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#406970 - 05/05/11 08:55 AM BEL Complains Of Cash Flow Crunch
Marty Offline
Last week, BEL released its Annual Report for 2010 and it showed the company again registering strong revenues of 186 million dollars – slightly down from 190 the year before.

The company's net earnings did decrease, from 8.8 to 3.4 million dollars.

And, according to the report the company continues to be in a cash flow crunch – and, as the Prime Minister told us today, that could start to impinge on taxpayer dollars.

According to the Prime Minister, BEL's account with the Mexican Power Company CFE is running dangerously high – and that figure is underwritten by the government of Belize – which means if BEL can't pay, then, government must. Here's what the PM had to say about it today:

PM Dean Barrow
"There is a letter of credit that we have guaranteed, their -- we were very concerned because BEL is almost at the outer limits of that letter of credit. We are just concerned that there be a stable flow of energy. We are concerned that CFE, from where we get so much of our power, perhaps 50%, at times we are getting most of our power from them, that there should not be any cutting off of that source of power. So we're concerned that BEL should pay CFE so as to forestall any interuption of power. Government is monitoring the situation closely, we did what we could in terms of paying a little early what we owed to BEL in terms of our bills for street lighting and so on. But we have the situation very much under review, and if circumstances warrant, then Government will have to intervene to ensure the non-interruption of that supply in Mexico."

Jules Vasquez
"That utility, I was surprized to see in that report in annual report issued last week, that it quite comfortably said that even though Government has increased it's gross tax from 1.75% to 6%, it will not be paying that until it is passed on to the consumer in a full tariff review. And at that point when they get it from the consumer, Government will get it from them."

PM Dean Barrow
"I don't know that that's quite what the report said, and I don't know that any government can countenance that.We need to collect our taxes."

Jules Vasquez
"However, you will agree that you increased the taxes last year, and my reading of the financial says that those taxes have not been paid; You will agree with that?"

PM Dean Barrow
"Well I'll check; we certainly increased the taxes. It is clear that BEL is having some cash-flow difficulties; what is not so clear is why that should be. When you look at their annual report, and you see that they spent something like 43 million dollars in capital expenditure in 2009, and then 44 million dollars in capital expenditure last year, you kind of wonder how it is-"

Jules Vasquez
"From their cash?"

PM Dean Barrow
"Yes, from their cash, no borrowing at all, infact they claim that they can't borrow; you kind of wonder at the management that infact does that, and now says that there is not any money to pay suppliers."

And while the PM said he would check to see if Government had been paid the tax it was due, the BEL financials state plainly that, quote, "On April 1st, 2010, the tax rate increased from 1.75 to 6.50% of gross revenues."

It continues:

"The additional 4.75% is being deferred to be recovered from customers." To us defer means "put off until later", and minus some magical accounting explanation, it means that straight like that; government implemented a tax, BEL said, we'll pay it later. We should all be so lucky.

Channel 7

#406985 - 05/05/11 10:16 AM Re: BEL Complains Of Cash Flow Crunch [Re: Marty]
Mike Campbell Offline
BEL needs to be nationalized. It is a subsidiary of a foreign company Fortis and does not operate with the best interests of the country at heart. The same with BTL. It has been nationalized but is still not being managed to the benefit of the people of Belize.


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