[xml][/xml]
The Bahamas Weekly Facebook The Bahamas Weekly Twitter
News : Bahamas Information Services Updates Last Updated: Feb 6, 2017 - 2:32:04 PM


State Minister for Finance tables $250 Million BEC Resolution
By Elcott Coleby, Bahamas Information Services
Jan 30, 2013 - 9:00:48 PM

Email this article
 Mobile friendly page
NASSAU, The Bahamas - A Resolution was tabled in the House of Assembly January 30 to secure a government guarantee for a $250 million private placement in the International Financial Markets by the Bahamas Electricity Corporation (BEC), as the Corporation seeks to restructure its debt portfolio.

Moving the Resolution was Minister of State for Finance, the Hon. Michael Halkitis, who pointed out that the government guaranteed $211 million of the debt on the 20th October 2009 with an additional $35 million borrowed on the 27th August 2012. When rounded off to $250 million, the net contingent liability of the government amounted to $39 million, according to Halkitis.

“I rise to move a Resolution which when passed would guarantee a total of US$250 million of debt of the Bahamas Electricity Corporation (BEC); it is intended that the guarantee will cover instruments to be issued in the US$ capital markets to facilitate the refinancing of this debt. $211 million of the debt already carries a government guarantee so the increase in the government contingent liability will be on the order of $39 million,” said the State Minister.

According to State Minister Halkitis, this debt restructuring exercise was necessary because most of BEC’s $240 million debt portfolio will be due in April 2013. The National Insurance Board (NIB) and a consortium of commercial banks led by First Caribbean Bank International are the creditors. The others are Scotia Bank, Bank of The Bahamas, Butterfield Bank and the Royal Bank of Canada (RBC).

He said “BEC now has a US$ debt portfolio in excess of $240 million, most of which becomes due in April 2013.” Halkitis continued, “CIBC FirstCaribbean is the provider of the latter loan and is the lead Bank in the syndicate which provided the loan for US$211 million. CIBC FirstCaribbean will act as Arranger for the refinancing of this debt in the US capital markets by way of a private placement.”

Commenting on the purpose of the $250 million that BEC is seeking to raise in the Capital Markets, Minister Halkitis had this to say:

“One hundred and five million (US$105 million) - 42% of the amount for which the Guarantee is being sought represents amounts associated with the purchase of fuel. The remaining amount (is) related to (the) refinance of IDB loans and sundry capital works.”

While admitting that borrowing to meet ordinary recurring expenses is unsustainable, the State Minister pointed out some of the initiatives BEC is undertaking is to bring relief to consumers through the reduction of the non-fuel cost of electricity. They include the adoption of modern procuring and pricing methods in addition to fuel conservation.

“The overall goal of the Government is to reduce the non-fuel cost of electricity (operations, maintenance and administrative expense) to the consumer, which at $0.11 per kWh and to minimise the variability in the fuel portion of the cost of electricity by adopting modern methods of procuring, pricing and conservation in the use of fuel.”

The Minister expressed the belief that this refinancing effort is a first step in facilitating a sustained reduction in the cost of electricity. The term of the Private Placement, said the State Minister, will be in the neighbourhood of 15-20 years and, with the government guarantee, will ease BEC’s cash flow challenges through lower payments on the restructured debt.

Bookmark and Share




© Copyright 2013 by thebahamasweekly.com

Top of Page

Receive our Top Stories



Preview | Powered by CommandBlast

Bahamas Information Services Updates
Latest Headlines
Statement on Prime Minister Minnis’ Meeting with US President Donald Trump
PM Minnis and Caribbean Leaders Meet with President Trump
H.E. Ellison E. Greenslade: Presentation of Letters of Credence to the President of Ireland
Urban Renewal Commission Community Walkabout in Freetown-St. James Road
Governor General's Divisions Ceremony at HMBS Coral Harbour