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08142019 BUSINESS

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business@tribunemedia.net WEDNESDAY, AUGUST 14, 2019$4.80$4.83$4.95$4.95New blueprint for Grand BOB shrugs off $6m default to Lucayan unveiled today resume profits…
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business@tribunemedia.net WEDNESDAY, AUGUST 14, 2019$4.80$4.83$4.95$4.95New blueprint for Grand BOB shrugs off $6m default to Lucayan unveiled today resume profits By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.netACABINET minister and Grand Lucayan Board members will today visit Miami to view an updated blueprint for Royal Caribbean’s multi-million transformation of the resort and nearby harbour. Dionisio D’Aguilar, minister of tourism and aviation, confirmed to Tribune Business that he and other members of the delegation have asked the cruise line and its ITM Group partner for a new look at their “vision and plan” for the resort and surrounding area. Voicing optimism that “a deal will be struck” to sell the Grand Lucayan to the joint venture as part of a wider development to overhaul Freeport into a destination product, Mr D’Aguilar said he hoped to• Govt team to see updated ‘vision and plan’ • Heading to Miami for Royal Caribbean meet • Minister: Talks may last ‘good many months’DIONISIO D’AGUILAR conclude an agreement with ITM Group/Royal Caribbean “certainly by the end of the year”. “We’ve asked them to update us on their vision and plan,” he told thisnewspaper of today’s Miami meeting. “As time goes on you’re always fine tuning and reworking, and I’m waiting to see their vision and plan on how they intend to redevelop the property. That’s kind of where we are. “This is a natural progression of the discussion and vision of what’s going to happen there. Everything is on schedule, going to plan. We’re negotiating, and that has its ups and downs, twists and turns.” Michael Scott, chairman of Lucayan Renewal Holdings, the governmentowned vehicle that owns the resort, declined to comment when contacted by Tribune Business and directed this newspaper to Mr D’Aguilar. Tribune Business sources,speaking on condition of anonymity, said the Government delegation was eager to see what ITM Group/ Royal Caribbean are proposing and their planned overall investment in overhauling Freeport’s tourism product. They added that the government, and Lucayan Renewal Holdings Board, are hoping to conclude a sales agreement for the Grand Lucayan’s disposal by the end of August given that the joint venture’s due diligence period will have expired by then following a previous month’s extension. “They also want to finalise the concessions, subsidies and incentives underSEE PAGE 4By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net BANK of The Bahamas shrugged off a $6m default judgment bid by an ex-Cabinet minister’s companies, and resumed its slow recovery march, by posting $2.99m in 2019 full-year profits. The BISX-listed institution, which has twice had to be rescued by multi-million dollar taxpayer bail-outs, last night unveiled an 87 percent net income increase for the 12 months to endJune that was driven largely by a six-fold reduction in bad loan provisions. These dropped from $7.568m to $1.184m yearover-year, a more than $6m reduction, as Bank of The Bahamas’ recovered much of the ground lost in the third quarter to the claim made against it bythe family companies of Damian Gomez, ex-minister of state for legal affairs, and David Jennette. Bank of The Bahamas’ need to take provisions against any potential loss stemming from that default judgment plunged the institution into a $4.039m net loss for the three months to end-March 2019. This “red ink”, which wiped out firsthalf profits worth more than $3.5m, drove Bank of The Bahamas into a $209,604 loss for the first nine months. The bank, though, was able to recover much of this lost ground by a six-fold year-over-year increase in net income for the fourth quarter, which rose from $524,397 in 2018 to $3.2m this time around. Kenrick Braithwaite, Bank of The Bahamas’SEE PAGE 3Manufacturers: ‘Blow hole in budget’ to fix BPL emergency BPL is ‘wreaking havoc’ on sector By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.netBy NATARIO MCKENZIETribune Business Reporter nmckenzie@tribunemedia.net A BAHAMIAN water supplier yesterday said it has spent “tens of thousands of dollars” replacing equipment damaged by frequent power outages, and blasted: “It’s wreaking havoc on us.” Geoffrey Knowles, operations manager at Aquapure, told Tribune Business: “This is a really busy period for us. Fortunately we have a generator, but every time BPL goes offline it messes with our motors, our sensors, everything. “We have spent tens of thousands of dollars on motors, sensors and all kinds of electronic equipment because of the power cuts. It’s a total mess. I know they have their problems but they have had a long time to deal with it. The only thing I’m hearing is excuses. It’s doing us really bad. We have to pay our employees overtime. It’s knocked us back quite a bit, but the big problem is the loss of equipment.”​ Other New Providencebased businesses expressed similar sentiments, describing Bahamas Power & Light’s (BPL) ongoing power generation woes as a “major disruptor” and huge “inconvenience” to their operations.​ Elvis Percentie,co-founder and chief executive of Shiver, a Bahamian ice cream and sorbet producer, told Tribune Business: “It’s definitely affected our schedule. We don’t really have any lost product. When the power goes out we don’t open any of our freezers, and that helps to maintain our product, but it’s definitely been disruptive. We are actually working on a back-up generator or a solar option.”​ Basil Smith, the Association of Bahamas Marinas (ABM) executive director, said: “There is a concern about this issue. In one instance some marinas may have to upgrade their generation capacity, which is definitely an expense. “One or two marinas have seen boats pulling out because they find the situation annoying, and so that’s business lost. You also have to consider how this could impact other potential boaters looking to come here.”​ Karla Wells-Lisgaris, brand manager at Caribeban Bottling Company, the local Coca-Cola producer, added: “As to be expected with the power cuts and surges we have had some mechanical issues. We blew a compressor and we also had some sensors go bad. An even bigger problem is that when our production line is running and there is aSEE PAGE 4A FORMER finance minister yesterday urged the government to “blow a hole in the budget” to end the “national emergency” created by Bahamas Power & Light’s (BPL) generation crisis. James Smith, who held the post under the first Christie administration, told Tribune Business it needed to “make the hard decision between a balanced budget and making capital investments to benefit the wider economy” given BPL’s inability to provide reliable energy supply to New Providence. Suggesting that the Minnis• Set aside fiscal targets, ex-finance chief urges • Govt must ‘stop everything’ for power crisis • Warns outages ‘likely’ to slash 1.8% growthJAMES SMITH administration needed to temporarily suspend its focus on meeting the Fiscal Responsibility Act’s deficitratio and other targets, the ex-Central Bank governor said the capital’s power shortfall should become the government’s “number one priority” item such that it “stops everything and tries to get that fixed”. Given energy’s importance to a properly-functioning economy, Mr Smith warned that BPL’s woes had already “quite likely” cut the 1.8 percent GDP growth projected for The Bahamas in 2019. With many businesses forced to close and send staff home early, and othersenduring daily disruptions to production and customer service, he added that economic output will fall even further the longer that the state-owned utility monopoly’s problems are unresolved. Mr Smith said BPL’s load shedding, and frequent power outages, had worsened to the point where it affected him on a personal level as he last year finally dropped his decades-long resistance to acquiring aSEE PAGE 2‘Very confident’ on Nassau handling Customs reforms By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Ministry of Finance’s top official is “very confident” that next month’s roll-out of Customs’ new system on New Providence will be “manageable” despite concerns voiced elsewhere. Marlon Johnson, acting financial secretary, told Tribune Business that initial difficulties surrounding the Electronic Single Window’s (ESW) implementation were not unexpected given that it represents “a massive sea change in the way business is done”. Responding to complaints from Abaco that the new digital system had increased the workload• Top official optimistic despite Abaco woe • Capital’s September launch ‘manageable’ • Pledges end to ‘bottlenecks’ by going digitalMARLON JOHNSON associated with clearing goods at the border by 400500 percent, Mr Johnson said Customs was already working with the island’sbrokers and importers to address their concerns. He indicated that the ESW’s “seaside” roll-out on New Providence would likely be smoother given the collaboration between Customs and BISX-listed Arawak Cay Port Development Company (APD), which operates the commercial shipping port that handles around 90 percent of the island’s cargo imports. Mr Johnson said major shippers and importers had also been involved to the extent that the shippingcompanies’ own electronic management systems had been “integrated” with the ESW. Hailing the latest element in the government-wide digitisation initiative, the acting financial secretary added that the ESW’s builtin Artificial Intelligence would enable it to detect “anomalies” in import trends and prices to expose potential fraud and tax evasion. The identity of all shipment owners, and ties toSEE PAGE 5PAGE 2, Wednesday, August 14, 2019THE TRIBUNEBISX-LISTED INSURER IN 29% PROFITS RISE COLINA Holdings (Bahamas) yesterday unveiled a 29 percent year-over-year increase in total net income to $8.9m for the 2019 first half. The BISX-listed holding company, revealing a $2m bottom line increase upon last year’s $6.9m, said net income attributable to ordinary shareholders had also risen by 24.5 percent for the six months to end-June. This produced an increase from $5.3m, or$0.22 in earnings per share (EPS) in 2018, to $6.6m or $0.27 in EPS. Colina Holdings (Bahamas), which is the parent for Colina Insurance Company, attributed its improved profitability to greater investment income driving top-line growth. The life, health and general insurer said total revenues for the half-year rose by $6.8m, or eight percent, from $84.2m to $91m. This was entirely driven by improved returns on itsinvestment portfolio, which increased year-over-year by 70.6 percent or $8.9m to $21.5m. The increased investment yields offset a reduction in Colina Holdings (Bahamas) premium revenues, which fell by more than $2m yearover-year - from $67.5m in the 2018 half-year to $65.3m. The BISX-listed entity said benefits paid to policyholders decreased slightly year-over-year, falling from$45.7m in 2018 to $44.2m this year. Policyholder reserves were increased by $12.1m, taking provisions for future benefits paid out on their behalf to $447.1m. Colina Holdings (Bahamas) total assets stood at $779.1m at end-June 2019, a near $20m increase upon the 2018 year-end figure of $759.9m. Invested assets accounted for the highest proportion of these assets, standing at some 80.6 percent.Terry Hilts, the company’s chairman, said: “Overall, we are pleased that the company continues to maintain its balance sheet strength and we remain focused on achieving our targeted financial objectives over the long-term. “Colina Holdings Bahamas will continue to pursue opportunities which will enable the company to deliver sustainable earnings in the future.”‘Blow hole in budget’ to fix BPL emergency FROM PAGE ONE generator by installing one at his home. While BPL executives have suggested that their generation woes will be solved once the utility’s 132 megawatts (MW) in new generation capacity is installed at Clifton Pier, that will only happen by mid-December 2019 at the earliest. Mr Smith said it was “going to be difficult, really difficult” for Bahamas-based businesses and residents to put up with daily load shedding and outages until then, which was why he is calling for direct government intervention now. “This is one of those areas where we have to make hard decisions between a balanced Budget and making capital expenditures to benefit the wider economy,” he told Tribune Business. “I don’t know if BPL is asking for funding, but if they need funds for new equipment the government should find a way to do it. “It’s a national emergency, and the sort of thing where you break the holes to fix it. You blow a hole in your Budget but get it back in the medium term. It’s not a bad investment. To do nothing and let it drag on like this, it will get worse and worse. It’s beginning to feed on itself.” The government, which has invested a significant amount of its political capital in reforming the public finances by eliminating annual fiscal deficits and reducing the $8bn-plus national debt, will be loathe to abandon the discipline imposed by the FiscalResponsibility Act’s targets which allow for a 0.5 percent “miss” or lower - so soon. BPL’s cash flow problems and persistent annual losses, which average in the $20mplus range over the past decade, have left it in no position to afford new generation units or maintenance beyond the $95m Wartsila engines purchase until its debts are refinanced by the upcoming $450m-$550m Rate Reduction Bond issue. However, no economy with “first world” aspirations can operate properly without a reliable energy supply, and Mr Smith argued that an immediate fix would restore business and consumer confidence, generate renewed activity and increase imports such that any government spend on new BPL generation capacity would ultimately be recouped over the medium to long-term. He argued that The Bahamas and its economy simply cannot afford to wait another three-four months for New Providence’s energy supply situation to improve, adding: “It’s the number one priority; something as fundamental as the sustained provision of electricity to all households and businesses operating in the country. “You just stop everything and try to get that fixed. It’s a real national problem. It reminds me of how sometimes you have to regroup after a hurricane. You turn all your resources to hurricane relief, and the country understands that.” BPL executives made it abundantly clear at the weekend that there is no immediate relief in sight for the three-four hour delay outages affecting all parts of New Providence, repeatedly stating that they “cannot guarantee” there will be no further load shedding this summer. They are pinning their hopes on repairing two of the three generation units that broke down at the Blue Hills power plant recently, believing that restoring them to service will eliminate the current 40 MW generation shortfall between BPL’s 210 MW capacity and New Providence’s 250 MW peak demand. However, BPL executives admitted there was nothing to prevent further breakdowns of these and other units in the utility’s aged, poorly maintained generation fleet. Other than repairs, the only other hope is for a mild November and an ease in New Providence’s energy demand such that BPL can meet it once again. Given that no part of the Bahamian economy has been spared, Mr Smith told Tribune Business that “it’s quite likely” economic growth has already been impacted to the extent that it will come in below the 1.8percent expansion projected for 2019. With those businesses lacking a generator often forced to close early and send staff home, he added that workers’ wages especially those receiving hourly-based pay - would be reduced. This, in turn, will lower aggregate demand in an economy where two-thirds of consumption is driven by consumer spending. Mr Smith said companies were also incurring increased generator fuel bills and maintenance costs, forcing them to divert resources from investment, expansion and job creation, while also suffering the loss of critical electrical equipment due to BPL-related power surges and spikes. Companies that sold perishable goods were also experiencing greater inventory loss, he said, adding: “It affects the economy at different levels and to different degrees, but the overall effect is to compress your economic growth. It affects all units of consumption and production. “I’m really concerned about the economy. It’s disruptive to all of us, but it could have some adverse medium and long-term effects for the main industry. When you get a black eye like this, word gets around and people make decisions to cancel. We may see some of that later this summer. “It’s also a turn-off to investment by locals and foreigners because any business putting up in this country depends on electricity being on on a normal basis. Decisions are being made now to defer planned expansions and bring on additional people.” Mr Smith said BPL’s inability to meet its basic obligation to the Bahamian people, that of keeping the power on consistently, had also impacted him personally. “For the last 30 years I said that any decent, working economy ought to be able to provide sustainable electricity to its population base,” he explained. “I refused to invest in a generator, but about a year ago I had to; the constant interruptions and not being as young as I used to be.” Mr Smith said a recent newspaper from The Tribune’s archives, dated 1969, carried a lead story referring to continuous power blackouts on New Providence. He added that it showed how little the progress The Bahamas had made in half a century when it came to providing such a fundamental service.To advertise in The Tribune, contact 502-2394THE TRIBUNEWednesday, August 14, 2019, PAGE 3Restaurant chains ready for single-use plastics ban By NATARIO MCKENZIETribune Business Reporter nmckenzie@tribunemedia.net A BAHAMIAN restaurant operator yesterday said it had been moving towards eco-friendly packaging long before the government’s decision to ban Styrofoam and singleuse plastics.​ Gandhi Pinder, Bamboo Shack’s vice-president of marketing and public relations, told Tribune Business: “We began the process in earnest in 2018, and continue to move in that direction with the goal of being fully eco-friendly. “Although the Bamboo Grill House has just been added to our group of companies, it will be the first to be fully biodegradable in a matter of days. In ourSapodilla restaurant our coasters are biodegradable even though it’s a fine dining restaurant. At our Bamboo Shack location in Miami we use biodegradable items as well.” Ms Pinder spoke as the government yesterday released the Environmental Protection (Control of Plastic Pollution) Bill 2019, which is designed to give legal effect to the drive to ban single-use plastics in The Bahamas. Businesses will be able to possess and sell prohibited plastics to customers up to June 30, 2020 for a fee of not less than 25 cents and not more than $1 per bag, excluding VAT, according to the Bill in a bid to ease the transition. Single-use plastic foodware is defined as styrofoamcups, styrofoam plates and other similar styrofoam foodware used to contain food, plastic knives, plastic forks, plastic spoons, and plastic straws. Ms Pinder added: “It’s a gradual process, but definitely the goal is to move toward 100 percent ecofriendly packaging. There are so many different aspects with our different brands, and so many different levels to our approach to being eco-friendly. We want the government to see us as a partner. We consider ourselves a responsible corporate citizen and that should be reflected in every aspect of our business.” ​ Janairo Turnquest, its chief financial officer, said: “Long before this became a mandate by the government this was our focus.”​ TheCAN MAKE A DIFFERENCE IN THE LIVES OF THE CHILDREN AT RANFURLYThe Ranfurly Homes for Children has been a safe haven for thousands of Bahamian
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