Corruption Rocks Bahamas Electricity Corporation - BEC

Corruption Rocks BEC


10/02/2004

 

 

The Bahamas Electricity Corporation lost about $100 million over the last five years as a result of businesspersons and BEC employees working in cahoots in an unscrupulous practice that involves meter tampering.

 

New figures reveal that BEC lost $18.54 million in 2003 in non-technical losses. New Providence accounted for $14.79 million in losses and the Family Islands made up for the remaining $3.75 million.

 

This serious leak in the corporation's revenue has reportedly been having a direct negative impact on the corporation's profitability for decades.

 

As a result, BEC is in the process of installing new electricity consumption meters, which can be read remotely and automatically, reducing errors and consequential queries.

 

The meters will be installed at all residences in the Bahamas and in the Family Islands that get their electricity from BEC. The corporation is also putting in place a more high-tech system to cut back on the losses suffered when BEC workers under read the meters of commercial clients reportedly for kickbacks.

 

BEC officials expect that this will also result in reduced labour costs, a reduction in the need to estimate bills and a reduction in customer service queries as well as an improvement in revenue.

 

The losses occur as a result of wrongful actions taken by some employees in reading residential meters, but primarily among commercial clients, the Journal has learnt.

 

According to documents obtained by the Bahama Journal in a recent investigation, over the last five years, BEC's operating and administrative expenses had an average increase of 42 percent.

 

But the corporation's revenues increased by only 37 percent during the same period.

Actuaries have warned that the disparity in those two figures would create serious concerns for BEC unless the problem is arrested.

 

Corporation officials, who have put in place aggressive measures over the last year to make BEC more efficient, are said to be concerned as well about abuse of overtime and stealing within the corporation.

 

The Journal has learnt that while BEC still has a lot of house cleaning to do, some turnaround is already evident.

 

According to documents, accounts receivables improved by about $40 million as of the end of September 2003, standing at about $60 million, compared to $104 million the year before.

 

But while BEC makes what management has called much-needed strides to improve efficiency, it is faced with reaching conclusion on a new industrial contract for members of the Bahamas Electrical Workers Union.

 

The union is making several demands, including wage increases and improved pension fund benefits. BEC employees make no contributions to their pension fund.

 

As it stands now, the corporation contributes what would amount to 13 percent of each worker's salary to the fund.

 

But a recent actuarial report determined that the plan is under funded to the tune of $22 million. The corporation this year plans to make up that shortfall by increasing contributions to 16.6 percent.

 

This would amount to an annual increase in contributions made by the corporation from $4.5 million to $5.7 million.

 

However, the union is reportedly demanding that that amount be raised to 26.2 percent, which would mean a contribution of $7.6 million.

 

Because of the increases it plans to make as a result of actuarial realities, the corporation says it is in no financial position to address the union's request for a change in the actuarial rate.

 

Both sides are also said to be locking horns over a proposed merit pay system, which would reward employees, beginning in the third year of the contract, salary increases between 3 percent and 8 percent according to their on-the-job performance.

 

The corporation estimates that the new industrial contract would cost BEC an additional $16 million over a four-year agreement; but the union is reportedly demanding a $26.9 million increase.

 

Now faced with mounting pressure from the BEWU's leadership, BEC's board executives continue to point to what they say are realities they simply cannot ignore.

 

But the board, led by former banker Al Jarrett, continues to highlight its key accomplishments, like refinancing Inter-American Development Bank multi-currency loans, which will save BEC tens of millions of dollars in interest and exchange rate costs.

 

Other achievements are an historic reduction in electricity rates throughout the Bahamas, which executives say has had a major economic impact on the entire Bahamian economy.

 

There is also now a 3 percent interest payment on all customer deposits; Major savings in oil storage facilities from the signing of a new five-year contract last July; and major savings from the signing of a new five-year oil contract.

 

Mr. Jarrett, who came to the corporation promoting a partnership between BEC's management and union, is now facing increasing accusations from union leaders that he is anti-union.

 

At a recent corporation function, the Chairman said, "We must pay closer attention to the issues that divide us by creating more dialogue with staff members at all levels. We must listen more - be more focused on the vision and the mission, rather than tearing down each other."

 

 

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