EDITORIAL: Dismantling defamation laws
Friday, 10 – Friday, 12 May 2013
CUC earnings on the increase
Caribbean Utilities Company’s (CUC) net earnings for the first quarter 2013 totaled $2.9 million, an increase of US $1.0 million, or 53 per cent, when compared to $1.9 million for the three months ended 31 March 2012 (first quarter 2012). On Tuesday this week, CUC announced its unaudited results for the first quarter ended 31 March 2013 (all figures in United States dollars). Despite continuing declines in kilowatt-hour (“kWh”) sales, CUC’s earnings for the three months ended 31 March 2013 improved over the same period last year as the company continued its focus on controlling costs and improving efficiencies throughout the organisation. In a press statement from the company, these results were attributed primarily to lower general and administration and financing costs as well as an increase in other income. General and administrative expenses for the first quarter
2012 included a one-time charge of $0.3 million related to restructuring costs incurred to further streamline CUC’s organisational structure. Maintenance costs also declined as a result of the ongoing capitalrelated projects that upgrade and improve the performance of the company’s fleet of generating units. CUC’s President and CEO, Mr Richard Hew, said that the company was focused on reducing its expenditure. “With a weak economy and high fuel costs, customers continue to conserve energy. The company remained focused on controlling its operating costs, while investing in required infrastructure to meet current and future demand as needed. CUC has been making every effort to ensure that its customers are provided with a safe and reliable electricity service at least cost.” These items were partially offset by a 1 per cent decline in kilowatt-hour (kWh) sales
CAYMANIAN OF THE WEEK
Dr Dax Basdeo is the Chief Officer in the Ministry for Financial Services. Dr Basdeo began his civil service career as an economist. He then headed the Cayman Islands Investment Bureau, which was later renamed the Department of Commerce and Investment. He holds a Bachelor of Science degree in Finance and Statistics from the Wharton School at the University of Pennsylvania, an MBA from the University of Manchester and a PhD in strategic management from the University of Maryland. A published author, Dr Basdeo has also conducted research involving US businesses, with research teams at various academic institutions.
and higher depreciation costs for the First Quarter 2013 when compared to the first quarter 2012. After the adjustment for dividends on the preference shares of the company, earnings on Class A Ordinary Shares for the First Quarter 2013 were $2.8 million, or $0.10 per Class A Ordinary Share, an increase of $1.0 million when compared to $1.8 million, or $0.06 per Class A Ordinary Share for the first quarter 2012. Kilowatt- hour sales for the first quarter 2013 totalled 125.5.million kWh, which is a decrease of 0.9 million kWh, or 1 per cent when compared to 126.4 million kWh for the first quarter of 2012. Capital expenditures for the first quarter 2013 were $6.4 million and system reliability was recorded at 99.97per cent. A Certificate of Need for generation capacity was issued to the Electricity Regulatory Authority (ERA) by the Company in November 2011.
This was driven primarily by the upcoming retirements of some of the Company’s generating units beginning in 2014. In March 2012, the ERA solicited Request for Proposals (RFP) for an additional 36 megawatts (“MW”) of generation capacity from qualified bidders, including CUC. In February 2013, the Company was advised that another local company, DECCO Ltd., had won the bid. In April 2013, the ERA announced that it would be engaging an independent party to conduct an investigation into the 36 MW bid process following public statements being made by its former managing director concerning alleged irregularities with the process. Mr Hew stated, “The company is becoming increasingly concerned that the ongoing delays in the process to secure firm generating capacity may lead to inadequate installed generation capacity, given
Richard Hew, CEO of CUC.
that 18 MW of the 36 MW of capacity was intended to have been installed for July 2014 to serve the needs of Grand Cayman. However, we will explore all options, including temporary generation solutions to mitigate the threat of extended power outages for the summer of 2014.”
Balance of Payment deficit continues to grow
The Cayman Islands Balance of Payment accounts deficit continued to expand, despite an improvement in the world economy. From the most recent data as contained in The Balance of Payment (Current Account) Report 2011, the current account deficit increased to $455.5 million in 2011 from $420.6 million recorded in 2010. This performance was largely due to the increase in imports of goods along with the decline in the surplus from services. The report, released last month, presents the balances of payments by the country’s residents with the rest of the world for goods and services, income and transfers. Information from the report is used largely by credit rating agencies, creditors and foreign investors as general indicators of the country’s ability to service its foreign debt. According to the government, “The overall current account balance continues to be in deficit in 2011 as expected. However, our receipts from services transactions including
Cayman’s balance of payments deficits grew in 2011, according to government data contained in The Balance of Payment (Current Account) Report 2011.
financial and travel services, continue to outpace payments, resulting in a surplus on the trade in services account.” Financial and travel services are the leading sources of foreign exchange receipts for the Cayman Islands. Other business services and government goods and services were also major contributors to foreign
exchange receipts in 2011. In the year under review, the balance of trade in goods deficit expanded by 2.7 per cent (to $603.4 million. This deficit represents 24.1 per cent of the GDP as compared to 23.9 per cent two years ago. After two consecutive years CONTINUED on page 10
During the quarter under review, the company also continued discussions with prospective providers of alternative energy in the areas of solar and wind. Once the negotiations are completed and agreements have been reached with all parties, an announcement will be made.
Dilbert appeals for more resources Although most Freedom of Information (FOI) replies have been within the statutory time framework, the Cayman Islands Information Commissioner Jennifer Dilbert feels that government needs to do more to improve the working conditions of her office. In a press release last week, the information commissioner noted that appeals were within statutory timeframes and the powers of the commissioner. “Unfortunately, in terms of capacity to deal with current and projected workloads, Cayman falls into the 19 per cent of commissioners who believe that their financial and staff resources, are ‘not at all sufficient’”, according to a recent international survey of information commissioners. CONTINUED on page 11
INSIDE THIS ISSUE • BAAM puts teenage in the spotlight.........4 • PPM billboards vandalised again..................9 • Herschelle Gibbs signs for CPL.......................16