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Jul 17, 2014

B.S.I. Says Farmers’ Demands Unreasonable

The Belize Sugar Industries Ltd. and the Belize Sugar Cane Farmers Association remain at odds over the proceeds of bagasse which is being used by BELCOGEN to generate the energy being sold to Belize Electricity Limited.  An interim agreement, which was met by both parties on January thirteenth, expired a week ago.  The objective of that concord was to negotiate and finalize a new agreement, including the claim by the B.S.C.F.A. for payment of bagasse.  Despite a proposal to keep the agreement on the table until the end of the month, B.S.I. and B.S.C.F.A. have fallen short of that objective.  This morning, we spoke with Chief Financial Officer Belizario Carballo, who told us that the proposal offered by B.S.C.F.A. for ten dollars per ton of bagasse is unreasonable.

 

Belizario Carballo Jr., Chief Finance Officer, B.S.I.

Belizario Carballo Jr.

“Well the farmers have proposed to us a payment of ten dollars per ton of cane and they presented a proposal that resulted in that quantum.  We have, in the process of the negotiation, shown them how in their calculation there are some errors that affect the calculation, but more importantly we have been elaborating that the payment quantum of ten dollars amounts to eleven point four million dollars, if we use 2013 as an example and BELCOGEN’s sale of energy to B.E.L. in 2013 amounted to eleven point seven million.  And so what the request really is is a payment for bagasse that would essentially be ninety-seven percent or a hundred percent of BELCOGEN’s gross revenues.  Now that is grossly unrealistic and it’s not a starting point and for us it was a non-starter because how can you come to the table and say we want a payment for this that you’re now using to do this but we want a hundred percent of BELCOGEN’s gross revenue.  When we are telling you and showing you, and we have been showing them the financials; we have written them giving them the financials from 2010, 2011, 2012, 2013. They have it, it’s a letter here, there are presentations that were made but specifically there’s a letter that we wrote on April seventeenth, attaching the financials of BELCOGEN.  One of our points in the negotiation is that BELCOGEN is not generating a profit, so we know that in the process we have to disclose to the other party the facts. And so our simple question to them has been, tell me how your proposal takes into account the cost that BELCOGEN has to incur and the return on the investment.  Just show us how that is taken into account because in our view it doesn’t.  You’re asking for a hundred percent of BELCOGEN’s gross revenues.  And they haven’t responded to us in those questions.  We have put it on the table, we have written to them to ask them because to us that is at the core.  They are telling us that they are taking it into account but yet in their calculation we don’t see it.”

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