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#409686 - 06/11/11 03:18 AM GOVERNMENT TAKES FIRST STEP TO RENATIONALIZE BEL
Marty Offline
He signaled government’s intention to renationalize Belize Electricity
Limited during his quarterly press conference earlier this week. And today
Prime Minister Dean Barrow made it official: government wants controlling
interest in the company. Prime Minister Barrow met with Chief Executive
Officer Lynn Young this afternoon and a commitment was made for a further
bailout of four million dollars. Reporter Patrick Jones spoke with the
Prime Minister about the decision.

Prime Minister Dean Barrow
“Because that is the only way to take the company forward. The company,
the meeting with Mr. Young confirmed this afternoon, is unable to pay its
bill, it is unable in particular to pay for the power supply that this
country needs. It can’t pay BELCOGEN, it can’t pay BECOL, it can’t pay CFE
and as you know and as I have said it must be obvious that if BEL can’t pay
for the power that we consume then the country will be without power and
the government cannot and will not allow that to happen. Since BEL is
unable to find the resources to pay for the power, BEL would like for
Government to find those resources. There is no way that Government can
find those resources simply to give over to a company over which it has no
control, that would be irresponsible on the part of Government. It would
be to saddle the taxpayers with a debt so as to provide money to an entity
in relation to which there are no assurances whatsoever. If Government is
to find the money to take BEL forward especially in terms of paying for a
stable electricity supply, then Government needs to be sure that it owns or
controls that company so that the interest of the taxpayers in whose name
the borrowing will be made can be protected.”

Patrick Jones - Reporter
Prime Minister it may be easy to say we want to control of BEL but how will
your Government get the money to buy the majority shares in BEL.

Prime Minister Dean Barrow
“We obviously have to borrow that money; we obviously have to work out an
arrangement that would contain terms for payment of a purchase price would
be agreed, if agreement proves at all possible.”

Patrick Jones - Reporter
Any idea what it would cost for Government to buy back BEL from Fortis?

Prime Minister Dean Barrow
“Not at this time but the point that I need to make is this, whatever
Government has to do to ensure a stable electricity supply it will do and
it is quite clear that BEL in its current circumstances cannot assure that
stable electricity supply. We had to agree at the meeting this evening
that Government will early next week find an additional, yet another 4
million dollars to give over to BEL so that it can make a payment on what
is owed to the three suppliers that I enumerated a while ago, BELCOGEN,
BECOL and CFE. Now this is the last payment that Government will be able to
make to BEL without resort to borrowing. And I say again if BEL cannot on
its own find the financing, if BEL has to rely on Government to go borrow
money to pay for power then BEL cannot expect that Government will simply
hand that money across without any say so as to how the money will be spent
and as to how the company will move in the future in order to get out
ultimately, finally, permanently of the current situation and to ensure
that it does not get back into the situation once it gets out of it.”

Patrick Jones - Reporter
The first step was taken today to renationalize BEL, is there a time table
you are working on as to when this will be a possibility or a reality?

Prime Minister Dean Barrow
“Yes indeed and it all has to do with the money that BEL is asking
Government to find. According to BEL when we give them the 4 million
dollars that we have committed to give them early next week that will buy
about 21 to 26 days worth of breathing room, 21 to 26 days worth of power.
After that if no agreement has been reached BEL will simply be coming back
to Government for more money or saying sorry that’s it we cannot pay so the
blackout starts, that then is the timeline. A permanent solution must be
found before that 21 to 26 days roughly expires because I repeat BEL cannot
come back to us after that for more money, we don’t have it and we will not
go and borrow it to put in a company over whose affairs we have no
control.”


Story at http://www.lovefm.com/ndisplay.php?nid=14080

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#409699 - 06/11/11 02:31 PM Re: GOVERNMENT TAKES FIRST STEP TO RENATIONALIZE BEL [Re: Marty]
Marty Offline

Gov’t Will Take Over BEL

The government will take over BEL. That's the decision that came out of a 90 minute meeting between the Prime Minister and BEL's CEO Lyn Young this morning in Belmopan.

As the Prime Minister disclosed at his quarterly press conference on Friday: BEL is bankrupt - as it can no longer pay for energy from Mexico or BECOL.

Government has already had to step in to advance a four million dollar payment, and it will have to do so again next week again - just to keep the country from plunging into continuous blackouts.

The solution that BEL seeks is an immediate influx of cash which can only come from a raise in rates - one that bypasses the Public Utilities Commission.

The Prime Minister refused - and with that BEL seems to have no other choice than to simply throw in the towel. That's why the Prime Minister today told us he has had to decide to intervene dramatically, which begins with asking Fortis, the Canadian investor which owns BEL, how much it wants for the company:…

Hon. Dean Barrow, Prime Minister
"Upshot of the meeting is that I've asked Lynn Young to convey to his principals - to FORTIS, the government's interest in buying BEL. That's the upshot of the meeting."

Jules Vasquez
"You are asking them to name a price?"

Hon. Dean Barrow, Prime Minister
"To first of all indicate whether they are interested in selling and thereafter to enter negotiations with the government to try and realize a sale."

Jules Vasquez
"Is there no other way forward?"

Hon. Dean Barrow, Prime Minister
"Well that's precisely the point. Before we got to that stage Mr. Young and I talked about various options. Mr. Young conceded that the company is simply unable to go forward at this juncture. Bottom line is that none of the options for a possible resolution of BEL's financial crisis was palatable to the government. There is no way we can do what has been suggested in terms of simply fixing a rate without any reference to the regulatory framework and to the formula that's there. There is no way we can give a letter of comfort that would say short of doing what was being asked first that somehow we will ensure that things progress until they reach a point where BEL can get the sort of rate increase that according to Mr. Young the banks will need to be assured of. There is no way that as was another suggestion government will agree to borrow money - saddle the Belizean tax payers with another degree of indebtedness to put into a company that it does not control. I am convinced that we have reached the end of the road with FORTIS where the current arrangements are concerned. I don't want to prejudice the possible negotiations. I don't want to pour any scorn on FORTIS, to burn any fire on FORTIS but obviously there is no way we can take this any further. They feel that the regulator is against them; I get the sense they feel the courts of this country are against them. They have pretty much won three out of four in terms of whenever there has been litigation between them and the PUC but they lost the last one and all of a sudden that means that the courts are against them. If however how wrongheaded that is. If they have that sort of conviction fixed firmly in their minds, I don't see how we can proceed. So I really think we reach the end of the road but surely we can at least take a stab at trying to disengage in an amicable way. If terms can't be worked out or if FORTIS sends back - Mr. Young to say that we are not interested in selling to you - then of course government would have to at that juncture go to plan B."

Jules Vasquez
"Well I know you don't want to show your cards but the way things are going plan B would necessarily have to be kind of take over."

Hon. Dean Barrow, Prime Minister
"Well the truth is that is was Lynn Young who last week said that government needs to sort this out or take back the company. I am accepting him at his word. I imagine that when he said that, he was speaking for FORTIS. Government can't sort it out along the lines that Mr. Young is saying that FORTIS wants to see occur. In other words as I said, government cannot go borrow money; government cannot give them a blank check in terms of a rate review and government cannot go borrow money to put into a company over which it has no control especially since, whether rightly or wrongly, there is a tremendous degree of public suspicion, public distrust where BEL and FORTIS are concerned whether rightly or wrongly. In that context it makes it politically and practically impossible for me to go and borrow that sort of money they are talking about in order to hand across to BEL. So as I said, let me repeat, I think, really the current arrangements can no longer work and I would hope that FORTIS would in fact accept this. It is my sense that FORTIS already knows this. If BEL can't go forward then you are talking about a collapse and you are talking about the drying up of the energy sources for this country. The government cannot allow that to happen. It does appear that the way to prevent it is for government to regain control of the company. We really would want that control to be acquired as a consequence of an amicable discussion and successful negotiation with FORTIS. But if that can't take place, we have as I said maybe 20-30 days at the most and then to do whatever else is necessary to avert this collapse. I need to stress that a collapse is imminent and there is no way any responsible government can play around with that sort of eventuality."

Jules Vasquez
"So my next question would have been if the government can afford to do it to: A) take on another asset and B) take on all the myriad entanglements - perhaps legal entanglements -that may accompany such a takeover or acquisition but as you are saying it - it can't afford not to."

Hon. Dean Barrow, Prime Minister
"That's my short answer. There is no choice. If FORTIS is prepared to enter into negotiations - a great deal will depend on the sort of bargain they will seek to drive - we will get our own valuation - hopefully we will have access to the company for purposes of due diligence, assuming again FORTIS may well say do what you want and how you want, we are not prepared to talk to you. But if that does not turn out to be the case and they are willing to negotiate, we will have to get a proper valuation. We will have to see how we can come up with whatever money appears to be fair. But ultimately I do know this - Belizeans can return that company to profitability. Belizeans can run that company in the interest of Belizeans and not just in the interest of the bottom-line, so it will be a tough road to home, but I am confident that..... It's an ill wind that blows no good and ultimately we will be able to make this right."

As we noted, to ensure an uninterrupted supply of power from CFE and other producers to BEL, and also to provide time for possible negotiations with FORTIS, the Government has agreed to pre-pay another four million Belize dollars toward its future utility bills with BEL.

And so, now, the government that took over the phone company two years ago - will now take over the power company - which is the largest utility in the country. The circumstances are far different, and at this point it's not clear if the execution will be different. A lot of that depends on how BEL's parent company FORTIS will handle it - but judging from past events, Fortis President Stan Marshall would probably like to make it as difficult as possible for the government of Belize. We note that he has the same international lawyers as the Ashcroft Alliance, and reports are that this week he made the rounds in Washington DC- accompanied by CEO Young and a Friend of Belize attorney - presumably to tell the IMF and other multilaterals bad news about the government of Belize.

And, it's fair to speculate that if the PUP were in government, maybe all this wouldn't be happening. Yes, the PUP did have a botched utility privatization at BWSL - but there were no take-overs.

So we asked the PM, is it something about his style of governance that's sending certain investors scrambling to the exits?:…

Jules Vasquez
"But it's something that people do say that if PUP were in all of this would be running smooth - BEL would have any problem - BTL wouldn't have any problem. I know it's a loaded question because there are so many issues beyond that."

Hon. Dean Barrow, Prime Minister
"But that's exactly the point. BEL wouldn't have any problem - BTL wouldn't have any problem but the people of the country would be having a problem. Mr. Young is saying to me that - well there was a situation that was not dissimilar in terms of BEL around 2006 - government simply then got the then chairman of the PUC to simply give the kind of letter that I am now being asked to give. Well that's the difference - this administration is not going to do that. This administration is not going to give anybody a blank check written on the backs of the Belizean people."

So, from here the story moves to next week - when CEO Lyn Young is expected to get back to PM Barrow with a response from Fortis on whether it wants to sell out and for how much. We'll keep following it very closely.

Channel 7


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#409709 - 06/11/11 02:48 PM Re: GOVERNMENT TAKES FIRST STEP TO RENATIONALIZE BEL [Re: Marty]
Marty Offline

Barrow wants to buyout B.E.L. from Fortis

Will the lights go out when Belize Electricity Limited’s bank account dries up? That has been the burning question in many homes since the country’s sole electricity provider declared that it could not meet financial debts with its suppliers on schedule. Prime Minister Dean Barrow announced at his quarterly press conference on Wednesday that B.E.L. should have never been privatized in the first place, but he would await the return of BEL’s C.E.O. Lynn Young to see if its parent company, Fortis, would inject the millions of dollars in cash that it needs to remain operational. The company has managed to stay afloat with four million dollars drawn from government coffers. After the sit-down with Young today, the PM said that there was clearly still no way out of BEL’s financial dilemma. The company remains in the position that it can’t pay its bills and it cannot pay for the power supply that the country cannot do without. So Barrow told Young that the government is ready to take over control of BEL by buying out Fortis’ shares.

Via Phone: Dean Barrow

Dean Barrow

“At the end of the meeting, it was agreed that Mister Young would convey to Fortis in Canada [that] Government offer to buy out Fortis’ majority shareholding in B.E.L. That’s really where we are. In the meantime, Mister Young has promised to do this today and to try to get back to us with an answer as quickly as possible. In the meantime, to stave off any possibility of interruption in the power supply, government will find another four million dollars as prepayment it will mean we would have been paid up in our monthly bills up to September of this year. That Mister Young tells us will buy us about twenty-one, twenty-two, twenty-three days grace. And in that period, we are hoping we can come to some arrangement with Fortis assuming that Fortis is interested in selling the company back to Belize.”

Jose Sanchez

“Assuming Fortis would sell back, the devil is in the details. The PUC is saying that Fortis through B.E.L. owes the consumers $50 million in rebates. That and other outstanding loans would also be discounted from whatever price they come up with?”

Via Phone: Dean Barrow

“Well right, this will be a matter of negotiation but we will have to make that point. In terms of the price that Fortis would be asking, you have to input all those factors before you can arrive at a fair price.”

Jose Sanchez

“Is it possible then that; can the government continue paying these four million dollar advances?’

Via Phone: Dean Barrow

“No we can’t and that’s just it. We are then saying that the twenty-one to twenty-eight days window that is now available as a consequence of the four million dollar payment that government will make by next week is the last of it. So we must have a solution before that window closes. The whole objective of the government is to avoid blackouts period. So whatever will be needed to be done will have to be done before we reach the point where B.E.L. stops paying and the blackouts begin.”

Jose Sanchez

“Is there an estimate that the government believes B.E.L. is worth through its assets at this point?”

Via Phone: Dean Barrow

“No, we first have to find out whether Fortis is even prepared to talk. We even had a preliminary look at the financial, but it is far more than that. If Fortis says it is willing to sell, then we will try to get a proper, professional evaluation taking everything into account and that is the offer we would make or perhaps Fortis might want to tell us initially what it is they want to sell for. But we will still do our due diligence and we would have to perhaps make a counter offer.”

Channel 5


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#409713 - 06/11/11 02:53 PM Re: GOVERNMENT TAKES FIRST STEP TO RENATIONALIZE BEL [Re: Marty]
Marty Offline

B.E.L. C.E.O. will deliver government buyout message to Fortis C.E.O.

Lynn Young

And though there are tough words coming from the Prime Minister, it is not difficult for critics to compare it to the takeover of Telemedia. Lynn Young says that he would convey the PM’s buyout message to Stann Marshall, the CEO of Fortis. News Five also spoke to Young this evening but he did not have any fiery rhetoric as the government stance is essentially the chronicle of a buyout foretold. Young was more concerned about the jobs of two hundred and fifty-five permanent and thirty-five semi- permanent apprentice linesmen as well as the eighty-one thousand customers who expect continued and uninterrupted service.

Lynn Young, C.E.O., B.E.L.

“The government would like to buy back B.E.L. Of course, I don’t speak for Fortis—I couldn’t say yes or no to that. I offered to convey his message to Fortis.”

Jose Sanchez

“Despite, it’s a new message from government. You must know more or less how Fortis feels? Did they feel this coming? What has Fortis been forecasting all along?”

Lynn Young

“Again, I don’t speak for Fortis, but Mr. Marshall has said publically that he would willingly sell his shares in B.E.L. if the government wants to buy. So I don’t think that position has changed, but I will convey the Prime Minister’s message to Fortis and see what they have to say.”

Jose Sanchez

“There is at least a twenty-one day span untilth e next payment is due and he will not go beyond that twenty-one days. Do you think definitely we will have a decision made by Stan Marshall and Fortis prior to those twenty-one days of whether or not to sell to the government?”

Lynn Young

“[Umm] I really don’t know. [Umm] You see I have to do what I can to keep B.E.L. going. I have said to the Prime Minister that B.E.L. is a quality company. That’s what I’m about; trying to get the company to provide the best service at the lowest possible rates to customers and of course, the shareholders invest in the company and they need to get a return. As a manager you have to try and make sure the shareholders get their return. But over and beyond that, the shareholders are shareholders—they can sell their shares or buy shares or whatever they want. We have no control over that. So I can’t go there.”

Jose Sanchez

“When Fortis bought the shares in B.E.L., if you can you recall, more or less what they spent then and what would have been the estimate of the value of the company?”

Lynn Young

“Well the shares were sold then at two dollars and seventy-five cents per share. The market value of a company in Belize is difficult to estimate because there isn’t a market for selling and buying shares. So [umm] I suspect that anybody can look at the retained earnings, the share holdings and see what the book value is and get an idea. I haven’t looked at it recently to see exactly what is the book value per share, but the company has grown significantly in the last ten years.”

Channel 5


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#409827 - 06/14/11 02:24 PM Re: GOVERNMENT TAKES FIRST STEP TO RENATIONALIZE BEL [Re: Marty]
Marty Offline
FORTIS INC. press release:

- Press Release, Fortis Inc., June 13, 2011 - The Government of Belize (the “Government”) issued a media release on Friday, June 10, 2011, announcing the Government’s interest, “...in purchasing majority shares in BEL so as to assume control of the company.” No purchase proposal has been received by Fortis Inc. (“Fortis” or the “Corporation”) (TSX:FTS).

Fortis holds an approximate 70% ownership interest in BEL, an integrated electric utility and the principal distributor in Belize, Central America, following investment at the invitation of the Government in 1999. In addition to its investment in BEL, Fortis owns Belize Electric Company Limited (“BECOL”), a non-regulated hydroelectric generation business that operates three hydroelectric generating facilities in Belize.

In June 2008 the Public Utilities Commission of Belize (“PUC”) issued a rate order that has had a significant negative impact on the financial condition and operations of BEL. The order effectively disallowed the recovery of previously incurred fuel and purchased power costs in customer rates and set customer rates at a level that does not allow BEL to earn a fair and reasonable return. BEL appealed the PUC rate order to the Supreme Court of Belize.

On March 15, 2011, the court rendered its judgment dismissing BEL’s application and finding that, among other things, the generally accepted concept of Good Utility Practice is not applicable in Belize. BEL has appealed this judgment to the Court of Appeal of Belize; however, a hearing is not expected until the first quarter of 2012.

On May 16, 2011, the Supreme Court of Belize granted BEL’s application to enjoin the PUC from engaging in any rate making proceedings or taking any enforcement or penal actions against BEL pending the appeal of its judgment. BEL has been in default of covenants under its long-term lending agreements since 2008 and has had no access to credit during this period.

As of March 31, 2011, the assets of BEL represented less than 2% of the total assets of Fortis; the combined assets of BEL and BECOL represented approximately 3% of the total assets of Fortis.

Fortis is the largest investor-owned distribution utility in Canada, with total assets of approximately $13 billion and fiscal 2010 revenue totaling approximately $3.7 billion; the Corporation serves approximately 2,100,000 gas and electricity customers. Its regulated holdings include electric distribution utilities in five Canadian provinces and three Caribbean countries and a natural gas utility in British Columbia, Canada. Fortis owns and operates non-regulated generation assets across Canada and in Belize and Upper New York State. It also owns hotels and commercial office and retail space primarily in Atlantic Canada. Fortis shares are listed on the Toronto Stock Exchange and trade under the symbol FTS. Additional information can be accessed at www.fortisinc.com or www.sedar.com.

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#409828 - 06/14/11 02:26 PM Re: GOVERNMENT TAKES FIRST STEP TO RENATIONALIZE BEL [Re: Marty]
Marty Offline

PRIME MINISTER COMMENTS ON POSSIBLE BUYOUT OF BEL

Three days after he confirmed government’s intention to re-nationalize Belize Electricity Limited, Prime Minister Dean Barrow today re-stated his commitment to do all that is necessary to keep the lights on.  Prime Minister Barrow was a guest on the Love FM Morning Show and explained that the crisis that has now turned one of the country’s most profitable companies into financial ruin is beyond his comprehension at this time.

Prime Minister Dean Barrow
“We don’t know how BEL has reached this pass when according to its last annual report BEL indicated in 2009 that in fact it was proposing a decrease in rates saying that they would still be very profitable.  That could not happen because of their injunction, even as they proposed this; they kept in place the injunction that prevented the PUC from moving.  With respect to 2010 their submission in terms of rates for the period July 2010 to July 2011 asked that the rates remain the same, of course the rates have remained the same.  So you in your financials, in your annual statement say that the current rate is enough for you to be profitable but before June of 2010 you come to us and say we are insolvent, we can’t pay we need this huge rate increase.  I therefore said, look I have publicly made clear that the Government will not allow BEL to plunge this country into blackouts, the Government will not allow  a cessation of power supply to this country, that would be simply disastrous, that would be chaotic, that is simply intolerable.”

Meanwhile, for his part, BEL’s Chief Executive Officer, Lynn Young, has offered his own explanation as to why the company got in the financial bind in which it finds itself.  In a conversation with Love News last week, Young said that one of the reasons is skyrocketing fuel prices and said that as far as its management practices are concerned, Young said that the company has been accountable and transparent, with representatives even from the Government represented on its audit committee.

Lynn Young – CEO, BEL
“You look at BEL’s statistics as compared to any other utility in the region.  We are one of the top best managed companies in this region.  I will tell you the members on the Public Utilities Commission have told me that personally, they have admitted that this company is a well run company, Ministers of Government has told me the same thing, yes the company is a well run company. We have a board of directors that has four directors appointed by the Government, two from Social Security and two appointed by the Government, Mr. Dillon Reneau he is also qualified in business, we have Mr. Rodwell Williams, the former law partner of the Prime Minister, he is a lawyer and he also knows a lot about finance.  They both sit on our audit committee and they review our financial statements and our financial statements do not get approved by the board until the audit committee has reviewed it and satisfy themselves that it is accurate.  The amount of money we have had to pay CFE is almost double what we normally pay them and so it has created a severe cash flow crunch on the company and we just can’t meet all the bills.  It could be all we need is an increase in rates now and maybe by the end of this year or next year it falls back.  The taxi man has to raise his fees, the airlines has to raise their fees, the newspapers has to raise their fees, everybody because the price of oil affects everybody and it affects us more than most people.”

Young has also blamed the PUC for actions it has taken against BEL.

Lynn Young – CEO, BEL
“The problem we have is that we cannot get loans to try and borrow money to pay for these bills until we can get things straightened out.  The reason being  is that the actions of the PUC has been such that the financial institutions are saying no they can’t lend us any money until this thing is sorted out.  Basically in their last rate review that they did the PUC went back in time and reversed approvals that they had given.  So when we present our financial statements to a financial institution and say, listen this is how much we normally earn and this is how much we expect to earn so we want to borrow money and you can see from our performance that we can pay back the loans; they are looking at it and say no because the PUC can come anytime and change things back in time.  What we have been trying to explain to the PUC and to the Government if the court is saying that the PUC can doing that legally then the Government will have to do something to make sure that that does not happen.  They have to put something in place that when the PUC approves something it is an approval that we can rely on, and when the oil prices go up the rates have to get adjusted up.  I think it was the Prime Minister who said that when the oil prices went down in 2009 that the PUC wanted to reduce the rates and we stopped them. We went to court and got an injunction because in 09 we made a proposal when the oil prices went down to resolve the crisis and give a two cents reduction in rates.  Our application to the PUC that year, because I had spoken to Fortis and I said listen, the Government wants a reductions in rates, the oil prices has gone down but the PUC is saying that we owe customers 36 million dollars, if we have to refund 36 million dollars to customers, this is exactly what I expected, the company cannot find it that, we are going to be in trouble.  I suggested to the Government and the PUC why don’t we just cancel all of this and start afresh, the company has already lost some money but just let’s forget it, forget this 36 million dollars that we are supposed to owe, let’s put everything back on even keel and start again.  We start with a two cent reduction in rates and the rates get adjusted up or down depending on how the oil prices move.”

Marion Ali - Reporter
Fortis is a multimillion dollar company, the parent company, how do you expect the consumers to say let us just cancel the 36 million that you owe them?

Lynn Young – CEO, BEL
"Well the trouble is that the 36 million was manufactured by the PUC in the first place.  They went back in time and reversed decisions and approvals that had happened long ago so you make business decisions based on these approvals."

Marion Ali - Reporter
How much would you say it is?

Lynn Young – CEO, BEL
“That we owe customers? I don’t think that we own customers anything. One of the reversals was for the hurricane restoration.  When the hurricanes came along, we jumped in, we did what we had to do, we got money from Fortis, from the banks.  Then we made an application to the then PUC to recover some of it, not all of it, some of it. The then PUC looked at it and thought it was reasonable and approved it.  This new PUC comes in and says no, no, no you should have done that yourself and customers should not have to pay for restoration so they reversed that, depreciation, there are a lot of little things.  They looked one spell and said oh we think you made too much profit five years ago so you have to pay that back to customers.  These were profits that were approved by the previous PUC and it worked out like 10% return on investment on that time.  They are saying that is too high you should only be making 6% return on investment so they go back and reverse the profit. They changed the rules to be able to do that.  That is like the government coming and changing the income tax rules and then go back and say you did not pay enough tax three years ago so you have to pay that.  In addition to that Government raised our taxes by 8 million dollars in 2010 when we were losing money.  The Government reduced the taxes on BTL which was making about 20 odd almost 30 million in profits we were making 6 million dollars in profits and the government increased our taxes by 8 million dollars so what’s the message to us.”

Young also said that its parent company, Fortis Incorporated, is not prepared to invest in the company based on the measures of the PUC.  But he also explained that these are the reasons why Fortis is not prepared to guarantee any bank loans, which the banks are requiring.  Meanwhile, Prime Minister Barrow says that despite misgivings about how BEL reached the point of insolvency, government’s offer to buy back the company was made in the spirit of a friendly take-over.

Prime Minister Dean Barrow
“All Mr. Young can tell me is that the cost of power has gone up.  The PUC, I met with the Chairman of the PUC yesterday, is convinced that just as the BEL annual statement suggests, the current rate is quite enough for BEL to be profitable, so there is again this huge divide now and this absolute lack of confidence on the part of the Government which you can understand because BEL is where it is.  We accept them at their word when they say we are solvent, what we can’t figure out is how you became insolvent and that is a huge mystery to all of us. I said to Mr. Young we do not want to go the route of a forced acquisition, would you find out from your principals whether they are prepared to sell the company; especially since Mr. Young had himself said the week before to the media, well Government needs to sort this out or take back the company.  We said fine, as much as we don’t want to we will have to take back the company if we are going to get the country out of this mess.”

BEL’s Chief Executive Officer Lynn Young has given his assurance to the Prime Minister that he will be conveying Fortis’ response to the offer to buy back the majority shares in BEL as soon as a decision is made by the Canadian conglomerate.  Fortis Incorporated has meantime been quoted in Canadian press reports as saying that it has not received a purchase proposal from the Belize Government for its majority shares in its BEL electric utility operations, despite the government issuing a news release expressing its interest.

LOVEFM


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#409906 - 06/15/11 02:53 PM Re: GOVERNMENT TAKES FIRST STEP TO RENATIONALIZE BEL [Re: Marty]
Marty Offline

B.E.L.’s C.E.O. says government must negotiate directly with Fortis

Lynn Young

Government’s proposed take-over of Belize Electricity Limited has been in the headlines since last week. But how will the government come up with the money to buy Fortis’ majority shares (seventy percent) in the utility company? Government has been making pre-payments of four million dollars monthly for its utility bill, covering a period up to September. But that’s a far cry from the value of the company. B.E.L.’s assets stand at four hundred and forty four million dollars and its equity in excess of two hundred and eighty-five million dollars. Government said on Monday that it has made its final advanced payment, which will keep B.E.L., below its credit limit to Comission Federal de Mexico (C.F.E.). That final payment covers a twenty-one day period, the countdown of which begins this Wednesday. After that period, there will be no more prepayments handed over to the cash strapped utility company by the government. It is anyone’s guess if indeed countrywide blackouts will be prevented. As an update, B.E.L.’s C.E.O. Lynn Young told News Five today that he has removed himself from the discussions or any negotiations and that government now needs to talk to the investor, meaning Fortis, or its representatives. This is to avoid misrepresentations down the proverbial rocky road. According to Young, he continues with the day to day operations of the company.

Channel 5


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#409907 - 06/15/11 02:56 PM Re: GOVERNMENT TAKES FIRST STEP TO RENATIONALIZE BEL [Re: Marty]
Marty Offline

BEL’s blame game!

Prime Minister Dean Barrow told Amandala today,Monday, that his administration will prepay another $4 million to keep the nation’s lights on, as he— “one way or another”—tries to find a solution to the crisis Government has said is hovering over the head of the country’s premier power distributor, Belize Electricity Limited (BEL).
  
“It must be clear where this is headed,” said Prime Minister Barrow, declining to get into specifics.
  
One proposal that has been tabled is nationalization of BEL via a government buyback. When we first began to report on this story 11 days ago, Prime Minister Barrow had said he had no intention of executing a temporary takeover of BEL, under laws that permit an emergency takeover for 30 days with a possible extension.
  
Last Wednesday Prime Minister Dean Barrow declared BEL to be bankrupt, as it has called on the Government yet again to prepay $4 million towards its bill for street lighting, so that the company can meet its financial commitments to its Mexican supplier, Comisión Federal de Electricidad (CFE). Government will be about 4 months ahead in payments.
  
At the last report, BEL’s chief executive officer, Lynn Young, told us that the company holds $20 million in arrears to two of its main suppliers of power, and it was unable to meet those commitments.
  
Prime Minister Barrow told Amandala this morning that Government makes its last prepayment to BEL this week, and that will last another 20 days or so.
  
“We won’t give a penny more to BEL,” Barrow commented.
  
What happens if BEL doesn’t pay Mexico? Last week, Barrow indicated that the situation puts the country at risk of being disconnected from Mexico’s supply – a situation that could plunge the nation into blackouts.
  
On Friday morning Prime Minister Dean Barrow met with Young to discuss their options.
  
“The Prime Minister asked Mr. Young to convey to Fortis Inc., the majority shareholder in BEL, the Government’s interest in purchasing majority shares in BEL so as to assume control of the company,” said a press release from the Government. “Mr. Young undertook to immediately relay this message to Fortis Inc. and to convey their response as soon as possible,” the release further said.
   Prime Minister Barrow said this morning that he has received an e-mail from Young proposing certain terms and conditions for the repurchase of shares, but the majority shareholder is indicating that whatever price the Government pays has to include the $36 million correction that the Public Utilities Commission made in BEL’s rate review back in 2008.
  
“That is something we could never accept,” Barrow told us.
  
In its 2008 Annual Report, BEL had said “...a $36.2 million charge for ‘excess revenues’ or disallowance of previously allowed costs was booked [by PUC]. This resulted in a net loss of $10.8 million for 2008, as compared to $29.9 million net earnings [profits] for 2007.”
  
The PUC had retorted in 2009 that BEL in 2008 had made a surplus of $38 million, and so “...the PUC is satisfied, and further assures the public, that BEL is not facing any financial crisis, as has been repeatedly claimed, and that there is no financial instability in the electricity sector as a result of the PUC’s 2008 Annual Review Proceedings Final Decision.”
  
Accompanying this article is a graph which charts BEL’s growing profits since the 1999 privatization. BEL’s profit in 2007 was nearly triple what it was when Government divested its majority ownership in 1999.
  
Fortis was a minority shareholder at the initial privatization in 1999, but its shareholding swelled to 70% in 2006, when the profits of BEL grew from $18.9 million to $26.1 million. Its profits almost hit $30 million in 2007.
  
However, in 2008, the company recorded a $10 million loss, blaming the loss on the regulator, PUC. Fortis’ lead representative on BEL’s board, Stan Marshall, had said that if BEL could not get a rate increase, the consequence would be rolling blackouts.
  
For 2010 it reported profits of $3.4 million—the second lowest for the company in over a decade.
  
Meanwhile, dividend payments have been frozen for approximately three years.
  
In its press release issued today, Fortis, BEL’s parent company, again casts the blame for BEL’s reported financial demise on the PUC.
  
BEL has been in default of covenants under its long-term lending agreements since 2008 and has had no access to credit during this period,” it added.
  
Prime Minister Barrow, who disagrees that BEL’s financial woes are the fault of the PUC, said that BEL had previously made two proposals for the sale of the Fortis shares that he cannot accept: one is to allow an unlimited rate increase and the other is to increase its credit facility with Mexico, guaranteed by the Government of Belize, from $10 million to $20 million.
  
Barrow said that he would not flout the decision of the PUC to make the $36 million correction, upheld by the Supreme Court.
  
You can weigh in on this issue through our online poll by voting at www.amandala.com.bz. Look at the right hand side of our webpage for Amandala’s weekly poll box.
  
The question is: Should the Government of Belize find a way to take back control of BEL from Fortis Inc. of Canada, including a buy-back, if necessary? So far, 76.5% agree that the government should take back BEL.
  
The Belize Social Security Board, a statutory body, owns roughly 27% of BEL. At the time of privatization, 1,400 locals bought shares in BEL.

Amandala


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#409910 - 06/15/11 03:02 PM Re: GOVERNMENT TAKES FIRST STEP TO RENATIONALIZE BEL [Re: Marty]
Marty Offline
Fortis of Canada it is reported on our local news programs, wants us to drop the $36 million owed by BEL for double dipping and overcharging in their bookkeeping during the PUP regime, when they BEL could get away with it. Also apparently they want a rate increase. There is no actual fiscal problem with BEL is my understanding. Except that by FORTIS of Canada playing hardball. According to the news discussions, I am led to believe that FORTIS are following a planned game of brinkmanship. What I understood, as manager of BECOL and BEL, Fortis are not using their managment skills to benefit the company. In fact the opposite is what is understood. They used to handle the loan borrowing part, for day to day operations themselves. But got caught double dipping. They want the privilege of lending money back to themselves to increase their dividends, add on loan interest payments sucked out of BEL and profits to run the company. Fortis do not wish to use their own money to keep the operations going and my understanding from the news is that they are only taking money out, not putting in any investment money, or managing cash flow sufficiently well, to cover what they say are running loans system of operations. They currently own 70% of the shares in the company and have a managment contract.

I say BARROW needs to just take it over. In the long run, the company is solvent and just needs better management, not a ROBBER BARON mentality squeezing the population of Belize for more and more money. That is the impression one gets from the PUC.

Ray Auxillou, WesternBelizeHappenings.blogspot.com

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#409986 - 06/16/11 03:14 PM Re: GOVERNMENT TAKES FIRST STEP TO RENATIONALIZE BEL [Re: Marty]
Marty Offline
GOB And BEL: Tense Standoff

The situation between BEL and the government of Belize remains at a tense standstill tonight. Government yesterday pre-paid four million dollars in electricity bills which BEL will use principally to pay CFE in Mexico. Government has asked for a full accounting and documentary proof of how the money is spent.
Government hopes to come to some agreement with BEL's owner Fortis in that time. But according to the Prime Minister - who appeared on KREM WUB this morning- so far, FORTIS has adopted a take it or leave it approach. IT has indicated to government that it is willing to sell its equity at the book value - which is over 200 million dollars - but wants 36 million dollars added to it. That 36 million has been under dispute since 2008 when the PUC disallowed it as an addition to BEL's costs. It has been a central sticking point - and is essentially what brought things to this point.

According to the PM, BEL CEO Lyn Young has also indicated that attorney Eamon Courtney is the contact person for Fortis.

Government today issued a cautiously worded four page statement outlining its position - most -we gather for the international investor community.

The statement stresses that "government has no dispute with CEL, BECOL or Fortis" and "its only interest is in maintaining an uninterrupted and reliable supply of electricity to consumer sin the country, and it is prepared to take whatever reasonable steps are necessary to achieve this objective."

Days ahead will tell if the measured approach will work out.

Channel 7

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