Written Thursday, March 3rd 2022, by Paige McCartney, The Nassau Guardian
There needs to be definitive clarity on what should be expected in the coming months regarding electricity costs, so that businesses and the wider population can properly plan their affairs, Bahamas Chamber of Commerce and Employers Confederation (BCCEC) Chairperson Khrystle Rutherford-Ferguson said yesterday.
Her comments came as crude oil is trading at a seven-year high over $110 per barrel and as uncertainty remains over Bahamas Power and Light’s (BPL) hedging activities, which would have locked consumers into lower fuel charges before the spike in prices.
“As the cost of oil increases, it will have a knock-on effect on the price of electricity and shipping. These costs will eventually have to be passed on to the consumer. Businesses will try as best they can to hold pricing steady, however, there are many factors outside of their control,” Rutherford-Ferguson told Guardian Business.
“It would be beneficial for the government and BPL to give coordinated clarity to the business community and the wider public on what should be expected going into the summer months.”
Although Prime Minister Philip Davis earlier this week pledged that his administration would do its endeavor best to ensure rising oil prices “will not have a deleterious effect on our people”, there remains national angst following the release of a statement by BPL on Monday that it was necessary to increase fuel charges from the locked in hedging rate of 10.5 cents per kilowatt hour to 13.7 cents per kWh. Minister of Public Works Alfred Sears later had BPL recall that notice, stating that Cabinet had not approved the changes.
Rutherford-Ferguson said this uncertainty comes at an already tumultuous time for the business community, as it juggles already rising prices because of record inflation in the United States – The Bahamas’ largest trading partner – and global supply chain shortages.
“The biggest challenges for businesses in this time, will be balancing inflationary costs with consumer sentiments. This is further exacerbated by the lack of availability of goods and the shipping delays brought on by COVID-19. Even service providers will find it increasingly difficult to keep pricing steady and they too will be impacted by the increased cost of utilities and fuel,” the Chamber chair said.
“We are hopeful that a swift, peaceful resolution is found to the conflict between Ukraine and Russia and that such peace will return the price of oil to more reasonable levels.”
Last July, BPL said its fuel charge will remain at 10.5 cents per kWh until June 2022. At the time, BPL said that fuel charge was secured in July 2020, when the corporation executed its first ever fuel hedge transaction.