Minister with responsibility for Energy Senator says the National Petroleum Corporation (NPC) is seriously in the red, and having recorded $2 million in total losses over the past two years, the state owned entity is headed for an even bigger shortfall this year.
“That would happen if there were no rate increase,” Boyce said as he sought to justify Government’s planned hike in domestic natural gas rates.
In piloting the National Petroleum (Amendment) Bill 2017 through the Upper House today, Boyce revealed that the NPC, which is currently indebted to its local supplier – the Barbados National Oil Trading Company Ltd – to the tune of $12 million, had registered a loss of $1.2 million in fiscal 2015/2016 and a further shortfall of $800,000 in 2016/2017. That figure is expected to rise to $4 million for 2017 to 2018.
Boyce said the statutory entity was currently caught between a rock and a hard place, charging cheap, decades-old rates for a rapidly dwindling supply of its products, while facing rising import costs.
“The rates charged by the National Petroleum Corporation are exceedingly low rates,” the energy spokesman said.
“At the same time the cost of natural gas that we supply has trebled since 2002. And the amount of natural gas that we have in the country has declined consistently since the early 2000,” he added.
The minister further reported that the natural gas supply taken from wells across the island had see-sawed in the 1980s, before stabilizing in the 1990s due to more well-drilling and oil finds, and then falling again.
He said the effects of this downward spiral had seriously hit home to Barbadians during the 2014 Christmas season when the tourism industry, especially hotels and west coast restaurants, along with some industrial plants, lost their supply, owing to low pressure.
This had forced officials to fast track a plan for the importation of natural gas at “five times the cost of the local natural gas”, according to Boyce.
“We are at the stage where we will soon have to import almost half of the natural gas that we have to supply,” he told the Senate.
In the meantime, Government is awaiting approval of a multi-million dollar loan by the Inter-American Development Bank (IDB) to pursue a major natural gas project in conjunction with Barbados Light & Power Company Limited.
Boyce said staff in his ministry were currently working towards a sign off by the end of June, so that the project could begin by early next year.
“We are therefore pursuing our discussions with the [Barbados] Light & Power company about the use of natural gas for power generation instead of the heavy fuel oil, the Bunker ‘C, so that we can get the gas [cost] down and we can now import the gas at much larger quantities,” Boyce said.
According to the IDB, the US$34 million loan will assist the island in improving its energy security and diversifying its energy mix.
The project “will finance improvements to Barbados’ existing natural gas infrastructure to ensure natural gas service continuity . . . . It will also enable the implementation of a public-private partnership project to import and supply LNG for power generation as well as to provide technical support to NPC/BNOCL to foster greater operational efficiency”, the IDB said.