister the Rt. Hon. Perry G. Christie stressed the need for responsible policy and vigilance in protecting the integrity and international reputation of our financial services.

“The world has never felt so big and yet so small at the same time. The problems that we face in 2015 are more complex. The battlefields of global wars are as much on the front line as in the board rooms of financial services businesses. We must be vigilant and jealously guard our jurisdictions from those that wish to engage in financial crimes and other imprudent activities. We must all adopt responsible policy,” said the Prime Minister.

Citing statistical evidence and education and training infrastructure to underscore the importance of financial services to the country’s overall economy, the Prime Minister said that the industry supports over 7,000 direct and indirect jobs and accounts for 15% of the country’s GDP. The industry also “encourages investment in high quality legal, finance and accounting education” said Christie and pointed to the Bahamas Institute of Financial Services as a principal driver in this, creating a regional center of excellence in financial services education and training for over 40 years.

Providing an overview of the country’s public finances and economy, Mr. Christie said that the successful introduction of Value Added Tax (VAT) in January of this year has contributed to the continued improvement in the overall fiscal position of the country.

“Additionally” said Christie, “the country has been able to attract over five billion dollars in foreign direct investments over the past several years and continues to experience positive economic growth from investment-led projects supporting sustained activity in the construction sector, as well as visitor stopovers generating higher levels of hotel occupancy and hotel rooms revenue.”

The Commonwealth Business Forum (CBF) is a gathering of business and government leaders from around the world organized as part of the Commonwealth Heads of Government Meeting held in Malta this week. This year’s theme is “Adding global value – Creating a more prosperous Commonwealth.” The first CBF was held in 1997 in Edinburgh, Scotland.

Mitchell: Bahamas “not a difficult country to which to migrate legally”

Wishing to put on the record some observations about migration from The Bahamas’ point of view, Bahamas Foreign Minister Fred Mitchell told fellow commonwealth country ministers that The Bahamas is not a difficult country to live and work in.

Mitchell made these observations as he delivered the Bahamas’ statement on migration at a Foreign Minister’s meeting held during the Commonwealth Heads of Government meeting (CHOGM) this week in Malta.

“The Bahamas is not a difficult country to which to migrate lawfully” said Mitchell. “There are job categories in the country where the skills are not available locally and the result is there is significant lawful migration.”

That said, the Minister explained that irregular or illegal migration continues to plague this country with some 4,000 migrants repatriated, mostly to Haiti in 2015 alone. He claimed that this level of illegal migration threatens the stability of The Bahamas and raises questions of cultural clashes and national security.

“The issue we face is the unlawful or irregular migration in numbers that threaten to destabilize the country. It has become a question of cultural clashes and more recently a question of national security.”

According to Minister Mitchell, even though local and foreign interests have portrayed many of the migrants as helpless victims, intelligence has revealed that this trade is driven by a sophisticated criminal enterprise and to some degree the migration trade has surpassed the drug trade as a legal and national security problem.

“But more recently this is a pattern of a sophisticated criminal enterprise that accepts up to 5,000 dollars a head depending on whether the journey is to the United States or to us in the Bahamas, using not the old fashioned sloops crowded with people but modern vessels.

“The activist community often both at home and abroad stands unwittingly (we hope) as a convenient cover for those who seek to break the laws on immigration and exploit human suffering for selfish ends” said Mitchell.

This week in Parliament

A compendium of bills designed to reform and restructure the Bahamas Electricity Corporation (BEC) specifically and the energy sector generally were debated and passed in the House on Monday of this week. The bills were the ELECTRICITY BILL, 2015; the UTILITIES REGULATION AND COMPETITION AUTHORITY (AMENDMENT) BILL, 2015 and the ELECTRICITY RATE REDUCTION BOND BILL, 2015

Below is a summary of the House communication delivered by the bill’s sponsor, Deputy Prime Minister and Minister for Works and Urban Development with responsibility for BEC, the Hon. Philip Davis.

The purpose of the Electricity Bill 2015, is to reform the electricity sector and provide for the separation of its regulatory and operations functions by the restructuring of Bahamas Electricity Corporation and transfer of its operating functions to a wholly owned subsidiary company and the establishment of URCA as the independent sector regulator. Its passage repeals the original Electricity Bill and the Out Island Electricity Bill respectively.

The Utilities Regulation and Competition Authority Act (Amendment) Bill, 2015, proposes changes in anticipation of the legislation that will establish URCA as the independent regulator of the electricity sector. It will also enable URCA to discharge such regulatory function in the new electricity supply regime.

The Electricity Rate Reduction Bond Bill, 2015, will provide the legal framework and infrastructure to enable the issuance of such bonds.

BEC is close to being insolvent without the support of a Government Guarantee. Its disparate system design requires major capital investment of at least $450 million over the next 5 years to resolve the many issues faced. Additionally, BEC continues to incur $20-30 million in losses every year due to an archaic rate structure – a financial and operational situation that is impossible to sustain. In fact, the situation is such that BEC is now unable to obtain a credit rating, and therefore has no leverage with lenders or suppliers.

BEC is technically in breach of certain covenants of its current $240 million facility. These breaches are accepted at present by the banks only due to the Government Guarantee, contingent on the ongoing reform process. Government wishes, now, to remove the current $240 million guarantee as part of the reform process.

The new 100% owned operating subsidiary, which is now called Bahamas Power and Light Company, Limited (BPL), will operate under private sector management by a Service Provider in a manner consistent with this Government’s National Energy Policy.

BPL was incorporated in September of this year and its Board of Directors was appointed in the weeks that followed, with Mr. Nathaniel Beneby as Chairman. Other members of the Board include Ms. Donna Smith, Ms. Patrice Hermanns, Mr. Andrew Rodgers, Ms. Daphne Simmons, and Mr. Deepak Bhatnager. Recall that two others will be appointed by PowerSecure.

The Electricity Bill further anticipates that BPL and the Grand Bahama Power Company (GBPC) will be the initial licensees, with GBPC serving the Port Area as defined under the Hawksbill Creek Agreement and BPL serving BEC’s current area of supply across The Bahamas. URCA is mandated to issue public electricity supplier licenses to BPL and GBPC within thirty (30) days of the Bill coming into operation.

In respect of renewable energy, the Bill requires public electricity suppliers to submit renewable electricity plans, facilitate renewable energy self-generation projects, and regular review and approval of the plan by URCA.

The Bill further empowers public electricity suppliers to grant permits to property owners to install facilities for renewable electricity generation sources for residential purposes using renewable energy sources of such size and quality as may be prescribed in regulatory or other measures issued by URCA.

The Bill provides for a public electricity supplier to purchase any excess energy supplied to the electric grid of the value and amount, calculated in accordance with regulatory or other measures issued by URCA, of power that is not required for the property owner’s use.

The entire process for the restructuring of BEC and the creation of BPL is underpinned by the issuance of Rate Reduction Bonds in the amount of approximately $600 million, likely to be issued in amounts of approximately 100 million Bahamian Dollars and $500 million US Dollars. This sum, while not being the end-all fix on its own, has several functions:

Firstly, it will refinance existing financial liabilities of BEC, including bank debts, bonds and other non-current financial liabilities outstanding

Secondly, it will also be a source for currently unfunded pensions and other benefits and rights vested in employees or former employees of BEC, which also represent liabilities of BEC today.

Thirdly, these Bonds also represent initial funds to commence and assessment of environmental conditions and an environmental remediation exercise, not exceeding $20 million. Remediation, particularly in the area of Clifton Pier, is essential. Our environment is our most valuable treasure. Beyond that, people have a right to swim in waters that are conducive to good health.

“This solution” said Minister Davis, “now allows for significant and sustainable reductions in the cost of energy; a financially healthy electrical utility company; increased energy security; improved reliability of service; more responsible environmental attention; and ultimately increases our competitiveness and marketability as a country. It is a process of true reform.”

BTC to launch “Quad Play”

Declaring “war” on the competition in the new era of telecommunications liberalization, Chief Execute Officer of the Bahamas Telecommunications Company (BTC) Leon Williams announced on Monday that BTC is set to introduce a suite of new communication products dubbed “Quad Play” beginning with the launch of its Internet Protocol Television (IPTV) service with Flow ToGo features in Bimini on December 10. The southern islands are set to receive this service next before BTC launches this product in New Providences, termed the “final battleground.”

He made these comments at a press briefing and presentation at the Island House Hotel near Lyford Cay on Monday.

“In the first week of December, Bimini will be the first island in the country that will have quad play. We will also be providing what we call Flow ToGo – that is, the ability to watch television on your cell phones.”

Beginning in Campertown in eastern New Providence, BTC plans to make this product available through its fiber optic platform to more than 4,000 households per month. This upgrade will make BTC the first company in The Bahamas to offer fiber to the home (FTTH) services.

Williams explained that the Flow ToGo feature of the IPTV service enables the customers to watch television on their mobile phones throughout the country. Additionally, the availability of cloud services would allow subscribers to also record, rewind and fast-forward the programs of their choice in real time.

Williams pointed to BTC’s current $75 million capital budget to finance new television services and to modernize the company’s communications infrastructure as clear demonstrations of the company’s unmatched commitment to innovation and development throughout the entire Bahamas, even in a liberalized environment.

In Passing…

Bahamas Prime Minister the Rt. Hon. Perry G. Christie announced this week the appointment of noted Chartered Accountant and Managing Partner of Grant Thornton Bahamas Mr. Paul Andrew “Andy” Gomez as the new Bahamas Ambassador to the Peoples Republic of China. Mr. Gomez takes up residence in Beijing early next year.

During his House communication on Monday of this week, former PLP member and now Independent member for Marco City the Hon. Gregory Moss announced his newly formed political party, the United Democratic Party (UDP). He later told the press that his party was formed to fight and eliminate government corruption and change the country’s political paradigm from “theatrics” to “presenting concrete proposals.” He said that he fully expects the UDP to contest all seats in the 2017 general elections.

In a press statement this week, the government of The Bahamas expressed its deep regrets, sincere sympathy and condolences to the family of Mr. Lomu, the All Blacks rugby team, the People, and the government of New Zealand over the news of the recent passing of New Zealand rugby union great Mr. Jonah Lomu. Mr. Lomu was widely considered to be one of the greatest rugby players of all time, and an inspiration to many. He will be sorely missed.

The Office of the Attorney General secured a delay in the winding up hearing on Baha Mar until the 1st February 2016. Attorney Loran Klein said the government did not want to proceed with an immediate winding up after some new and significant developments at Bah Mar. Among the list of suitors vying for ownership of Baha Mar are former Atlantis owner Sir Sol Kerzner and his partner, Andrew Farkas, principal of Island Capital Group.

A national service of thanksgiving and repentance was held at the Evangelistic Temple on Collins Avenue on Wednesday of this week. Worshippers thanked God that no lives were lost during the recent passage of category four Hurricane Joaquin. Deputy Prime Minister Philip Davis, Minister of Social Services and Community Development the Hon. Melanie Griffin, CARICOM Ambassador the Hon. Picewell Forbes and Opposition Leader the Hon. Hubert Minnis were among those in attendance to give thanks.

The former Nassau Palm Resort has reopened its doors on Wednesday of this week after $25 million in renovations. The project is a venture between Sunset Equities and Sterling Investment. The resort opened with 118 rooms in operation and at the conclusion of its second phase in 2016, that total is expected to increase to 201 rooms and suites.

Thanksgiving is the biggest and most important holiday in the United States, but Bahamians took the opportunity to give thanks this week. The celebrations began as early as Tuesday when wife of the Prime Minister, Mrs. Bernadette Christie addressed a Thanksgiving Day luncheon under the theme, “Embracing Humanity,” held in recognition of teachers, administrators and staff of Eva Hilton Primary School (formerly Oakes Field Primary School), and the Northwestern District Teachers of the Year 2015-2017, at the Paul Farquharson Conference Center, East Street, on Tuesday. On Thursday several thanksgiving event took place. A special service of thanksgiving was held at the Straw Market Authority with the Governor General as the special guest. Just down the street the Ministry of Tourism hosted a thanksgiving luncheon at Pompey Square; the tourists loved it. The Island Luck Gaming Company treated the students and faculty at the Centerville and Woodcock Primary schools to a thanksgiving luncheon as part of their community outreach program. United Faith Ministries also held a thanksgiving luncheon off Fire Trail Road to celebrate the occasion.

Well The Bahamas was successful once again in its bid to secure a seat on the prestigious executive council of the International Maritime Organization (IMO) for 2016. The IMO is an agency of the United Nations that oversees global maritime activities. Voting took place on Friday in London. Commercial shipping and ship registration are significant and growing components of the Bahamian economy and its physical environment and a seat at the IMO table is important to The Bahamas in advancing its economic interests internationally. Special thanks go out to Bahamas Prime Minister Christie; Transport Minister Glenys Hanna-Martin; Foreign Minister Fred Mitchell; her PS Lorraine Armbrister and Captain Davie Rolle and his staff at the Bahamas Maritime office in London for all of their hard work and a job well done.

Minister of the Environment and Housing, Hon. Kenred Dorsett, will leave the country this Friday for Paris, France where he will join the Bahamian delegation at the United Nations Framework on Climate Change Convention (UNFCCC), Conference of the Parties (COP) 21. Ahead of the meeting the Second National Communication (SNC) of The Bahamas has been sent to the UN Secretariat.

For the first time, the Medical Review Board of the National Insurance Board met outside of Nassau on Friday, 27th November 2015. Holding a press conference to discuss this and other issues was Labour and Public Service Minister the Hon. D. Shane Gibson.

During this weekend, Governor-General Her Excellency Dame Marguerite Pindling will travel to Fort Lauderdale, Florida. In her absence, our premier historian Dr. Gail Saunders will be sworn in as Deputy to the Governor-General by Chief Justice Sir Hartman Longley.

About the author: Elcott Coleby is a Deputy Director at the Bahamas Information Services. He holds a Bachelor of Science degree in Chemistry (B.Sc) and a Masters of Business Administration (MBA). He provides frequent commentary on public policy and communicates the works of the government. Address all comments to the following email: egcoleby44@gmail.com