Government nationalizes B.E.L.

Belize Electricity Limited will be in government hands by Tuesday morning. Today, the government rushed through the House and Senate, legislation to take over the utility company worth four hundred and forty four million dollars. The drastic measure of a corporate takeover became more than whispers on Friday evening when it was announced that there would be special sittings of the National Assembly. The modus operandi in the capital followed a pattern similar to the Telemedia takeover in 2009. In the House, Prime Minister Dean Barrow laid out his reasons why the cash strapped government took on a second major corporation, citing as the primary reason that the country would have been cast into long periods of blackouts because of BEL's litany of debts. B.E.L. owes millions of dollars to BECOL, Mexico's Commission De Federal De Electricidad, Belize Sugar Industries' Belize Cogeneration Facility (BELCOGEN), and the Caribbean Development Bank. Barrow said that the prepayment of government bills to buffer B.E.L.'s cash flow problem could not continue. He gave several reasons to appropriate the electric company including; B.E.L. is in grave financial difficulties and is unable to pay or service its debts and is otherwise unable to secure the continuity of electricity supply and notice to revoke license has been given by the P.U.C. Barrow also told the House he wanted to avert the disruption of electricity supply.

Dean Barrow

"The main provisions of the Bill allow the Minister responsible for electricity to make an order, with the approval of the Minister of Finance, acquiring all such property as may be required to assume control over the supply of electricity in Belize. This is to be done where circumstances have arisen such that it is necessary in the public interest for government to assume control over electricity supply in order to maintain the continuity of that supply to the country. In trying to keep up with CFE payments, we have been having difficulties in meeting some major obligations to other creditors including the Caribbean Development Bank (CDB) and BECOL. We currently owe BECOL in excess of ten million Belize dollars. Now that BELCOGEN is back on line, we are receiving power from them but will have problems meeting payments to BELCOGEN as well. We are also struggling to make a payment to the European Investment Bank (EIB) that is due at the end of this month. Since the Government is party to the agreements with CFE and BECOL, as well as the loan agreements with CDB, the IBRD and the EIB, and thus exposed, we are seeking the Government’s assistance in helping the company to manage its way through this very difficult period.

CFE has advised that we do not have-this was the twenty-fourth of May. I believe that was a Tuesday. CFE has advised that we do not have sufficient credit for power purchases to take us through this weekend and will interrupt supply of services on Friday if no arrangement is made for any payment or extension of credit. We need an urgent response in order to determine how and when we should start planning rotation power outages for the country as appropriate. So people have to understand that this is not something that was likely to happen. This was something that was about to happen. There are some who say, well why don't you wait. How can we wait when from as early as the twenty-fourth of May, we were told that the country would be plunged into blackouts by the Friday of next week; except government stepped in again to bail out B.E.L. When we gave that four million dollars last Wednesday, we thought it might buy us a couple of weeks. But it turned out that in addition to the just under ten million dollars owed to CFE for power, and the twelve million to BECOL, B.E.L. also owed five point one million Belize dollars to BELCOGEN as of BELCOGEN's May invoice. Still, B.E.L. was giving none of the four million dollars that we gave it last Wednesday to BELCOGEN. I have the breakdown of how they were apportioning that four million. The bulk of it was going to CFE, some was going to Fortis and some was going to the EIB-none was going to BELCOGEN. And that Mister Speaker became a real tipping point. BELCOGEN needs money to service its own foreign debts, which are cross-referenced to the BSI sugar factory loans. I knew that the BELCOGEN people were travelling to Washington for a meeting last Friday with the international bankers that are BELCOGEN’s financiers. The purpose of the meeting was to discuss the rescheduling of the BELCOGEN loans. Now Mister Speaker, BELCOGEN’s sole reason for being is to convert bagasse into energy for sale exclusively to B.E.L. Without B.E.L. as a buyer in good standing, BELCOGEN would ultimately also collapse. And because of the cross-default clauses, if the BELCOGEN loans are called the BSI loans are also called. It was therefore critical, in my view, that BELCOGEN should be able to assure its creditors that it will be able to collect for its electricity sales to B.E.L. and the only way that could happen is if government is in charge and make those payments. Otherwise, exit now the entire sugar industry."

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