Countrywide Blackout De-mystified

Posted By: Marty

Countrywide Blackout De-mystified - 06/04/11 02:50 PM

The entire country was plunged into a blackout this morning. But don't worry, it wasn't caused by CFE in Mexico cutting the supply for non-payment - that hasn't happened, yet….

At 8:55 power was lost to the entire country due to failed equipment on at the West Substation in the Belize District. By 9:03 a.m. power supply was restored to the entire Northern Zone and By 11:25 a.m. power supply was restored to the rest of the country.

Channel 7
Posted By: Marty

Re: Countrywide Blackout De-mystified - 06/04/11 02:56 PM

PM Barrow’s “splitting headache!”
[Linked Image]
The country’s electricity sector find itself in a bind as we go to press tonight, and failure to resolve it could throw at least 50% of the country and as much as 70% of the country into darkness, according to information from the Government.

Prime Minister Dean Barrow told Amandala this evening that he is faced with a conundrum. “They have the government and the people in a bind,” he said, speaking of financial troubles reported by the Belize Electricity Limited.

According to Barrow, BEL’s fiscal situation has worsened. They have written the government to say that they are having great difficulty meeting their financial commitments with Mexico, currently the country’s main supplier of power. They are unable to pay for power from Comisión Federal de Electricidad (CFE), which supplies about 70% of power to the country currently.

If BEL fails to meet payments to CFE, Government is on the hook for $10 million for a letter of credit it had given to facilitate BEL’s purchase of power, the Prime Minister said.

If that happens, any further sale of power to Belize requires cash on the nail, said Barrow.

As a result, he said, BEL has asked the Government to prepay its bills of roughly $2 million a month. It had asked for Government to pay its May bill in advance—which it did—and the subsequent request was for the government to pay for three months: June to August, 2011—which it did not.

Instead, Government prepaid two months with $4 million, the Prime Minister said.

If $4 million lasts only 12 days, we can see where that is headed, added Barrow. “There will come a time when the government won’t have the cash flow,” the Prime Minister said.

BEL’s President and Chief Executive Officer, Lynn Young, told Amandala that BEL is “between a rock and a hard place.”

He said that BEL owes BECOL over $12 million, owes CFE $8 million, owes BELCOGEN, as well as suppliers. “It’s just crazy,” he commented, adding that they get through by prioritizing what gets paid first.

The latest report of the Public Utilities Commission (PUC) to the press indicated that BEL owes $50 million to consumers, which ought to be rebated.

Asked if he sees any resolution to the financial quagmire in sight, CEO Young said: “It will be like this until the regulatory dispute is resolved and [BEL] can borrow again.”

Currently, that litigation, after BEL lost in the Supreme Court, is pending resolution in the Court of Appeal. Young said that even if BEL wins in court this time, the PUC can just implement further measures for the electricity sector to counter them.

“Government needs to sit down and say ‘this is how we will make it work’, or else take back the company,” said Young, declaring that the ball is really in the government’s court.

For his part, Barrow said that the only option is a temporary takeover of BEL under laws that permit an emergency takeover for 30 days with a possible extension—but, he told us, he has no intention of doing that.

According to Young, alternate sources of local power have not met expectations. BELCOGEN, the plant owned by Belize Sugar Industries, has provided less than half the expected power, said Young. Belize Aquaculture Limited has shut down, because they can’t get affordable fuel, he added. Resorting to local diesel generation would be even more financially crippling because fuel costs are high again in 2010, Young indicated.

As for the Belize Electric Company Limited (BECOL), the sister company that generates power from the waters of the Macal, production has been low, as is customary during the dry season; but the situation has been aggravated by the drought, said Young.

“Right now, we are down to less than two weeks’ supply from BECOL,” said CEO Young.

He told us that they have been talking with the banks, but the Bank of Nova Scotia has already said it can’t release any funds to BEL until the regulatory situation—meaning its dispute with the Public Utilities Commission—is resolved.

Young said that BEL is also talking with First Caribbean International Bank and the Belize Bank to see if they can source financing, but to borrow further, they have to get waivers from institutions they already owe, such as the World Bank and the Caribbean Development Bank.

BEL is also on the hoof for payments to 3,000 debenture holders, who have invested $60 million in the company.

In its 2010 annual report, BEL also said that Government’s increase in the business tax rate from 1.75% to 6.5% means $5.8 million in extra taxes—which it won’t pay until the tariff dispute is resolved.

“Without this deferral, the company would have ended the year with a net loss,” BEL’s report said.

“For 3 years we’ve been trying. We don’t know what else to do,” said Young.

Young said that Government had granted a letter of credit for purchase of power from CFE in 2008, when the company could not get commercial credit, and CFE was threatening to cut Belize off its power lines for several months of arrears.

The 30-day credit arrangement the company had with CFE was discontinued, but the letter of credit allowed BEL to get US$5 million worth of credit, with the government’s guarantee of payment in the event BEL defaults.

“Every month we pay our bill,” said Young, “but they are exceeding US$5 million now. Every week we have to make payments, because we are passing the credit limit.”

Young added that, “All I’ve said is what I’ve said before. The problem is nobody believes us.”

Prime Minister Barrow told us that he doesn’t know if BEL is to blame, and he does not know what BEL does via its affiliate, BECOL.

Young said that while what is happening now is similar to what had transpired in 2008, with sky-high fuel prices, the problem now is they can’t borrow to help meet their shortfall of funds.

“Every business goes through difficult periods, but you can finance your way through it. The problem is, BEL can’t get financing right now—but we are trying.”

There is the hope, said the Prime Minister, that once the rains come BEL could get more power from its sister company, BECOL, from hydropower generation, so he is praying for the rains.

The Prime Minister also indicated that if CFE cuts power, that could lead to a 50% to a 70% blackout.

Right now, it is a race between how soon the government’s coffers runs dry, and whether the rains come, the Prime Minister added.

Posted By: Marty

Re: Countrywide Blackout De-mystified - 06/04/11 02:59 PM


Belize Electricity Limited has issued a brief statement on the today's nationwide blackout. According to BEL the entire national grid went down at 8:55 this morning. The loss of power is blamed on, quote: "failed equipment on the 115 kV transmission line at the West Substation in the Belize District," end of quote. BEL says that immediate efforts were made to restore the electricity supply, with the north coming back on stream eight minutes after the blackout. The north, including San Pedro town, was restored at 9:03 am. Power was restored to the rest of the country by 11:25 this morning. The BEL statement said that "during restoration, some areas experienced intermittent power outages that were necessary to facilitate normalizing of the system."

© 2021 Ambergris Caye Belize Message Board