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TUESDAY, FEBRUARY 25, 2020
$4.52 Funeral home chief hits back in Dorian row By YOURI KEMP Tribune Business Reporter ykemp@tribunemedia.net A FUNERAL home director has denied an industry association’s assertion that the government paid her business a near-six figure sum to collect the bodies of Dorian victims, branding this “misleading”. Denalee Penn-Mackey, chief executive of Evergreen Mortuary, in an e-mailed response to Tribune Business blasted the allegations made by the Bahamas Funeral Directors Association (BFDA) in a February 19, 2020, letter to the government. “To mislead the public into thinking that a removal fee of six figures was collected for the recovery of Dorian’s victims is not only untruthful, but is very deceptive,” she wrote. “In all fairness I recalled Dr Duane Sands inviting the association to come to Abaco to assist with the recovery, but they surprisingly never showed up. And, as printed in yesterday’s article, any indication of putting up $300,000 by the BFDA is simply laughable. “Had they spoken with Iram Lewis, the substantive minister for disaster preparedness, management and reconstruction, who has full responsibility and carriage of the process of seeing this whole mess cleaned, they would know the details.” The association’s letter, sent to John MichaelClarke, chairman of the Disaster Reconstruction Authority, said it was “shocked and very concerned” that the government appeared to have gone back on a “letter of commitment” it had allegedly promised to issue to it. It said the group “had multiple level communications” with the Disaster Reconstruction Authority and was “advised by its chairman” that they would be provided with a “letter of commitment” to proceed with providing services for the burial of victims of Hurricane Dorian. They “were invited to meet with representatives of the Disaster Reconstruction Authority in Marsh Harbour on February 17, 2020” to view the burial site and finalise plans. This trip went ahead, and the BFDA said they were advised that their services “would be accepted, and that we would be issued a letter of commitment on February 18, 2020”.
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Working age ‘plateau’ to hit growth, credit rating By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
M
OODY’S has warned that a working age population due to “plateau” by the mid-2020s will limit The Bahamas’ economic growth potential and “weigh” down its sovereign credit rating. The international credit rating agency, in its justreleased latest update on The Bahamas, said the government’s post-Dorian interest (debt servicing) burden at 15 percent of its total revenues will be more than double that of countries with the same “Baa3” credit rating. It added that the government’s deficit forecasts for the upcoming six fiscal years were similar to its own, with the Fiscal Responsibility Act’s target 0.5 percent deficit target as a percentage of gross domestic product (GDP) only achieved in 2024-2025. More intriguing, though, is Moody’s forecast that an increasingly elderly population will start to impose a growing burden on working age Bahamians to support them and help finance their
• Moody’s warns of mid-2020s ‘weigh’ down • Bahamas interest burden double its peers • Projects ‘flat’ economic expansion for 2020 retirement needs. “Social considerations, in particular demographic trends, affect The Bahamas,” the rating agency said. “Growth in the working age population has been slowing since the late-2000s, and the number of working-age people is likely to plateau by the mid-2020s. This will limit economic growth, weighing on The Bahamas’ credit profile.” Larry Gibson, vice-president of Colonial Pension Services (Bahamas), yesterday told Tribune Business he was “somewhat surprised” that Moody’s was predicting that working age population growth in The Bahamas was set to fall away as early as the mid-2020s. He acknowledged, though, that this will eventually become a “massive issue” for The Bahamas as it has in many European and developed countries. And the National Insurance Board (NIB) could already be experiencing some of the trends outlined by Moody’s.
Its contribution income has been exceeded for several years now by benefits payouts, which could be one sign of a growing elderly population. “I know NIB has crossed the threshold some time ago where payouts were greater than contributions and income,” Mr Gibson said. “But I’m kind or surprised because The Bahamas has always had a large population of young people. I don’t think we would be there yet. If that’s the case, I question some of our statistics. “I didn’t think it would have climbed so soon. At some point it will be a massive issue, but I’m kind of surprised that it’s happening now.” Moody’s, meanwhile, agreed that The Bahamas’ debt-to-GDP ratio is set to imminently jump to 66 percent due to $1.7bn in collective deficit spending over the next four fiscal years as the government grapples with Dorian’s reconstruction costs.
BAHAMAS Power & Light (BPL) was last night urged by the Chamber of Commerce’s top executive to “do everything in its power” to solve its cooling woe and avoid a repeat of summer 2019’s blackouts. Jeffrey Beckles, responding to Tribune Business revelations that the state-owned utility monopoly is locked in a race against time to have its new $95m generation plant ready to meet peak summer demand, warned that “in no circumstances” can households and businesses endure a return to daily load shedding that lasts for a minimum three hours. Confirming that the chamber and wider private sector were “very concerned” about BPL’s latest mishap, Mr Beckles said it was vital that a
“Given that the reconstruction efforts are likely to begin in earnest in 2020, we expect the deficit to widen in second half of the fiscal year,” Moody’s said. “The authorities’ deficit forecast for fiscal year 20192020 is 5.3 percent of GDP, followed by a reduction to 3.8 percent in 202-2021 and 2.2 percent in 20212022, and down to the fiscal rule’s medium-term target of 0.5 percent of GDP by 2024-2025. “Our updated fiscal forecasts follow a similar trajectory as the official ones, which would contribute to an increase in the debt burden over the coming years toward 66 percent of GDP. At this higher level, The Bahamas’ debt burden is broadly aligned with the median for ‘Baa3’-rated sovereigns. However, given the loss in revenue, its interest burden will be higher at 15 percent compared to the median of 6.4 percent.”
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GB Power: New customer charge ‘not an easy sell’
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
GRAND Bahama Power Company’s top executive yesterday admitted it is “not an easy sell” to add an extra charge to all customer bills to pay for $15m in Hurricane Dorian restoration costs. Dave McGregor, the utility’s chief executive, defended the Storm Recovery and Stabilisation Charge that will be added to all its light bills from April 1, 2020, as “the fairest way for customers to pay” for the damage inflicted on its transmission and distribution network by the category five storm. Acknowledging that many GB Power customers were still facing “tough times” rebuilding businesses and lives shattered by Dorian, and that an increase in electricity costs will be the last thing they want, Mr McGregor said the extra charge was
• But extra levy ‘fairest way to do it’ • Can’t take $45m damages in four years • Says one cent per KWh fee’s effect minor “unfortunate” but necessary to rebuild essential energy infrastructure. Pointing out that GB Power had delivered predictable energy costs through its fuel hedging initiative, and that tariffs had not increased for eight years, he added that such reliability “needs to be paid for” after the utility incurred almost $45m worth of uninsured restoration costs in four years when Hurricane Matthew’s 2016 damage is factored in. Mr McGregor spoke out after the Grand Bahama Port Authority (GBPA), the utility’s regulator and Freeport’s quasi-governmental authority, revealed the imminent addition of the extra charge to all GB Power bills with effect from
April 1, 2020. The charge for its three customer categories will be: • Residential - $0.013 cents per kilowatt hour (kWh) or 1.3 cents • Commercial $0.008 per kWh or 0.8 cents • GSL (industrials) $0.010 per kWh or one cent The GBPA added that the Storm Recovery and Stabilisation Charge will represent an increase of less than $7 per month for the “average” residential customer, and $24 for the “average” business customer, in a bid to soften the upcoming blow and any consumer push back/fall-out. However, the new fee’s implementation means that Grand Bahama energy consumers will feel a little of the pain their New
BPL must ‘do everything in its power’ to prevent 2019 repeat By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
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• ‘In no circumstances’ suffer blackout summer • Chamber chief urges ‘urgent’ action over cooling • Public/corporate confidence in utility already ‘thin’
JEFFREY BECKLES cooling solution for the seven Wartsila engines was in place “urgently” given the lack of confidence both corporate and residential customers have in its ability to produce a reliable energy supply. “Listen, in any circumstances we cannot have
another repeat” of summer 2019, Mr Beckles told Tribune Business. “I think BPL really has to step up to the plate, not just with technical challenges, but they have to come up with solutions. “How we got here is irrelevant. We need them to fix it soon as corporate and consumer confidence is critical, so we are concerned. We’ve just got to keep moving.” Tribune Business exclusively revealed on Monday how BPL’s 132 megawatts (MW) of new generation capacity has literally “hit the rocks” after the stateowned utility encountered unanticipated difficulties with its preferred solution for cooling the Wartsilamanufactured engines.
BPL’s plan to dig four 800-feet deep wells to provide a water source has run into harder-than-expected coral rock structures that have proven difficult to penetrate, with multiple drill bits breaking. It has been forced to source and order a closed radiator system as a back-up in case the wells are not in place in time to meet peak summer demand. Desmond Bannister, minister of works, told this newspaper that a cooling solution needs to be implemented by May so that all seven engines are fully operational by June to meet peak summer demand. This means BPL has somewhere between two-and-half and
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Providence counterparts are set to receive when Bahamas Power & Light (BPL) shortly adds its own additional levy to pay for its $580m refinancing. That will presently be based on 15 percent of a customer’s consumption. Mr McGregor yesterday told Tribune Business that the extra charge is a “pass through” fee that GB Power will not make money from, much like the fuel charge. He added that the utility had also sought to minimise the impact on the commercial sector, and encourage the private sector’s post-Dorian revival, with lower rates for such customers while also recognising their higher consumption volumes.
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PM: 20% hotel vacancy cut to hit jobless goal By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE prime minister yesterday argued his six percent unemployment rate goal can be achieved by increasing average occupancy rates at existing Bahamian hotels by 20 percentage points. Dr Hubert Minnis, telling the House of Assembly that his ambitious jobless rate reduction target can be achieved “without building one more room in The Bahamas”, said growing average occupancies from 65 percent to 85 percent would inject a further $657m in visitor spending into the economy. He added that rather than seek new resort investments The Bahamas has to maximise the existing yields from its current 18,000 hotel rooms which, at an annual average occupancy of 65 percent, means some 6,300 are sitting vacant every night. Hitting back at those who have voiced doubts that he will achieve his target jobless rate, Dr Minnis said: “We need to remind the sceptics that, not so long ago, properties on Paradise Island with more than 1,000 rooms regularly ran occupancies of 85 percent year round. Those sceptics also need to digest the fact that cruise ships arrive in the port of Nassau with near 100 percent occupancies. “We must focus even more to make the adjustments to move the occupancy needle beyond 65 percent.” The prime minister added that increasing the average Bahamian resort occupancy rate to 85 percent would mean an extra 3,600 hotel rooms per night are filled. “That is equivalent to filling a property one-anda-half times the size of Baha Mar every night,” he said. “An additional 3,600 rooms occupied every night at double occupancy would mean an additional 438,000 annual stopover visitors with an average length of stay of six nights.”
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