NASSAU, The Bahamas — Prime Minister Philip Davis hosted a press conference at the Office of the Prime Minister on Thursday, 19th September 2024 to provide an update on the policy initiatives of his government as he marked the third anniversary of his party’s electoral victory at the polls.
BPL…
In May 2024, the government announced that it had entered into a 25-year contract with Pike Corporation through its Bahamian management company, Island Grid Solutions (IGS). PM Davis said the agreement will be finalized the week of the 24 September 2024.
Under this Joint Venture partnership, the government will own 40% of a Special Purpose Vehicle (SPV) called Bahamas Grid Company. The other 60% will be owned by Island Grid Solutions, the local company formed by Pike Corporation. The government’s reasoning for engaging a strategic partner rather than a management agreement option was to avoid tax increases which would put an extra burden on the Bahamian people.
Prime Minister Davis said that “first of all, the amount of finances that are required to transform BPL was not within the remit of the government in the context that if the government decided to go that route (a management agreement), me may have to look at how we increase taxes for the Bahamian people to pay for what we have to do.”
In putting the daunting fiscal challenges facing BPL into perspective, Prime Minister Davis had this to say:
“We met BPL with a $500 million legacy debt. To transform T&D and the other (required structural upgrades) required we will probably need another $400 million. We are looking at a near $1 billion investment.” PM Davis explained that bringing in partners allowed the government to avoid putting “more pain on the Bahamian people through taxes.”
Other details of the partnership to fix BPL are as follow:
The government reserves the right after seven years to purchase nine percent of the equity from Island Grid Solutions at market value.
Island Grid to transfer two percent in equity to a charity selected by the government.
The SPV will transfer 0.0025 cents of every dollar earned in revenue to a hurricane fund.
The SPV will contribute 0.0025 cents of every dollar earned in revenue to a debt legacy fund earmarked for the pay down and retirement of the $500 million BPL legacy debt.
One hundred and twenty-three BPL employees will be seconded to the Bahamas Grid Company for one year with the option to return to BPL after one year with no loss of benefits or seniority.
The Bahamas government has agreed to initially pay the SPV a 5.8% in management fee, inclusive of the salary and benefits of the CEO of the SPV. This percentage will be reduced to 4.8% as revenue increases.
