Government must not encourage the National Insurance Board (NIB) to sell its shares in the Barbados Light & Power (BL&P), says chief Opposition spokesman on finance and economic affairs, Clyde Mascoll.
“The consequences of selling the NIS shares are not the same as selling the shares of the Barbados National Bank,” Mascoll said yesterday.
“BL&P is a monopoly which is profitable and is guaranteed to be profitable for several years to come.
“The most important consideration is that the NIS needs to have long-term investments to help finance its long-term obligations (pensions and benefits).
Investment
“There is no benefit in selling shares with impressive high rates of return to have to search for alternative investments; there is hardly a better investment in town.”
A Canadian company,?Emera, which has a 38 per cent holding in BL&P, has offered shareholders $25.70 per share compared with the current market price of $12 – a potential financial windfall which the directors of the Light & Power Holdings (L&PH) have advised them to accept.
Contribution
Mascoll, an economist and former Minister of State in the Ministry of Finance under the Owen Arthur Administration, said there may be a misconception that the NIS money belonged to the Government.
“It is available for borrowing by the Government,” he said, “but the interest rate has to meet the actuarial expectations of the scheme.
“The NIS is already making a healthy contribution to the financing of the excessive fiscal deficit of the Government.
“The current self-imposed fiscal crisis cannot be remedied except via expenditure cuts.
“Not even the forecast growth of two per cent in 2011, which is achievable, followed by four more years of similar growth, is not enough to solve the Government’s current account deficit which is over half-billion dollars as predicted.
Obligation
“Once the economic growth fuels Government revenue, it is expected that the Government’s appetite for spending will be fuelled as well, especially in the face of a general election that the Government must win.”
Mascoll said that beyond the economic and financial issues, the Government via the to hold on to its shares in the country’s only electricity company.
“Private investors have no such obligation,” he declared.
