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#409249 - 06/04/11 09:07 AM Will there be blackouts in 12 days?  
Joined: Oct 1999
Posts: 55,641
Marty Offline
Marty  Offline

BEL owes millions to Mexico’s CFE

Lyn Young

While the poverty stricken squatters are demanding alternative land or housing from the government, surprisingly, a large corporation is also calling on the government to help with its financial condition. Belize Electricity Limited is facing the possibility of countrywide blackouts. This morning’s blackout that hit the nation, however, was due to birds that built nests in BEL’s equipment. During the removal of the nest, a faulty breaker tripped causing the blackout. That breaker was immediately replaced and power was restored before midday. Though the power is on tonight, the company is in grave financial trouble. It owes millions to creditors and its primary supplier of power, Comisión Federal de Electricidad (CFE) of Mexico, may cut power to Belize in two weeks. News Five spoke this afternoon to BEL’s CEO, Lynn Young, who says the government and the Public Utilities Commission have an important stake in the state of affairs of BEL.

Jose Sanchez

“If you can’t extend your letter of credit, if you can’t get the cash, what is going to happen? How soon should we see the effect?”

Lynn Young, CEO, B.E.L.

“I don’t think the government will allow that to happen, but at the end of the day, we all have to be responsible about the electrical supply to the country. I can’t imagine rolling blackouts with crime situation as it is in Belize City, not to mention the effect on the economy—we just can’t have that. So quite frankly, if we don’t pay CFE they will cut us off. If they cut us off, we don’t have enough water to carry the country for more than five or six days. So there will be rolling blackouts.”

Jose Sanchez

“When is the deadline for this CFE payment?”

Lynn Young

“Well it’s everyday we have to keep paying to stay below the credit limit and the last payment we made to them gave us about ten to twelve days of credit. So we’re gonna have to make another payment soon, but this is a bad month for us. We have the debenture interests payments at the end of the month, and of course we have other suppliers too. We are behind on Belcogen which is from the bagass plant and we are very much behind on BECOL also. We owe BECOL something around twelve million dollars also.”

Jose Sanchez

“So how soon can we start seeing blackouts if it happens?”

Lynn Young

“Well within the next ten days, if we don’t find the money to make another payment to CFE, we will have blackouts.”

Jose Sanchez

“So at this point you’re just waiting for the government to step in?”

Lynn Young

“We are talking to the banks too. We have sent letter to the C.D.B. before to ask for waivers and we are sending again. We’ve asked Scotia to reconsider their position also because we had a line of credit with Scotia, but their head office is saying no they cannot extend any more credit to us until regulations are resolved because ultimately for an electric utility, our ability to pay these loans depend on the actions of the PUC and what they have been doing so far is basically sending a signal to the financial institutions that we are not credit worthy. The banks are saying that they won’t advance money to us unless they have a guarantee from Fortis or the government. Fortis isn’t going do it. So that is why we are trying to get the government to help. We are now in court. And while we think we are going to win the case eventually because what the PUC did is definitely not acceptable in any sensible jurisdiction. Even if we were to win the case, it seems to be that the PUC seems obsessed with bringing down the company. I hate to say that but that’s the only conclusion I can come to.”

Jose Sanchez

“Now that you brought that, I read an article that the government could take over, for a short period of time, BEL.”

Lynn Young

“I remember shortly after Minister Hulse was appointed and he was interviewed on KREM and he said that as far as he is concerned BEL should not have been privatized and he wants it back. In one of my meetings with the Public Utilities Commission, one of the commissioners told me they want the government to get back the company. And I said well, talk to Fortis—tell them you want to buy it back. He said quite frankly to me, if the PUC forces BEL to lose money then Fortis will have to sell cheap. So quite frankly I’m not surprise. Now in my personal conversations with the Prime Minsiter, he has told me that he has no interests in taking back BEL, but I know the former Minister of Public Utilities and the chairman of the PUC and Mister Vasquez at the time he was there—they all told me quite frankly that they are not happy with the fact that BEL is not owned by the government and they want it. So maybe, my only conclusion is that that is the ultimate objective. It is far more expensive for the country not to have electricity than for us to try to adjust the rates to make it sensible. Now we don’t want to see the rates go up, nobody wants to see the rates go up, but it’s worse if we can’t pay the bills and I don’t see it sustainable for the government to keep doing the things it’s doing to keep BEL floating.”


#409250 - 06/04/11 09:08 AM Re: Will there be blackouts in 12 days? [Re: Marty]  
Joined: Oct 1999
Posts: 55,641
Marty Offline
Marty  Offline

Prime Minister says the government won’t always bail out BEL

BEL’s CEO Lyn Young has made it clear that an increase in electricity rates would alleviate the cash flow problem of the company. The government has made advanced payments mounting to four million dollars to assist BEL. And though the P.M. concedes that at least half of the country would be without power on a rotational basis if the government doesn’t continue to make these payments, Barrow indicated via phone from his office in Belmopan, that BEL needs to get its act together.

Prime Minister Dean Barrow

“It would be a situation that would be intolerable; it would be a situation that we cannot afford to have materialize.”

Jose Sanchez

“Mister Young says that they are paid up for maybe the next ten to twelve days. After that there is a possibility of rolling blackouts around the country. Essentially he believes it is either up to government to some how step in or maybe for their parent company, which he doesn’t feel would put more funds in.”

Dean Barrow

Dean Barrow

“But I don’t understand how Mr. Young. BEL is the licensed service provider, it is not government’s problem except that government has to be concerned that the country doesn’t suffer. And this is what has upset me, every time for BEL to say simply we can’t pay anymore, government has to find a way to pay. Man it’s not government that is the owner of BEL. That strikes me as a callous abdication of responsibility and it’s very, very upsetting. I am saying to you Lyn Young and BEL has to do better.”

Jose Sanchez

“Mister Young says that on one hand the government is assisting by it paying its bill. However he believes the PUC, as an arm of the government is really what is causing the problem with the court cases and also with not willing to allow it to increase rates.”

Dean Barrow

“The public, I am sure, will completely and perhaps violently disagree with Lyn Young. When circumstances were such that a rate reduction was mandated by PUC, Lyn young and BEL went to court for an injunction—that has never ever happened. No doubt, the circumstances have now changed so that a rate reduction would no longer be feasible. But how can Lyn Young and BEL explain the fact that when times were better, when oil prices were low, when there was a determination that the people of this country ought to benefit from a rate reduction, he and BEL did not comply. And to turn around and say now when they want rate increase the PUC should just automatically give in to them, when it fact when it was on them by operation of law and a proper determination to give people the benefit of lower rates they didn’t do it.”

Jose Sanchez

“Does the government have any interest in nationalizing BEL and will it help in the coming weeks?”

Dean Barrow

“No, no to nationalize BEL makes no sense to me for all sorts of sound economic social policy reasons—that is off the table. In terms of what will happen in the coming weeks, the government unlike BEL can’t shirk its responsibility. But I have said to BEL and to Mister Young, there is a point beyond which we cant go meaning that we simply will not be able to find the bulk funds they keep requiring from us every twelve days or every fourteen days.”

BEL also has obligations to the Caribbean Development Bank and other creditors including BECOL which it owes over twelve million dollars. The CFE debt currently stands at eight million dollars. In the next sitting of the Court of Appeals, the electricity company is fighting the PUC’s rebate to consumers which is estimated to be over fifty million dollars. The Prime Minister said that the government will oblige and make prepayments as long as it is able to. We’ll have more details on the BEL debt on Monday.

Channel 5

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