The Free National Movement today issued a direct response to the Minister of Energy’s recent defence of the Government’s energy reform agreements, stating that her argument rests on a fundamental and misleading comparison.
At the centre of the Minister’s response is a basic error: she continues to mix fuel costs with fixed generation and grid charges. They are not the same, and they do not affect Bahamas Power and Light (BPL) in the same way.
Fuel costs are a pass-through. Whatever the fuel price is, customers pay it in full through the fuel surcharge. BPL keeps none of it. It does not use fuel revenue to pay staff, maintain poles and wires, or reduce debt. Lower fuel prices may reduce the surcharge, but they do not fix BPL’s finances, and they do not solve its long-term problems.
What determines whether BPL survives or fails are the non-fuel costs — the fixed charges locked into long-term generation and transmission contracts. Those are the payments that drain BPL’s revenue. Those are the costs this Government has now locked in for decades.
The 4.65¢ Charge: A Fixed Cost, Not Fuel
The Minister repeatedly refers to the 4.65 cents per kilowatt-hour charge under the New Providence agreement as if it were related to fuel. It is not. The executed agreement makes clear that this is a generation cost before fuel is added. Fuel is invoiced separately and passed through to consumers.
In simple terms, BPL is required to buy electricity at 4.65 cents per kilowatt-hour before fuel and other charges are applied. That is a fixed cost. It is not tied to fuel prices, and it is not temporary; it is written into the contract.
Why New Providence Matters — and Why This Deal Weakens It
New Providence is the financial engine of BPL. For decades, electricity consumption in New Providence has helped subsidise the Family Islands under a single national tariff. That system only works if New Providence maintains strong gross margins.
Under the new transmission and distribution agreement, Bahamas Grid Company (BGC) will be paid 5.5 cents per kilowatt-hour for every unit transmitted and billed in New Providence.
The math is straightforward. Average electricity revenue is approximately 11.4 cents per kilowatt- hour. Bahamas Grid takes 5.5 cents immediately. That is nearly half of billed revenue gone before BPL pays salaries, services debt, maintains infrastructure, or supports Family Island operations.
Because BPL historically collects less than 100 percent of what it bills, the private operator’s share becomes even larger relative to the actual cash received.
Double Paying for Workers, Double Paying for Failure
At the same time, not a single BPL transmission and distribution worker agreed to be seconded to Bahamas Grid Company. As a result, BPL continues to carry approximately 123 transmission and distribution employees on its books while also paying BGC to hire an entirely new workforce to perform the same functions.
That is duplication at public expense.
More Staff, Less Revenue
After the Voluntary Separation Exercise, BPL had fewer than 800 employees in 2021. Today it has over 1,000 employees, while generation has been outsourced and transmission and distribution have been outsourced. Revenues retained by BPL have shrunk, but fixed obligations have grown.
Taxpayers on the Hook
The Minister speaks about a “sinking fund,” which is simply money that is supposed to be saved each year to cover major repairs and debt.
But the contract does not require Bahamas Grid Company to use that money to pay BPL’s old debt. And if a hurricane hits, the Government — not the 60 percent private owner — commits to restoring the infrastructure.
That means the public carries the risk.
Where Does the Profit Go?
We are also told that BGC will make a profit and that 40 percent will flow back to BPL. But BGC functions largely as a pass-through entity. Much of the money paid by BPL flows directly to the private operator. If profits exist, a reasonable question follows: why not reduce the fee charged to BPL instead of exporting 60 percent of returns to private shareholders?
Transmission and distribution payments alone are projected to run between $80 and $90 million per year for 25 years. That is billions over the life of the contract.
Is BPL investing that amount annually in its own network? Or will these payments become a long-term guaranteed revenue stream for private interests after upgrades are completed?
The obvious question remains unanswered: do BPL’s projected revenues actually cover the minimum purchase and transmission obligations locked into these agreements?
If the answer is yes, the Government should publish the full business plan showing how these payments are sustained without increasing rates or accumulating losses.
If the answer is no, the Bahamian people deserve to know who will pay the difference and for how long.
The FNM will continue to examine the agreements in detail and present our findings to the Bahamian people in clear, straightforward language. These contracts will shape electricity costs for a generation. Bahamians deserve transparency, honesty, and the full financial truth.