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Jun 3, 2011

BEL owes millions to Mexico’s CFE; will there be blackouts in 12 days?

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.”

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13 Responses for “BEL owes millions to Mexico’s CFE; will there be blackouts in 12 days?”

  1. Lindsay Howard says:

    Why does BEL owe its sister company, BECOL, 12 million dollars? Isn’t BECOL just pulling money out of BEL and channeling it to Fortis? BEL and BECOL playing a fool di eye game here.

  2. ESSB says:

    Probably management should look at reviewing the HR section; there be too much funds being spent exorbitantly on benefits or even people may be overpaid. Let’s be real, things are not good for our economy so we all have to be realistic.

  3. Earl Grey says:

    When IT WAS… Belize Electricity Board…………WE DID NOT HAVE THESE PROBLEMS….DID WE???

    SO MUCH FOR PRIVATIZATION…………………

  4. Sasha says:

    Getting back BEL should not be 1 Minister’s opinion but the people, I am sure they would rather have government run this Natural Interest this way, gas prices & electricity wouldn’t be soo high.
    Private Companies Interest is in making MONEY ONLY. They don’t care about the people.

  5. ElSgial says:

    Ha Lyn where have all the diesel generators gone ? I think you guys did not look into the future. You need to go back to the good old days Lyn. Just think seriously about obtaining 2
    Of those machines back .

  6. COOLIE says:

    WHAT THE HELL IS GOING ON AS IF PEOPLE ARE NOT POOR ENOUGH.ONLY GOD CAN HELP US,I THINK OUR COUNTRY NEEDS TO DO HEAVY PRAYING.THATS A SIGN AND WE HAVE BEEN TAKEN EACH OTHER FOR GRANTED TOO LONG.WAKE UP! WAKE UP BELIZEAN

  7. Maverick says:

    Lynn is saying that the problem is due to a need for increase in the credit line.. to me that means that business is up because demand is up. the hot season means more A/C units running, the high tourist season means more consumption. By asking GOB to prepay its bill, this means that their cash flow from the increase is being directed elsewhere, since no one that I know of has credit with BEL. The structure of BECOL was done to permit transfer pricing tactics, which essentially is designed to suck cash from the regulated utility for its parent company; BECOL and its foreign parent Fortis. This oldest trick in the book is pulled off by over-inflating the cost of every services provided by BECOL and Fortis, including the basis cost of power, and everything from management fees to equipment leases, inflated materials bills, etc.

    Before we the tax payers take responsibility for this management debacle, BEL has to come clean with FULL DISCLOSURE of all inter-company transactions. Beyond this, BEL needs to devise, along with the Government, a plan for sustainability which has to include import substitution using modern renewable power; and including modern legislation to allow for self generation by households and a buyback provision for excess power generated by households using solar, wind and bio fuels.

  8. Jessie James says:

    The problem is Lynn is getting PAID TOO MUCH MONEY. He should get no more than $5, @ hour like many Belizeans. This FOOL is paid MILLIONS OF DOLLARS for sitting in an air conditioned office just because of who his father is.
    KICK HIS POMPOUS @$$ ONTO THE STREET AND GIVE SOMEONE DESERVING THE JOB.

  9. Storm says:

    If they privatize a public utility/necessity, it MUST be monitored and regulated to prevent crises like this.

    It is really a public trust. They collect the money from ratepayers, why does it disappear?

    Put simply: WHOSE BANK ACCOUNT IS THE MONEY IN? Show me the money, I’ll show you a thief.

  10. none says:

    i am just reading all these comments that people put and they are obviously ignorant people with a narrow sighted mind. i am a belizean just like anyone else who doesn’t want my electricity rate to increase and i have to wonder as to why that ended up that way but it doesn’t change the facts of how things are which is that gas price is up. generators don’t run on air, it runs on fuel and people fail to realize that fact. the dams are more of a backup system the country cannot run on hydro alone the dams don’t have the capacity for that.

    one person is talking about why BEL owes BECOL money. i wonder if they think BECOL built the dam for free out of the good will of their heart. if my sister owned a shop i can’t expect to go to her and get items for free when she took her money and invested it and built a shop and the supplies in it. thats ludacris i wonder if that person even thought before they wrote that comment.

    another person is talking about cutting people’s pay at the company and their benefits. i wonder how they would feel if their pay got cut. they have to realize that while BEL management may be better paid than regular employees, the number of regular employees make up probably 95% of the company and things are hard for everyone today. so a pay cut would hurt the same poor people just like everyone else that just happen to be employed by the company that everyone hates. i would hate to be put in a situation like that and i think it incompetent for someone to suggest a pay cut of lay off employees in these hard times.

    lastly i want to comment on Jessie James comment about Lynn getting paid too much. while it may be true, we bealizeans have to realize that lynn can go anywhere in any fortis company and make probably double or triple the amount he makes now. and from what i am seeing lynn has been in the media alot trying to inform people make them aware of whats happening. not sitting in an AC office waiting for the company to crash and pack up and leave. thats exactly what the cornies who they appoint to his position will do when government eventually steps in.

    i just have to say i am dissappointed to be a belizean knowing that incompetent and ignorant people talk before they think. i think we need to focus on the real problem, how did we reach to this point. was it because PUC denied the rate increase or was it possibly BEL mis-managed or overspent money at some point. i think it quite possible that maybe they reaped the benefits fully when they could and did not plan for times like this to come along and now they don’t have enough financial savings and backup to run things.

  11. Disappointed says:

    Well put to “none” finally someone speaking with some intelligence. So happy to know that Belizean is not synonymous with Ignorant. I think your final point might be the problem when things were good they reaped the benefit and forgot about the rainy day and that is why we are here now.

  12. Maverick says:

    None, clearly you have no understanding of the economics of power generation and the reality of today’s world. BEL buys power from sources that are not tied to the price of oil. only 4% of BEL’s power sources come from diesel generation, and another 10% was coming from heavy oil generation from the Bowen Shrimp Farm. 50% comes from Mexico which is generated from the Merida 2 Hydro plant, as prices that are in line with our local production sources, all the rest comes from Bio energy and Hydro. Lynn stated that the problem is partly due to the low production of Hydro, no production of Bowen, and low production by Belcogen, which means that they have had to buy more from Mexico, thus increasing the need for credit from Mexico. Now we have to accept the premise that the demand has not reduced, but in fact may have increased, since our exports are up, tourism is up, leading to more consumption by the productive sector.

    All I want is an explanation why the cash flow problems exist when BEL is buying more from an outside source, but non exist when they are buying from a related party?? Something smells funny here.. Sorry, None, the dams are not a backup system, they are a system for moving money out of the company, and when the money is needed elsewhere (Mexico), suddenly it becomes as scarce as the water in the mountains.

  13. belize says:

    this government is bs thats wat, wat the hell r they doing to poor little belize. wat happen to all the money frm tourism village departure tax n much more. wat the hell this is so so so ashame of them .

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