Wednesday, April 1, 2020
BPL hoping to capitalize on low cost of oil
By Chester Robards
With the price of oil on the global markets in the mid to low $20 range due to the COVID-19 pandemic, Bahamas Power and Light (BPL) is hoping to fuel hedge in order to bring down the cost of electricity for Bahamians, BPL Chairman Dr. Donovan Moxey said yesterday, adding that the company continues to work on finalizing the rate reduction bond amidst globally volatile markets.
Moxey said that while the successful placement of BPL’s bond would greatly assist the company in fuel hedging while prices are low, he explained that the company has a fuel hedging plan that does not consider the cash from the bond.
He said one scenario that does not consider the bond relies on financial backing by the government because hedging requires the security of liquidity, which BPL is hard-pressed for.
“When you do hedging you have to have a credit coverage for hedging and so we need the cash to do that,” Moxey said.
“Even if the bond rates, given the volatility in the market, are a little higher than you would typically expect, then you balance that against being able to lock in fuel prices for the long-term, then the net effect is you have a significant reduction in the cost of electricity for Bahamians. Read more >>