BEC Chairman Hits Back at Big Bad Brad
I had, for a long time, resigned myself to believing that the repeated utterances by the chairman of the Progressive Liberal Party (PLP) regarding the state of BECs finances were mere political posturing and mischief. However, after hearing but a miniscule portion of his seemingly sincere contribution while a guest on a talk show sometime last week, I am now forced to conclude that Mr. Roberts was either sadly duped, hoodwinked if you will, into believing BEC’s finances were in a state of good health during the period he served as Minister in the PLP government, or he may be delusional.
I am therefore providing, for the record, the summary from a report by PA Consulting Group presented to BEC 13 January 2006, as well as a brief history of BECs finances commencing with the final year of the PLPs recent single term in office and progressing backwards to the beginning of the term.
The PA consulting Group report titled Bahamas Electricity Corporation Tariff and Financial Review Preliminary Road Map for BEC, presented to BEC 13 January 2006, reported the following:
While net income remains positive in the $10 million range, other aspects of BECs financial performance have deteriorated to what (in many companies) might be called a danger zone.
BEC has experienced negative cash flow over $7 million in 2003/4
Bank overdraft and demand bank loans have grown and total more than 2 months revenues.
Currently liabilities substantially exceed current assets.
Accounts payable have grown to be far higher than accounts receivable.
Government overdue accounts receivable has grown to $35 million.
The ill-advised and ill-conceived rate reduction imposed on BEC under the watch of the PLP chairman set BEC squarely onto a progressively deteriorating financial spiral.
The P A Consulting Groups report is not the only document that speaks to the organisations mismanagement under the PLP. Its findings are fully supported by BECs audited financial reports, a matter of public record, and summarized below.
For the year that commenced 1st October 2006 and ended 30th September 2007, BEC recorded a loss of $11.733 million.
For the year that commenced 1st October 2005 and ended 30th September 2006, BEC recorded a loss of $2.916 million.
For the year that commenced 1st October 2004 and ended 30th September 2005 BEC recorded an operational profit of a mere $1.306 million plus a gain of $14 million on the sale of its 2 million shares in Cable Bahamas, yielding a net profit of $15.306 million. Without the foresight of a prior administration to secure purchase of the shares during the initial public offering of the stock, occasioned by that administration and opposed by the PLP, BECs profit for the year would have remained a tepid $1.306 million.
For the year that commenced 1st October 2003 and ended 30th September 2004, BEC booked a net income of $14.160 million. The term booked is used deliberately because of the quite unusual, uncustomary and extraordinary measure that took place to yield the result. Whereas BEC annually makes a provision in its accounts to cover likely bad debts, during the year ended 30th September 2004, BEC seemingly succeeded in convincing its auditors that excessive provisioning for bad debt had occurred in prior years and that a significant portion of the prior provisioning could be claimed back. As a consequence, instead of a bad debt expense being recorded, a sum of $2.837 million was recorded as having been recovered. There is no evidence of a past, similar recovery having taken place and there has been no similar, subsequent recovery. If, instead of the recovery having been posted, a bad debt provision similar to the $2.8-$2.9 million posted in years immediately prior had been posted, net income for the year would have been $7.5 million, down significantly from financial year 2003 (($11.143 million) and 2002 ($10.507 million).
The rate increase introduced in 2010, that restored BECs tariff to about the same position it was some eighteen (18) years ago has stopped the massive hemorrhaging. It will, however, likely take a number of years for BEC to fully recover from the illogical and irresponsible rate reduction that was imposed on the organization.
BECs finances are public record. The next time Mr. Roberts or one of his cohorts seek to laud BECs performance under the PLP, a responsible press owes it to their audience to ensure the subject is addressed objectively, from the record, rather than via loud, empty foundationless utterances.
Michael R. Moss, Executive Chairman,
Bahamas Electricity Corporation