Letter to Prime Minister Davis The $110 Million Loan to BPL

Aug 11, 2023

Hon. Philip E. Davis, M.P.

Prime Minister

Commonwealth of the Bahamas

Office of the Prime Minister

West Bay Street

Nassau, Bahamas

Dear Prime Minister,

Re: The $110 Million Loan to BPL

The April 2023 Quarterly Public Debt Bulletin and the comments from the Ministry of Finance to The Tribune on May 15th, 2023 have confirmed that the Government has extended a loan to BPL in the sum of $110 million during this fiscal year.

The matter was raised by me in the House of Assembly on Monday, June 26th, 2023 during the committee of the whole phase of the budget deliberations.   You promised to review the matter.

Both The Public Debt Management Act (PDMA) and the Public Finance Management Act (PFMA) permit you as Minister of Finance to extend loans from public resources.   Section 55 (1) of The PFMA 2021 – in effect at the time – permits you to extend a loan to a government business enterprise, which by schedule includes Bahamas Power & Light (BPL).

Section 55 (2) of the PFMA 2021 states the following:   “All investments made under subsection (1) shall be made under an appropriation.”

That provision clearly stipulates that all such loans to government business enterprises – such as the $110 million – would require an appropriation from Parliament.

But even outside of this provision, the expenditure outlays to BPL for this loan would in any case have come from borrowed funds or government revenue that by law had to be deposited into the Consolidated Fund (Article 128 of the Bahamas 

Constitution). Accordingly, these outlays must comport to the Article 131 provisions of the Constitution which limits public spending strictly either to parliamentary appropriated sums, or to statutory expenditure.   (See also Article 130 (2)) 

We have perused both the original Budget Estimates for Fiscal Year 2022/2023, the Supplementary Budget presented earlier this year, the current Budget Estimates for the upcoming fiscal year, and the various accompanying appropriation bills.   We can find no sums that had been appropriated to facilitate this $110 million loan to BPL.   We ask that you point out to us the relevant allocations within the approved appropriations that were either made or were adjusted for this purpose.   

If no such sums have been made available from authorized appropriations, then consistent with the provisions of the Constitution and the PFMA 2021, it is our considered view that you will require a supplementary appropriations bill to cover this sum.    We anticipate that this undertaking will cause a readjustment in the spending projections for this fiscal year equal to that sum once it is properly appropriated and expensed consistent with the law.

We also require a copy of the loan documents and all the related terms and conditions, including if and how this loan impacts the fuel surcharge imposed on BPL customers.

We look forward to your prompt attention to this matter.

Sincerely,

Hon. Michael C. Pintard, M.P.

Leader of the His Majesty’s Loyal Opposition

Cc: Auditor General

Media Houses

17th July, 2023

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