Related Articles

The liberalization of Virgin Islands electrical power: taming an 800 pound Gorilla!

Dickson Igwe - Saturday, April 14th, 2012 at 8:39 AM

Dickson Igwe

A series of articles on a new British Virgin Islands integrative development model, discuss why privatization and liberalization of the local power industry are the way forward for a cheaper, more self sufficient, renewable, and greener energy future

The British Virgin Islands Electricity Corporation, in the near future, may have to be privatized, and simultaneously broken up into a number of smaller energy type businesses owned by BV Islanders, and Citizens, if this tiny country is to proceed towards a renewable, and cheaper and cleaner, energy future. This belief and assertion comes from some in depth reading of the views of writers on the subject of renewable energy in the local and global media, by this Village Square Thinker.

Consequently, the conclusion can be reached, that the road of privatization, and the liberalization of domestic power and energy provision in the British Virgin Islands, is the swiftest, and most viable way of moving the country towards a more efficient, self sufficient, and secure energy future.  Now, whether this is the time for a bold change in the business culture of these British Virgin Islands or not, only time will tell. But a forum and discussion on the issue of power and electrical generation, and how a new and much more liberal dynamic must be created in the coming years, is critically necessary at this time, for the country.

And one ‘critical source’ has already told this Observer that this proposition may well be very unpopular to a majority of the population, owing to a belief that ownership of a newly liberalized and privatized electricity industry will be grabbed by the rich and powerful, and to the detriment of Joe Public. However, this Writer’s retort was, ‘’not necessarily so, if the process is fairly handled, well legislated, discussed, and designed to ensure that everyone gets a fair share of the electricity cake.’’

This Villager will further add that if privatization, and liberalization of power, is determined as requisite for this country, then every effort must be made to ensure that the new businesses emerging from the old BVI Electricity are owned by BV Islanders, and Citizens, with alien interests limited to bond type instruments, bills of exchange, consultancy contracts, the supply of machinery and equipment, add related and relevant products not readily available locally. And not handing over a critical utility and industry to the management and ownership of a foreign company, but keeping the energy generation industry local.

As it is with the national water infrastructure, power is a critical utility, and it must remain in local hands. The equitable and fair privatization of a future BVI energy industry is something government can ensure.  And for a model of the process, and likely outcome of a BVI electricity privatization dynamic, the country need look no further than Margaret Thatcher’s Britain of the 1980s and early 90s, when the wholesale privatization of major public utilities in Britain, such as British Telecom, Trustee Savings Bank, the British Gas utility, British Airways, parts of British Rail, and many other public entities, eventually led to greater efficiency in formerly inefficient, public owned organizations, and new wealth opportunities created,  in terms of private ownership of stocks and shares in the newly privatized businesses for Britain’s peoples.

Britain’s privatization brought greater dynamism to her stock exchange, strong economic growth, and a new prosperity enjoyed by her middle classes. The British Government actually made more money in terms of taxation from profitable businesses after privatization and liberalization than from its ownership of loss making parastatals, post World War 2.

Bear this in mind also; the BVI witnessed a form of liberalization of its telecoms industry some years back, that saw cellular and landline phone bills decrease substantially, from the good old days when Cable and Wireless, and Caribbean Cellular Telecommunications, held monopolies on both products, and essentially determined their own pricing, year in and year out.

On a related note, one wonders why BVI Cable TV does not get into the internet business, and would that not further bring down internet prices for Joe Public? Does that organization not possess a natural cable network that could carry internet traffic? Then add a cable oriented voice over the internet type product? Anyway, that is another matter!

Now, the  Virgin Islands Premier, Honorable Dr. Orlando Smith, in an article on Virgin Islands News Online of January 24, 2012, headed ‘’ high cost of electricity a great concern for Premier Smith’’ stated that alternative and renewable energy, were long term goals for his administration. The VINO article described the Premier as stating that he was looking at ways of getting the Ministry of Works and Communications, ‘’working with the BVI Electricity Corporation, to introduce improvements that will lead to lower costs.’’

Interestingly, in his State of the Union Speech of January 24, 2012, President Barack Obama of the United States also determined that clean and renewable energy was the future for the American way: a new modus Vivendi for the world’s most powerful nation.  The US electrical grid and power generation companies are wholly privately owned.

The US President, in his speech, asserted that alternative and green energy was the future of US prosperity and job growth. Bear in mind that for the United States, this is a national security issue, and so it should be for these Virgin Islands in the sun. Renewable energy, food sufficiency, and internal security, are all related matters, and critical to the future way of life, and life quality, and even standard of living of these Treasure Islands.

Incidentally, in the BVI Beacon Edition of January 26, 2012, the issue of electricity generation, and the high price the Virgin Islands consumer pays for electricity was a prominent feature of the opinion columns. National Forum Contributor, Edgar Leonard, exhorted in an article titled ‘’ ideas offered for cutting electricity costs,’’ that ‘’ the Virgin Islands should establish an independent regulatory agency.’’ He determined that the current self regulated monopoly that is the BVI Electricity Corporation had ‘’ little or no incentives to minimize cost.’’ Mr. Leonard further asserted that the current ‘’ arrangement could result in inefficiencies and higher production costs.’’

The National Forum Contributor gave a valuable citation of a report on Puerto Rico’s Electric Sector that explained how an independent regulator ‘’ could provide various functions: setting price caps and rate of return regulation; establishing, reviewing, and revising electricity prices and tariffs annually; setting price adjustment criteria; protecting consumer interest; approving capital investment plans; reviewing and facilitating opportunities to transition to renewable energy sources; and providing general oversight of the electricity utility.’’

Leonard offered excellent ideas on lowering costs in the electricity marketplace such as : ‘’ collaborating with other regional countries on joint purchasing of bulk fuel to achieve economies of scale, thereby reducing cost; researching the possibility of buying fuel directly from wholesalers; and allowing residential households and small businesses to use solar panels and small wind turbines to generate electricity.’’ This Writer would further add large businesses and organizations as well, who can afford the expense of a relatively new type technology.

Leonard described how ‘’ fossil fuel is the primary energy source used by the Virgin Islands to generate electricity.  But it is expensive.  As such, the Virgin Islands, like most of the region, needs to explore other energy sources. For the long term, the territory should consider wind, solar, thermal, compressed natural gas, photovoltaic, and coal as possible sources to address its critical power needs.’’

The use of clean coal technology for electricity generation is a very interesting idea owing to the abundance of this resource in the hemisphere. Liquefied natural gas is also a fuel that is abundant in these Americas and ultimately cheaper than dwindling oil based global supply model. And do bear in mind the hidden and unpaid costs of dirtier fossil fuels such as petroleum, in terms of environmental damage.

Leonard further admonished the Virgin Islands ‘’ to explore interconnections with islands like Nevis, which may have excess capacity from its promising geothermal explorations.’’ Again, there has been a suggestion that the technology exists for certain types of waste, including sewage, to be converted into energy, even the breaking down of waste plastics into a liquid form that could be used to run diesel engines, add the use of heat from the garbage incinerator to generate power into the surrounding areas, interesting ideas indeed!

Leonard’s commentary showed just how much could be done to reduce this country’s dependency on fossil fuels and nurture a new clean energy dynamic for the future. And understand this: fossil fuels will probably always be part of mankind’s energy equation. But fossil fuels are finite, and with emerging economies such as China and India demanding millions of extra barrels of oil daily, the demand pressure s on hydrocarbons will continue on an upward trajectory, with prices continually on the rise.  Add a volatile Middle East, and this is even more the case.

This Lay Ecologist however, will assert that for these Enchanting Antilles, the only way to bring down the price of electricity and related energy costs will be within the context of a liberal and free enterprise energy environment, albeit well regulated, and directed by a new government department of energy and powerful regulator. Yes, only then will the overwhelming dependency on fossil fuels be ended, and a renewable and cheaper energy future realized.

To be continued

Connect with Dickson Igwe on Facebook and Twitter

This article was posted in its entirety as received by bvinews.com. This media house does not correct any spelling or grammatical error within press releases and commentaries. The views expressed therein are not necessarily those of bvinews.com, its sponsors or advertisers.



9 Comments

Disclaimer: BVI News and its affiliated companies are not responsible for the content of comments posted or for anything arising out of use of the comments below or other interaction among the users. We reserve the right to screen, refuse to post, remove or edit user-generated content at any time and for any or no reason in our absolute and sole discretion without prior notice, although we have no duty to do so or to monitor any public forum. All comments posted on BVINews.com reflect the views and opinions of the commentators and not that of the management and staff. Click here for our full comment/user policy/ agreement.

  1. Quiet Storm
    April 16, 2012
    Like or Dislike: Thumb up 0 Thumb down 0

    Sometimes to save the village the village has to be burnt. Similarly, to liberalize the power infrastructure it needs to be completely overhauled. As noted, the BVIEC is a monopoly. And needs independent oversight to pursue any serious cost efficiencies and reduction. There is a great opportunity to liberalize the industry and bring lower cost to customers.

    But any effective changes will have to be driven by external forces. The Board is probably too inbred and political to effectively make the tough changes. We need to act now for Virgin Islanders are paying too much for electricity. We, the consumers, are being gouged. Let us leverage techonology to lower cost, i.e., solar panels, wind technology……..etc.

    Reply to this comment
  2. Not2Sure
    April 16, 2012
    Like or Dislike: Thumb up 0 Thumb down 0

    Mr Igwe has some interesting ideas, but two of them I have problems with. Firstly, industry liberalisation only works if you have at least two competitors in that industry. For power, we only have one supplier, and it controls all of the lines and infrastructure. I cannot see how liberalisation (in the usual way that word is used) can occur. Second: it is a nice idea that after privatisation the utility must be owned by BVIslanders. But if you say that only locals can buy it, then you effective drive the price right down. Given we are selling off a national asset, then we are selling it off cheap. Much better to give local interests a right to match the price of any foreign investor, and protect the BVI people through a strong regulator. I would much rather see the whole BVI benefit than have one or two local investors strike it rich by buying BVIEC on the cheap.

    Reply to this comment
    • Questions??!!
      April 16, 2012
      Like or Dislike: Thumb up 0 Thumb down 0

      I’m not too sure that the electricity industry cannot be liberalize unless there are least two service providers.True, the BVIEC is the sole provider and owns all the generation, transmission, and distribution assets. But as is happening in other places, agreement can be fashion where separate entities control different aspects of electricity producction. These entities can share assets and owners can be compensated for their use. Moreover, liberalization can be realized by changing some current policies. For example, citizens can be allowed to install solar panels and small wind turbines.

      Further, given Virgin Islanders the first option to buy electricity production assets will not lower their value. The assets have value and will be sold at a fair and reasonable rate. And if Virgin Islanders do not want to pay market rate then the valuable national assets can made available to others. Further, ownership can be fashion so that scores even hundreds of Virgin Islanders can own a piece of the electricity asset.

      Reply to this comment
  3. Diaspora
    April 16, 2012
    Like or Dislike: Thumb up 0 Thumb down 0

    What is the value of the fuel supply contract if everytime diesel prices change on the market consumers are bludgeon with the exorbitant fuel surcharge? Is not one of the benefits of having a contract is operational cost stabilization? Are fuel surcharges being charge on fuel already in the pipeline?

    The writer is on point on at least two issues. First, the BVIEC is indeed a self-regulated monopoly with little to no incentives to keep cost as low as practically possible. Monopolies and oligarchies typically have little to no competition and no incentives to control cost and price. Secondly, there are opportunities to liberalize the electrical power industry. The liberalization can start with letting residents and small businesses install solar panels and wind turbines. Further, the Premier needs to follow through and follow-up with his directive to the MCW to review electricity generation and distribution operations for opportunities to reduce overall and customer cost.

    Moreover, there are a myriad of reasons for privatizing and outsourcing services. Among them are contracting out non-core functions to enhance focus on core functions, to extend capability, to improve the quality of service delivery, to reduce cost, to procure infrequently required specialty skills….etc. But outsourcing and privatizing have pitfalls. Cost creek is always a lurking reality. Contractors bid low to get their foot in the door but over time the cost skyrockets. The contracting folks must constantly monitor and adjust needs to get the best services at the lowest cost.

    Reply to this comment
  4. Sole sources
    April 14, 2012
    Like or Dislike: Thumb up 0 Thumb down 0

    I think the “idiots” are the ones who allow and
    permit the sole source single vendor conditions
    to go on for so long in this territory..

    Reply to this comment
  5. Heads up
    April 14, 2012
    Like or Dislike: Thumb up 0 Thumb down 0

    Well, we’ve been getting screwed by the fuel surcharge for ever. My March bill was for $157 and $70 was for fuel surcharge. That’s absoulutly sicking.Theses idiots don’t know how to buy fuel at the right price. Venezuela is selling it for pennies a gallon. BVI is just chocked full of the most stupid people I have ever delt with. The most expensive third world country in the world……that is forever going backwards

    Reply to this comment
  6. Keep it Coming
    April 14, 2012
    Like or Dislike: Thumb up 0 Thumb down 0

    Another good description of opportunities here to position BVI industries to better serve the
    territory and its economy…

    Reply to this comment
    • April 16, 2012
      Like or Dislike: Thumb up 0 Thumb down 0

      Dickson I am with you on this one! A few small adjustments in the short term could make for large long term gains.
      As an example, installing meters that measure the flow of current both ways on larger commercial properties. In the event of a storm or any power outage, the commercial property would automatically turn on their genset, and any excess would go into the grid, to be credited to them at the end of the month. There is alot of excess capacity in the private sector here and this is one way of putting it to mutual good use.
      Secondly, solar water heaters should simply be required on every home. They are proven world wide to save tons of energy and they work. They are simple to install, safe, and easy to use.
      Last, a simple and inexpensive mass transit system would be very helpful. Such as this: buses on the hour from the police station east end to town. Buses on the hour from the Ferry terminal west end to town. Buses on the hour from CGB. In town itself, step-on and step-off open trolleys, going around a route from Prospect Reef roundabout, up to Huntums Ghut, down to Water and Sewer Baughers Bay, and then past the banks. Round and round, one dollar to ride. Buy six, install GPS, hire a dispatcher to keep them all seperated by ten minutes, and you have yourself an incredibly efficient people mover. THEN, create a website, post a map with trolley locations in REAL TIME, and we would be on top of the world. Persons could access the map from their phones and know if the have to run or walk to the bus stop.

      Reply to this comment
      • Not2Sure
        April 16, 2012
        Like or Dislike: Thumb up 0 Thumb down 0

        Completely agree: TCP should mandate all new buildings use solar water heating. It is a no brainer in terms of saving costs and reducing our carbon footprint.

        Reply to this comment