BEC TAX hike to come on the poor


<<< Sidney Sinclair-Sands questions the panelists at the BEC’s Town Meeting on a new tariff hike at L W Young Junior High School.

Nassau, Bahamas – Rising energy costs has the Bahamas Electricity Corporation (BEC) suffering financial duress.  As a result, BEC has submitted a request to the Government to consider reinstating the 1993 Fuel Surcharge Tariff to pay for importing fuel.

“We must return BEC to a position where it is financially independent of Central Government, and in a position to develop and meet the demands of The Bahamas in the near future,” said the Hon Phenton Neymour, Minister of State in the Ministry of the Environment during a town meeting to discuss a new tariff hike, Thursday, May 10.

“In 2007, we recognized there were a number of deficiencies in shortfalls at BEC.  So we began a number of programs in parallel, in an effort to address BEC’s challenges, not just internally but to address the Energy sector as a whole,” he said.

BEC contends it has been 17 years since the Corporation last received a moderated tariff increase of 5.25 per cent in 1993.

The goal of the straight life tariff was not realized because it was eliminated shortly after 2002.  BEC was required to absorb the 10 per cent customs duty imposed on its fuel imports, since 1994.  The Corporation suffered seven financially crippling blows in 2004.

·     The first was when a 10.6 per cent tariff decreased BEC’s revenue collected from residential customers, using less than 800 units of kilowatt-hours per month.

·     The second was when BEC experienced an additional five per cent reduction in revenue for residential customers using more than 800 units of kilowatt-hours per month.

·     The third was a five per cent energy rate decrease for small commercial customers was also added.

·     The fourth blow caused BEC to increase its debt percentage ratio by imposing an additional seven per cent energy rate reduction for large commercial customers.

·     The fifth blow reduced a fuel recovery charge.

·     The sixth was when their maximum demand for electricity occurred every six months rather than annually.

·     The seventh involved customer deposits attracting only three per cent per annum interest, which threw the Corporation into financial duress.

Mr Neymour also outlined BEC’s key issues.

“Over the last two and a half years, I have repeatedly expressed a concern in every budget contribution for the financial position of BEC.

“In January 2010, for every dollar collected by BEC as revenue, approximately 78 cents of that dollar went towards paying BEC’s fuel bill,” explained Mr Neymour. “The receivables, essentially monies owed to BEC, were approximately $132 million.  The payables, which are monies BEC owed to various suppliers including its fuel supplier, mounted to approximately $190 million.

“Another concern was late last year, as a result of BEC’s cash flow challenges, the Government had to make a one time direct payment to Shell, the fuel supplier, of $30 million.  That was more than we paid to subsidize Water and Sewerage for an entire year and more than we subsidized Bahamasair.”

In addition to those costs, the Government had to guarantee a refinancing package for loans to BEC in the amount of $211 million.

“BEC is a public utility that requires significant funding for its operations.  It also needs significant funding for its future development.  The fact is that electricity demands throughout The Bahamas is growing,” said Mr Neymour.

By measuring the cost of capital from 1993 to today, the Dollar in 1993 was worth 73 cents to 2010’s Dollar.

Estimates prove that if the 5.25 per cent fuel surcharge tariff had not been eliminated after 2002, Bahamians would have benefitted from being grandfathered into a commitment to pay only 5.25 per cent on 73 cents.  This price would be fixed, despite the upward movement of the retail price index, over the last 17 years, he explained.

“When we came into office, we analyzed all the developmental plans of BEC and we put the budgeted amounts to these plans.  It amounted originally to $580 million.  I am not talking small change here.  These are the facts,” said Mr Neymour.

Bahamians are asked to consider today’s cost of living and compare it to 1993 to see for themselves that the new fuel tariff is actually much lower than the one in 1993.

Terise Knowles (right) speaks with Minister of State in the Ministry of Environment the Hon Phenton Neymour at BEC’s Town Meeting on a new tariff hike at L W Young Junior High School.


  1. I agree this is the most stubborn and inconsiderate government this country has seen and the light bill is small when they are demanding that home owners pay property tax in a recession; after giving crown land to foreigners for little or nothing while Bahamians pay $80,000 plus for property. Our PM commented about banks repossessing Bahamians homes and looked like a hero, but he put nothing in writing so what the hell the banks care; I was told by Commonwealth Bank that the PM don’t work here.

  2. I agree Freda, but what could you do? This is the most stubborn government this country has seen to date. When you see their minds are set, it is almost impossible to get them to change it.

  3. Kim I am really beginning to believe this also, because only the poor is suffering and being told to watch how they spend their monies. What about how the government is spending our monies? From what I gather they want to spend monies again to change who is now on the ten dollar bill this is not needed right now.

  4. Freda, I am sure people has a problem with this increase, it just goes to show how uncaring this government could be. This is the worst thing they could do at a time like this. So much people are not working. Tourism is down, people in the tourism industry are not making monies, some of them are only working days Small businesses are struggling, people no longer has the extra monies to spend the way they used to. The people with steady jobs, could merely make ends meet. I love the Bahamas, but I feel it is really hard to get anywhere in this country. Sometimes, I get the impression that it is designed to keep the poor people down.

  5. Freda, whats is so astonishing to me is that BEC just underwent a process where they disconnected electricity from thousands of Bahamians. So they know many people cant pay the high light bills. So what do they do, they increase the tariff, lol.

    I guess one good thing will come out of this. With BEC having to disconnect so many customers, the load wont be to heavy on those generators this summer, thus leading to fewer blackouts, lol.

  6. Wow. No one has anything to say about prices being hiked up on poor Bahamians. BP why are our politicians allowed to mismanage monies for their God knows whatever reasons(most likely personal) and then bahamians carry the burdens. And why do we always believe the manure that comes out of their mouths as an excuse.

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