BEL Bankrupt!?

Posted By: Marty

BEL Bankrupt!? - 06/09/11 02:01 PM

Belize Electricity Limited - your power company, is bankrupt! At least that's what the Prime Minister said today at his quarterly press conference which was held at the Biltmore.

The power company has been crying on hard times for years and even though it grossed 186 million dollars last year - and its sales are robust - the company says it can't meet its debt obligations or its power purchase payments.

The Prime Minister said he spoke with CEO Lyn Young on Monday who told him that if the company is to continue operations going forward, it will need a government bailout - further to a letter of credit which government had already guaranteed.

PM Barrow outlined the situation - and discussed government's options:

Prime Minister Dean Barrow
"What I gather is that basically, BEL is bankrupt. Now as I said, how it got there, and what happened when BEL was making huge profits, is quite another story. But I saw in the newspaper that Mr. Lynn Young basically said, "Well, we don't have any money to pay for energy from CFE, the Mexicans who supply us with the bulk of our power. We don't even have any money to pay our sister company, BECOL, from which we get the hydropower. And so basically, power will be cut off, the country will be plunged into rolling, if not a continuous black outs, and Government better solve it." Well, I'm not sure if the way - let me put it this way. Goverment will solve it. I'm not sure that there will joy on the part of BEL and its parent company, Fortis, in terms of how Government will solve the problem. But to that extent, Mr. Young is absolutely right. This government has a responsibility to its people, to the consumers, and Government will not allow a situation to occur in which this county is not guaranteed a stable supply of electricity. The Government is prepared to do whatever is necessary to assure a stable electricity supply to this country. This government, the party that is now in government, was always ideologically opposed to the privatization of essential resources. So, wherewithal apart, as a matter of philosophy and what conviction and what we think is right, we believe that the people of this country should own BEL."

And while Barrow certainly played up to an audience dominated by dozens of workers with the Southside Poverty Alleviation project - turning this press conference, unfortunately, into a sort of pep rally - the practical considerations of BEL's imbroglio are certainly daunting.

The company's hard and fast position is that under the current regulatory framework - it cannot continue to be viable - meaning basically that it wants a big raise in rates, which the PUC refuses to give. In fact the PUC says BEL actually owes consumers!

The Prime Minister discussed the differences between BEL and the PUC:

Prime Minister Dean Barrow
"Mr. Young then says, "But, the banks will be prepared to lend us if you, Mr. Government, can guarantee that the PUC will in effect, consent to an almost - my words, not his, and I am interpreting as best as I can - an almost unlimited rate increase. Now, ladies and gentlemen, if I ever did that I would need to have my head examined, or perhaps taken off by the Belizean people. First of all, we don't tell the PUC what to do. The PUC is there as an honest broker between BEL and the consumers, and as I said, there is legal regulatory framework."

And so, how far is government prepared to go to stabilize the power supply and rectify affairs at a bankrupt BEL?

Remember, government already owes compensation for one utility company - that's BTL and is fighting lawsuits all over the world to try and settle that case.

So the last thing it would seem to need is another take-over headache. But the prime minister empathically declared today the philosophically - public utilities should be in the hands of the Belizeans people:

Prime Minister Dean Barrow
"But if BEL can't get money to pay for energy, then it seems to me that BEL is on the brink of becoming non-operational. And I am saying to you, ladies and gentlemen, that the Government of Belize cannot have that happen. I will try to report again to you as quickly after that meeting on Friday, as I can. They're at the margins, so Mexico is threatening to cut us off again. Government is prepared to pre-pay another couple of months electricity bills, 4 million dollars, and that will buy us 12 days or so. And it is my promise to the Belizean people, that within that 12 days, a solution will be found."

As a flourish, The Prime Minister speculated that with BEL in its present troubles, unable to pay for power, unable to pay its debt - the company's shares may actually have a negative value.

And while all that talk floats in the electronic ether - on Friday the Prime Minister expects to get down to brass tacks when he meets with BEL CEO Lyn Young after he returns to the country on Thursday.

Channel 7

Posted By: Marty

Re: BEL Bankrupt!? - 06/09/11 02:10 PM

P.M. says, “We believe the people of Belize should own B.E.L.”

We have been reporting on the precarious financial situation of Belize Electricity Limited and whether or not there will be blackouts. The issue of its nationalization was dealt with squarely by Prime Minister Dean Barrow today. B.E.L. has been unable to keep current with payments to suppliers, primarily the Comision Federal de Electricidad to which, it owes eight million dollars. Added to that there is a twelve million dollars debt to its sister company BECOL and a court case worth fifty million dollars with the Public Utilities Commission. C.E.O., Lynn Young, appealed to the government to pay at least four million dollars to keep the lights on for the next two weeks. But what is the future of B.E.L. and is the government going to take over the company? At his quarterly press conference today, P.M. Barrow, went as far as to say that while it is a question of ideological conviction, government should own essential services.

Dean Barrow

Dean Barrow

“I don’t want to prejudice negotiations with B.E.L., but I am telling you that there will be a solution. I have in my mind the team, the Cabinet has in its mind the outlines of the solution, but a lot will depend on how the talks go with B.E.L. We already had some confirmation of how serious the situation is. In terms of my phone call with Lynn Young, it appears B.E.L. has no answer. Well that is unacceptable. I don’t know where Mister Young went—perhaps he went to Canada, perhaps he went to talk to Fortis. So when he comes back in the country and we meet on Friday, he may have some solution to offer us in the interests of B.E.L. and the interests of consumers. So I really want to wait to speak with him before I report to you on how things are progressing.

“This government, the party now in government, was always ideologically opposed to the privatization of essential resources. So wherewithal apart—as a matter of philosophy and conviction and what we think is right—we believe that the people of Belize should own B.E.L. We believe that the people of this country should own B.T.L.; we believe that the people of this country should own Belize Water Services. That is a philosophical, ideological conviction if you will.

If we could wave a magic wand or snap our fingers to get back B.E.L. thereby, we would do it immediately. We know, especially if you are talking about a bankrupt company, that it would be a hell of a challenge going forward, but we would be left with no alternatives to secure the interests of people and we would also be doing what we inherently believe is correct—have the government and people of this country own the essential services. In terms of compensation, I am telling you that we are going to sit down and have what I hope will be an amicable meeting with Lynn Young. I am not telling you that government is looking to nationalize by force B.E.L. at all.”

Channel 5

Posted By: Marty

Re: BEL Bankrupt!? - 06/09/11 10:16 PM

The Guardian:
June 9, 2011

The Prime Minister made a stunning announcement during his quarterly press conference held on Wednesday June 8th at the Biltmore Hotel. That announcement was that it appears that Belize Electricity Limited is apparently bankrupt. PM Barrow explained that he was not sure how BEL got to where it is currently but based on requests made from BEL to the government and based on conversations with BEL officials BEL does not have money to pay for power that it is purchasing from CFE and BECOL. The Prime Minister added that if the matter is not addressed the country would be plunged into blackouts. To this however he emphatically stated that “government will solve it!” He continued saying that “government has a responsibility to its people to the consumers and government will not allow a situation to occur in which this country is not guaranteed a stable supply of electricity.”He added that, “if BEL can’t get money to pay for energy then it seems to me that BEL is on the brink of becoming non-operational and the government of Belize cannot have that happen.”

BEL’s financial crisis has had BEL ask GOB to make pre-payments for electricity supplied and government has been making those prepayments. The Prime Minister also noted that BEL’s CEO Lynn Young has asked that government increase its letter of guarantee to the Comission Federal de Electricidad up to 20 million dollars from where it stands at 10 million dollars currently. The PM explained that in a phone conversation held with Young on Monday of this week, Young explained that the company has no money and that it is unable to secure funding from banks because of ongoing problems between BEL and the PUC. Prime Minister Barrow however was quick to point out that the problems were of BEL’s own doing. He explained that any utility in any country in the civilized world is subject to regulation and BEL is no different. PM Barrow told the nation that when things were good the PUC told BEL to give back to the consumers and instead of doing so it went to the court and got an injunction and now the company cannot come back for a rate review since there are proceedings in the courts. He further added that Young told him that the banks would be willing to lend to BEL if the government is willing to give BEL an unlimited rate increase which BEL will impose on consumers and the government will simply not allow that. More than not allowing it PM Barrow stated that “if I ever I did that I would have to have my head examined and perhaps taken off by the people of Belize!” On the matter of raising the letter of guarantee to 20 million dollars the PM point blankly stated that the government cannot be carefree with taxpayers money. For the meanwhile however the government will be prepaying 4 million dollars to BEL which will give BEL 12 days or so of power supply and the Prime Minister explained that, “within those 12 days a solution will be found.” He continued, “This country under this government will not be plunged into blackouts.We are going to assure a stable supply of electricity for this country. The government is prepared to do whatever is necessary to assure a stable electricity supply to the country.”

Asked if government would buy back BEL and what compensation would be considered the Prime Minister stated that compensation would be a question of how much since they are broke and can’t go forward since it is burdened with a mountain of debt. He went as far as contemplating the possibility that the shares in BEL may have a negative value.

For the time being however the Prime Minister will be having a meeting with CEO Lynn Young on Friday to chart a way forward.
Posted By: Marty

Re: BEL Bankrupt!? - 06/10/11 02:10 PM

Will B.E.L. become government owned if the country is covered in darkness?

After Wednesday’s press conference in which Prime Minister Dean Barrow dropped the bombshell that he might have to consider nationalizing Belize Electricity Limited, the nation has been on edge on both the possibility of blackouts and the effects on investors’ confidence if another company is nationalized. B.E.L. has been unable to meet debt obligations or pay dividends because the utility company claims it has been losing money since the P.U.C. denied a rate increase and the price of fuel is keeping operation costs high. A critical meeting is set for this Friday between the prime minister and B.E.L. C.E.O., Lynn Young, from which government may arrive at a decision on whether or not it will take control of B.E.L. Here’s an excerpt of what the Prime Minister said on Wednesday.

Dean Barrow

Dean Barrow

This government, the party now in government, was always ideologically opposed to the privatization of essential resources. So wherewithal apart—as a matter of philosophy and conviction and what we think is right—we believe that the people of Belize should own B.E.L. We believe that the people of this country should own B.T.L.; we believe that the people of this country should own Belize Water Services. That is a philosophical, ideological conviction if you will.

If we could wave a magic wand or snap our fingers to get back B.E.L. thereby, we would do it immediately. We know, especially if you are talking about a bankrupt company, that it would be a hell of a challenge going forward, but we would be left with no alternatives to secure the interests of people and we would also be doing what we inherently believe is correct—have the government and people of this country own the essential services. In terms of compensation, I am telling you that we are going to sit down and have what I hope will be an amicable meeting with Lynn Young. I am not telling you that government is looking to nationalize by force B.E.L. at all. So, the hard place in which B.E.L. finds itself with respect to the P.U.C. in my view is principally of its own making. But if B.E.L. can’t get money to pay for energy, then it seems to be that B.E.L. is on the brink of becoming non-operational. And I am saying to you ladies and gentlemen that the government of Belize cannot have that happen. I will try to report again to you as quickly after that meeting on Friday as I can. There are at the margins, so Mexico is threatening to cut us off again. Government is prepared to prepay another couple months of electricity bill—four million dollars—and that will buy us twelve days or so. And it is my promise to the Belizean people that within that twelve days a solution will be found.”

Today, all over Belize, many questions are being asked: Will B.E.L. be able to pay its mounting debts? Will the government continue to prepay its electric bills to ease B.E.L.’s cash flow? Will there be rolling blackouts? Would the P.M. dare to nationalize yet another private company? B.E.L. has warned that the company, due to high fuel costs and litigation with the P.U.C., may be unable to make payments to its main power supplier in Mexico, the Comision Federal de Electric to which it owes eight million dollars. The outcome of the much anticipated meeting could determine if Belizeans must prepare for rolling blackouts in the near future or the nationalization of yet another large company by this government. We’ll be monitoring developments closely.

Channel 5

Posted By: bywarren

Re: BEL Bankrupt!? - 06/10/11 04:10 PM

Now there is the opportunity for those looking to come to Belize and live off of a business. Start at candle store. smile
Posted By: bobcat bill

Re: BEL Bankrupt!? - 06/10/11 04:38 PM

or solar power shop
Posted By: Cayemen

Re: BEL Bankrupt!? - 06/10/11 06:41 PM

Instead of use our crude oil to operate a power plant,
we export it and buy expensive energy form Mexico.

The same is with the gas, that we fill it in butane tanks,
this would be a clean and cheap energy source for a Belizean power-plant.

All over the country of Belize there is a mess,
crime, border protection, corruption, sugar industries, banana farming, bus traveling, energy, time share projects...

Hope is does not get more worse.
Posted By: Loansum-Al K

Re: BEL Bankrupt!? - 06/10/11 06:45 PM

Wind farm.......fuel not needed!
Posted By: ron

Re: BEL Bankrupt!? - 06/10/11 07:46 PM

Just might keep my turbine up and sell power to BEL.
Posted By: Hon

Re: BEL Bankrupt!? - 06/10/11 08:51 PM

Wind farms are not the answer...
Posted By: bywarren

Re: BEL Bankrupt!? - 06/10/11 09:01 PM

What ever happened with the power from Fortes's controversial dam project? And, you can bet Barrow will use this as further need to drill for oil.
Posted By: PROBUS

Re: BEL Bankrupt!? - 06/11/11 12:14 AM

I wonder how much has been paid in any form to Fortis each year. I have a nagging feeling that there's a lot more to this than we know, or are ever likely to be allowed to know.
Posted By: Marty

Re: BEL Bankrupt!? - 06/11/11 12:47 AM

Patrick Jones, LoveFM recently reported on Facebook:

"The Government of Prime Minister Dean Barrow today took the first steps at acquiring majority shares in Belize Electricity Limited. At a meeting with BEL's Chief Executive Officer Lynn Young today, Prime Minister Barrow asked the BEL boss to convey to Fortis Inc., government's desired to assume control of the company by purchasing the majority shares in the country's sole electricity provider."

from a friend....

BEL got the transmission line from the original owners of the dam for $1 as it was the sensible thing for that company to do - BEL being the transmission and distribution provider is responsible for maintenance of its system. Part of the package when some adjustments were being done to the original master agreement between the two companies. Please remember, that cost for hydro power would have factored in the cost of building the lines anyway, and the Belize consumer would be paying the cost of hydro power in the electricity rates they pay. So selling for a $1 was not because the company wanted to gift BEL. They were getting their investment back from the rate payers. It was the sensible thing to do. (BEL gets back maintenance costs from consumers.)

However, when Fortis bought the generator shortly after, they had BEL agree to pay them 30million for the hydro lines. In essence, BEL gave back the lines to BECOL (Fortis) and agreed to pay them for it - one way of skimming 30 million out of BEL for Fortis. And BEL wants the consumers to again, pay for their 30 million dollar gift to Fortis.


PM Barrow meets with President/CEO of BEL

Press Release - Belize Press Office, Belmopan - June 10, 2011 - The Hon. Prime Minister met today in his Belmopan Office with Mr. Lynn Young, President and Chief Executive Officer of the Belize Electricity Ltd (BEL) to discuss the current financial position of BEL.

Also present at the meeting were the Legal Counsel in the Ministry of Finance and the Financial Secretary.

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.

Mr. Young undertook to immediately relay this message to FORTIS INC. and to convey their response as soon as possible.

In the meantime and in order 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 a further sum of BZ$4.0 million toward its future utility bills with BEL.
Posted By: Marty

Re: BEL Bankrupt!? - 06/11/11 02:35 PM

BEL bruk!

Prime Minister Dean Barrow told us today, Thursday, that Belize Electricity Limited (BEL), which he has described as “bankrupt,” had called government again today, asking for more money via prepayment of light bills, because it has no funds to make its payment due to Mexico next week.

BEL reported nearly $200 million in revenues in 2010; however, Prime Minister Dean Barrow announced at his quarterly press conference on Wednesday, June 8, 2011, that BEL is bankrupt—on the brink of becoming non-operational.

“Government will not allow a situation to occur in which the country is not guaranteed a stable supply of electricity,” said Barrow, indicating that Mexico, the main supplier of power to Belize, is threatening to cut Belize off.

“I promise that within the next 12 days, a solution will be found,” Barrow said.

That’s how many days’ worth of electricity BEL can buy from Mexico using $4 million in prepayment for two months of street lighting paid (in advance) by the government.

“This country, under this government, will not be plunged into darkness,” said Barrow.

A week ago, in speaking with Amandala on BEL’s cash flow problems, the chief executive officer and president of Belize Electricity Limited, Lynn Young, said: “Government needs to sit down and say ‘This is how we will make it work’, or else take back the company.”

Barrow said yesterday that Young, who is abroad until this Thursday, is scheduled to meet with him Friday morning, to discuss a possible solution to what Barrow indicated could become a national crisis. The Prime Minister said that he will report as quickly after Friday’s meeting as he can.

The Prime Minister said that he had gotten a report that Young was in Washington, along with Eamon Courtenay, SC, and he had confirmed via the airline that they flew together. He said he finds it “a little unsettling,” and he wonders what the purpose of their trip was. He said that he is a little troubled over the report.

Amandala contacted BEL to find out the reason for Mr. Young’s trip, but his executive secretary said she doesn’t have that information, but they could ask PR to get back to us with the information. Barrow, who commented that BEL’s money problems are “principally of its own making,” said that his party has always been opposed to the privatization of essential resources, and he believes that the people of Belize should own the Belize Electricity Limited, the Belize Telemedia Limited and the Belize Water Services.

BEL’s privatization began in 1999. The Social Security Board retains 26.5% of BEL; the rest is primarily owned by Fortis Inc. of Canada.

The privatization of BWS in 2001 proved to be an utter failure as the former administration had to repurchase the company four years later, after the then Dutch investor, Cascal, accused the Musa administration of selling it “puss ena bag.” Government now owns over 80% of BWS, and SSB 10%. Minority shareholders own the remainder of shares.

The privatization of Belize Telecommunications Limited (now Belize Telemedia Limited) has also come with its own complexities. In August 2009, amid a dispute with the Michael Ashcroft group, the Barrow administration nationalized BTL, later offering shares to Belizeans. Government is still the majority owner of BTL, although negotiations are ongoing to sell a 45% block to a foreign investor. Meanwhile, Government still owes the former owners millions in compensation, but that matter will be litigated in court.

Fortis Inc of Canada, the majority shareholder of BEL, is also the owner of the Belize Electric Company Limited (BECOL), the second largest supplier to BEL next to Comisión Federal de Electricidad (CFE). BECOL provides substantial hydropower to the national grid.

Last week, Young told us that BEL owes BECOL over $12 million, owes CFE $8 million, and owes BELCOGEN (which generates power from bagasse), as well as suppliers.

“It’s just crazy,” he commented, adding that they get through by prioritizing what gets paid first.

Young is basically saying they will need a huge cash infusion to service their debts and pay for energy and they want the government to raise the ceiling of the letter of credit to CFE from $10 million to $20 million – but that will only buy 28 days of power, said Prime Minister Barrow. “Government cannot be so carefree with taxpayers’ money,” he added.

The Prime Minister said at his Wednesday press conference that, “The government is prepared to do whatever is necessary to ensure a stable electricity supply in this country.”

BEL has reported that it had paid out roughly $133 million of its $190 million in operating revenues just to purchase power. In 2008, the company reported a loss of $10.8 million, but it registered a profit of $8.9 million in 2009 and $3.4 million for 2010.

Cash and short-term assets were listed at only $5.3 million for 2010 versus $25 million the year before, 2009.

Earnings per share for shareholders were down from 13 cents to 5 cents over the course of 2009-2010.

In its annual report for 2010, BEL said “the Government of Belize increased the business tax rate on the revenues of the Company from 1.75 per cent to 6.5 per cent, a 271 per cent increase.

“This increase resulted in $5.8 million in extra business tax expense for the period April to December 2010, which is being deferred to be recovered from customers when the tariff components are adjusted in accordance with the tariff setting byelaws.”

It said that without this deferral, BEL would have ended the year with a net loss.

Amandala received an e-mail from BEL today indicating that contrary to our report that BEL “won’t pay” the extra taxes, the company has paid the full 6.5% to Government.

BEL said that the actual tax paid was reflected in its cash flow statement as $8 million.


Posted By: Marty

Re: BEL Bankrupt!? - 06/17/11 02:36 PM


June 16, 2011

Chief Executive Officer of Belize Electricity Limited Lynn Young says the company is not insolvent or bankrupt as stated publicly by the Prime Minister.  Young was a guest on the Love FM Morning Show today and explained that the current financial difficulties that BEL is facing are seasonal and all the company is asking for is assistance to get through the low hydro production season.

Lynn Young - CEO, Belize Electricity Limited
“I have explained that the company is going to get there under the situation we are in.  And the problem we have right now is a serious cash problem, which happens every year and its going to get worse if we cannot get financing.  Ernesto you said quite rightly right. It’s the difference between views of public service and the private but I don’t think so, really I have come to the conclusion that this is a deliberate action by the government and the P.U.C. to basically force Fortis to try and sell them cheap because they want back the company and that’s why I came out and said “Listen let’s resolve this or take back the company because it’s hurting the company and it’s going to hurt the country it’s going to hurt the electricity supply. You’ve got to get this solved, one way or the other.” But is happening right now to B.E.L. is that the hydro contracts that we have, hydro is the cheapest power that we have, it’s about 18-19 cents for kilowatt hour that’s compared a rate which is 44 cents for kilowatt hour. The power from Mexico, they charge us based on what they think we have to pay. That is my view of what is happening and that’s the business man’s view and that’s how business people will do it. In the dry season when we don’t have a lot of hydro, they will charge us based on what we would have to pay if we were generating with diesel, right now diesel is what $9.00 a gallon? You got about 12 kilowatt per gallon? It would cost us about 70 cents per kilowatt hour to generate with diesel. The Mexicans have jacked up their price, yesterday I was checking the price it was running 26 cents US per kilowatt hour. That’s 52 cents Belize per kilowatt hour that is more than we charge customers but this is going to happen for two or three months until start to get a lot of rain and when the hydro opens up and we start generating a lot with hydro the Mexicans they start dropping their price, it happens every year.”

Young says he has explained the financial difficulties to the Prime Minister; but it appears that the cash flow difficulties have played right into the hands of those who have foretold the demise of Belize’s monopoly electricity provider.  In effect, says Young, this was a demise foretold.

Lynn Young - CEO, Belize Electricity Limited
“Our problem is that when the PUC made its decision in 2008 we got letters from the banks saying listen you are offside on your covenants, this is too risky, we cannot lend you any money until this is resolved.  Just recently we asked Scotia to reconsider, we got back a letter from Scotia saying we cannot give you any money; we cannot give you any overdraft until this thing is resolved.  It is not only the uncertainty; it is that shortly after elections the Minister of Public Utilities got on the radio and said he intends to bring BEL to its knees, the Chairman of the PUC every time he gets on the air he is saying he is going to wreck BEL, they keep on taking actions that is indicating to everybody that they intend to put the company down.  If you are a financier and you know that this company’s bottom line depends on the actions of the PUC and the laws that the Government makes and the indications you are getting from these two bodies is that they intend to put this company under, would you lend money into a company like that?   That is the problem that we are facing, we cannot get our overdraft, we had $6 million overdraft with Scotia, we had four with First Caribbean Bank, we have a million dollars overdraft with Belize Bank.  Belize Bank didn’t cancel their overdraft, Scotia has put their overdraft on hold, FCIB cancelled their overdraft.  Because we are not meeting our bank covenants we cannot borrow any money without waivers from debentures holders, from Scotia Bank, from Royal Bank, from CDB because we are on default on all our covenants so when we have a problem now where our cash outflows are exceeding our cash inflows, even though it is temporary; Ernesto can call the bank and get some overdraft or get a temporary extension to his overdraft; we don’t even have overdraft to meet it and we can’t go and borrow.”

Young says that the red flags started to go up in November of 2008 and BEL has been actively seeking the assistance of government since then but all their call for help apparently fell on deaf ears.  On Wednesday, the government of Belize issued a statement on its position regarding BEL reiterating that BEL is not viable as it is unable to pay its creditors, particularly its major supplier, Mexico’s Commission Federal de Electricidad.  The GOB statement says that in order to avoid a major disruption of Belize’s electrical supply, government is prepared to acquire majority shareholding in the company. Government’s position is that it is not prepare to interfere with existing utility regulation arrangements, that no further financial assistance beyond power-usage prepayments up to September would be given to BEL and that the announced acquisition would be on an amicable basis if possible so as to ensure an uninterrupted supply of electricity for the country.


Posted By: Marty

Re: BEL Bankrupt!? - 06/18/11 02:30 PM

Pay yu bills, BEL!

As we go to press tonight, there is reportedly no progress in talks between the Government of Belize (GOB) and Fortis Inc., the parent company of the Belize Electricity Limited (BEL), over the stated intention by the Barrow administration to acquire controlling interest in BEL, amid what Prime Minister Dean Barrow describes as “insolvency” and an “impending collapse” of the country’s premier power distribution company.

“It is clear that Fortis and the government have reached the end of the road,” said Prime Minister Dean Barrow, in speaking with Amandala Thursday evening.

The Prime Minister said that he has received a copy of a letter forwarded by the Public Utilities Commission (PUC) to BEL, citing not just BEL’s failure to pay $1.8 in license fees for 2009 and 2010—but also its inability to pay its various suppliers, as reasons for which it proposes to cancel its license.

According to Prime Minister Barrow, he has learned that BEL now owes BELCOGEN, a subsidiary of the Belize Sugar Industries, $5.1 million for power, generated from bagasse.

The Government on Wednesday of this week prepaid $4 million to BEL for street lighting, and the Prime Minister has said he won’t make any more prepayments to BEL.

Referring to PUC’s announcement on Wednesday to cancel BEL’s license, Barrow said: “For me, all it does is add to the mounting accumulation of evidence that BEL is insolvent to the point where it is in danger of fast becoming non-functional, and so it just brings home to me the absolute urgency with which Government needs to act to avert what now seems certainly to be an impending collapse.”

The Prime Minister said that on Tuesday, Cabinet discussed the BEL matter fully and “...agreed on a certain course of action in the case of certain eventualities. It is just a matter now of waiting and seeing which of the eventualities will occur and applying the action to those eventualities,” Barrow added.

He told our newspaper that BEL is right at the limits of the $10 million that the letter of credit affords for supply of power from Mexico.

BEL also owes a reported $12 million to its sister company, the Belize Electric Company Limited (BECOL).

“Where is it all going to end? And you have no way of paying these people going forward. As a consequence, what will happen?” Barrow questioned.

Mr. Avery and the PUC are satisfied that the non-payments to suppliers, too, provoke the action that the PUC is taking to cancel BEL’s license, the Prime Minister said.

He also said, “BEL will trigger the default that will then fix Government and taxpayers with the $10 million that is the extent of letter of credit.... We will just do whatever we need to do.”

The matter, said Barrow, now becomes urgent, since BEL’s CEO Lynn Young is now being heard to say they can’t pay; let Government take the company.

Earlier this week, Young told our newspaper that he would step back from the discussions with the government and leave the negotiations with GOB to Fortis.

Posted By: Marty

Re: BEL Bankrupt!? - 06/18/11 02:32 PM

PUC threatens to pull BEL’s plug

Amid what has been described as a serious cash flow crunch, the Belize Electricity Limited (BEL) has more trouble on its hands as we go to press tonight. The Public Utilities Commission (PUC) has published a notice threatening to cancel the license of BEL, which permits the company to generate power and to distribute power to over 70,000 customers around the country.

The notice gives BEL a 30-day warning that the PUC intends to cancel the company’s license for not paying its fees for 2009 and 2010. The license was acquired in 2000 and is renewable in 2015 for another 10 years.

PUC Chairman John Avery told Amandala that BEL owes the PUC $2.1 million. The cancellation notice is for $1.88 million owed for 2009 and 2010.

Avery furthermore explained that BEL is disputing $235,000 in fees for 2007 and 2008, and this latter figure is not included under the notice.

BEL’s President and Chief Executive Officer, Lynn Young, told Amandala when we asked him for comment that, “Our priority is to pay the power suppliers at this time.”

Avery said that the PUC has its bills to pay, too!

“If the license is cancelled then we have to stop operating within 30 days. Hopefully the Government will have worked out the change of ownership by then, one way or the other,” commented BEL’s Lynn Young.

Avery said that if BEL does not pay its fees for 2009 and 2010, the PUC will proceed to cancel the company’s license.

Amandala understands that the 2010 payment was due in March. The fees are a very small percentage (a fraction of a percent) of BEL’s revenues.

Avery said that the monies BEL owes the PUC are supposed to go into the Consolidated Revenue Fund of Central Government.

Government has not gotten those payments, yet Government continues bailing BEL out, Avery added.

The Government of Belize has provided BEL with a letter of credit for $10 million under which BEL can get power from Mexico’s state-owned Comisión Federal de Electricidad (CFE). Over the course of the past few weeks, the Government has been prepaying its bill for street lighting to BEL.

This week, Government paid an advance of $4 million, but Prime Minister Dean Barrow has said Government won’t make any more prepayments, as a solution will be found one way or another before the country could lose its power supply from Mexico.

Last week, we had reported that the latest information from the PUC had indicated that BEL owes customers roughly $50 million. That information was obtained by one of our reporters, during an interview with BEL’s Lynn Young, who had said that the PUC was demanding a refund of $50 million for customers, which would push BEL into insolvency.

Today, Avery told us that the figure quoted by BEL is inaccurate, and there is no current assessment to indicate how much BEL owes customers. According to Avery, no accurate figure can be provided until a rate review is conducted.

Avery also told us that BEL’s cash flow situation is a self-created crisis, because the current electricity rates are “...more than adequate for them to operate quite comfortably.”

For its part, BEL’s majority shareholder, Fortis Inc. of Canada, issued a press release this week indicating that, “Three years ago, the Public Utilities Commission in Belize made changes to the rates that Fortis said ‘effectively disallowed the recovery of previously incurred fuel and purchased power costs in customer rates.’

“The decision also ‘set customer rates at a level that does not allow BEL to earn a fair and reasonable return.’”

Fortis noted that BEL has subsequently been in default of its lending agreements since 2008.

The Government has said it wants to acquire controlling interest in BEL from Fortis Inc.

Posted By: CarlosCabanas

Re: BEL Bankrupt!? - 06/18/11 06:14 PM

Am I the only one who finds this totally corrupt? The government controls the rates until they go out of business and at the same time have a serious intent to "seize" the assets of the company. I wouldn't be suprised if the government also invited them to come and 'invest' here in the first place. Government controlled power will cost the consumers more in the long run.

Posted By: elbert

Re: BEL Bankrupt!? - 06/18/11 07:06 PM

I hear where your coming from but it didn't seem to happen so maliciously(IMHO)and still could be just a bluff to get the rates raised.
The government was protecting its people by having a contract with a suppler that fixed a price. The supplier now wants to raise that price and is saying they are going out of business because of being held to the contract that protected us from raising rates....BEL is saying let us raise the rates or else you will be with out electricity!
The government is calling their bluff in a respect by saying,'If its true your going out of business because of this ,then we'll just have to take over because electrical supply is to important to just let it just fail.We don't want to but your making us!
My guess is if Barrow is a good businessman he will concede something to keep them in business, hopefully not a rate increase to the people but probably.
Posted By: bywarren

Re: BEL Bankrupt!? - 06/18/11 09:16 PM

Identifying the problem here should not be that difficult. A comparison of the income and expenses of BEL between profitable years and non-profitable years should shed light on the issues.
If BEL must purchase the power from suppliers, then a look at that cost to see if it has increased would be the first issue to look at. The second issue should be a look at the other expenses the company has that are directly in its control. After paying for the power it purchases, where did the rest of the revenues go?
If it is controlling expenses, other than the cost of purchasing power, then a rate increase would be in order, unless a lower rate could be negotiated with its suppliers.
If those other revenues are not being managed or are going “someplace” they should not go, then that is an issue.
I don’t think Barrow should talk of nationalizing the company until those questions are answered.
If it is a cost of power issue, then the government should work with BEL and its suppliers to negotiate a better price. If it is a miss-management issue, the stockholders should demand a change of management. I seriously doubt that the government managing the company would change anything other than, if there is money going somewhere it should not go, then it would be going where those in government want it to go - if you know what I mean.
Posted By: Moby

Re: BEL Bankrupt!? - 06/18/11 09:48 PM

I seriously doubt that the Mexican government will negotiate more favorable energy rates with GOB until there is a corporate middlemen in between skimming profits. The problem is not that the faceless bureaucracy like GOB will be running things - it's more that GOB is no more transparent or open to public scrutiny than a faceless bureaucracy like FORTIS.

FORTIS already proved that they're nothing more than a bunch of thieves by charging the customers in Belize 35 mil for the power lines TWICE - for that alone they should have been put in jail long time ago and all their property forfeited. Nationalizing BEL is basically moving on and letting them get off easy.

Posted By: Short

Re: BEL Bankrupt!? - 07/01/11 06:18 AM

Former BEL execs walked off with $2.7 mil: PM Barrow

[Linked Image] Prime Minister Dean Barrow revealed on the KREM WUB this morning that the former management of Belize Electricity Limited (BEL) had paid itself $2.7 million on Friday, June 17, days before the Government stepped in to take control of the company, on Monday, June 20; yet they could not find money to pay for power from their suppliers.

At the time of the Government takeover, BTL had been getting millions in prepayments from the Government, in order to pay its Mexican supplier.

Barrow told Amandala that BEL’s chairman Rodwell Williams reported to him last Friday that the $2.7 million payout had happened.

Asked if there were any other unusual transactions that occurred before the Government takeover of the company, Barrow said that the five Belizean executives of BEL (who had voluntarily terminated themselves) had all their vehicles transferred to the Belize Electric Company Limited (BECOL), who gave back the executives the vehicles, said Barrow.

Fortis Inc., the company from which Government took 70% of BEL at the time of the takeover, owns BECOL.

The local executives were Lynn Young, then President and Chief Executive Officer; Joseph Sukhnandan, then Vice President, Engineering & Energy Supply; Rene Blanco, then Vice President, Finance, and Chief Financial Officer; Curtis Eck, then Vice President Customer Care & Operations; and Juliet Estell, the Company Secretary.

Among those paid from the $2.7 million, said Barrow, were two Fortis managers who had been working in Belize, but he is not sure what happened with their vehicles.

Barrow said that it appears from its press release last week that Fortis is not challenging the Government takeover, but that the company wants its compensation.

He said that Government is inviting Fortis to submit its quantified claims, but if Government and Fortis cannot agree, the matter would have to be settled in court.
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