The BVI Electricity Corporation’s General Manager Leroy Abraham has explained that the short duration of the corporation’s new agreements with SOL St Lucia for fuel supply and services at two power stations in the territory is a result of the current conditions impacting the global oil market at this time.
Abraham noted that the corporation is optimistic that the situation could normalise soon and therefore must be in a position to quickly adjust.
“Recognizing where we are globally in terms of fuel prices, we’re hoping that things would regularise. As I’ve mentioned before, we’re dealing with an unprecedented situation propagated by the invasion of Ukraine by Russia, so we’re hoping by early 2023 things would essentially normalise and fuel prices would go back to normal which is why we only engaged in a contract for one year”, he said.
“As all of us know, what it is we’re seeing now is mind-blowing… We do know it’s not going to last forever but none of us have a crystal ball in regards to the extent of time that the current situation will last”, Abraham added.
The new deal with SOL St Lucia comes following the premature end of agreements with Delta after it was determined that Delta could no longer meet its obligations to provide No.2 Diesel to BVIEC.
In addition to taking over the supply of fuel to the Henry Wilfred Smith Power Station and the Anegada Power Station, SOL St Lucia has also been contracted to provide lubricants and waste oil removal services at these facilities.
In terms of security for this deal, should it not progress like the last, Abraham admitted that the reality remains that all suppliers are susceptible to the volatility of the industry.
“The rationale for premature end of the prior contract was that the supplier indicated that they could not gain access to the product. If SOL comes around in the not-too-distant future and indicates that they have an inability to gain access to the product then we are right back to where we are… things are very volatile in the world right now”, he said.
Abraham went on to tell 284News that this volatility remains a key factor in electricity pricing in the territory.
He explained that despite the new contracts having no direct impact on customers’ monthly bills, due to the supplier’s cost rate being fixed, another hike in global oil prices certainly could.
“The way our electricity pricing is done is based on a global index because oil is a commodity which changes in price on a daily basis. So there’s a fluctuating component to the price and there’s a fixed component which is the fuel supplier’s cost for logistics, administration and so forth. So that price doesn’t change. But we have no control over the volatility in regards to fuel prices”, he said.