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BEC challenged by competition for land from developers

Land challenge one of many factors raising costs for utility provider
Guardian Business Editor

Published: Sep 30, 2013

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The Bahamas Electricity Corporation (BEC) is facing increased ​rivalry from private developers for suitable land for facilities, its general manager has indicated, as BEC and developers​ are often attracted to similar property throughout the archipelago. ​

Kevin Basden noted the developer/BEC land clash during a presentation to ​the 2013 Caribbean Energy Summit taking place at the Atlantis resort ​on Friday.

In the presentation, Basden highlighted the conflict over land resources as one of a number of challenges the corporation faces as an entity that is tasked to provide reliable and cost-effective power at a unified rate to islands across the Bahamian archipelago.

These include duplication of resources, staffing, maintenance of an extensive system of transmission and distribution lines, the size and distribution of the population, and maintaining inventory at strategic levels.

Basden further noted that as a government-owned entity, BEC’s costs can suffer from a "business versus social obligation" analysis impact, as politicians seek to use the organization to achieve other social objectives such as employment.

Noting an issue with accounts receivable, Basden suggested that customers "believe their MP can assist them in getting a delay in disconnection”.

"All of these contribute to our high cost structure," he told a gathering of Caribbean energy executives and stakeholders.

BEC currently employs some 1,023 individuals, 729 in New Providence and 294 in the Family Islands.

The corporation, which has assets of $903 million and achieved revenue in excess of $570 million in the past year, of which $308 million went towards fuel purchases, currently operates 28 power stations.

The issue with respect to clashes with land developers over space for power facilities may suggest the need for long term planning in this regard by the government if it is to ensure ​an appropriate balance between the demand for affordable power and for development going forward.

In an interview with Guardian Business, Basden explained: “Where we saw that was in the Abacos for example whereby where we had wanted to site the power station was ​S​nake ​C​ay, and there was a developer that wanted that. We saw the same thing in Eleuthera, I think in the Governor’s Harbour area if I am not mistaken – at the ​old n​​avy base – where we had wanted that as a site.

“And in other islands as well. [The problem arises] because we need good deep water in order to​ accommodate th​e ships for delivery of fuel and many times that’s exactly what the (development) themselves may need.​”

​Basden suggested that ​when conflicts have arisen, the government does not necessarily have a determined policy but makes decisions based on the circumstances at hand.

​​"I think the government would have to look at the whole picture and make a decision at the end of the day of what’s best for the Bahamian public and that can go in either direction. We would have our preference but at the end of the day the government would have to look at the bigger picture."

Former BEC Chairman Michael Moss recently raised the possibility of further interconnection among islands as a means to reduce the cost of producing power for far flung communities.

Where possible, Basden said interconnection has been considered as a means to reduce the cost of operating multiple facilities across the various inhabited islands, but it is not always a more cost-effective solution and it may reduce the ability for the government to fulfil other social needs, such as employment on those islands, Basden told Guardian Business.

Basden added that it is not always a cheaper option, as there may be deep water between islands that could make the installation of submarine cables difficult.

"​We do have interconnection where it is practical and there may be one or two other areas to consider at this point in time for interconnection. One of the challenges is that the capital costs associated with interconnection (are) so high and when you look at the size of some of the operations the return on investment based on the customer base, there would be no pay back for many, many years.

​"​To some extent as well having operations on the islands is also a source of employment and so from the government perspective they sometimes look at the bigger picture.​​"

​Nonetheless, Basden suggested there are places that may make good candidates for interconnection as a means of reducing costs in the future.

"Potential candidates would be New Providence and Eleuthera, Abaco and Grand Bahama, if you look at the synergies,” he said.

"The difference with Abaco and Grand Bahama is that we own [the power plant on] Abaco and a private company owns [the power plant on] Grand Bahama. But these kinds of things are probable in the future."

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