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Jun 20, 2011

Government nationalizes B.E.L.

Dean Barrow

Belize Electricity Limited will be in government hands by Tuesday morning. Today, the government rushed through the House and Senate, legislation to take over the utility company worth four hundred and forty four million dollars.  The drastic measure of a corporate takeover became more than whispers on Friday evening when it was announced that there would be special sittings of the National Assembly.  The modus operandi in the capital followed a pattern similar to the Telemedia takeover in 2009.  In the House, Prime Minister Dean Barrow laid out his reasons why the cash strapped government took on a second major corporation, citing as the primary reason that the country would have been cast into long periods of blackouts because of BEL’s litany of debts. B.E.L. owes millions of dollars to BECOL, Mexico’s Commission De Federal De Electricidad, Belize Sugar Industries’ Belize Cogeneration Facility (BELCOGEN), and the Caribbean Development Bank.  Barrow said that the prepayment of government bills to buffer B.E.L.’s cash flow problem could not continue. He gave several reasons to appropriate the electric company including; B.E.L. is in grave financial difficulties and is unable to pay or service its debts and is otherwise unable to secure the continuity of electricity supply and notice to revoke license has been given by the P.U.C. Barrow also told the House he wanted to avert the disruption of electricity supply.

Dean Barrow

“The main provisions of the Bill allow the Minister responsible for electricity to make an order, with the approval of the Minister of Finance, acquiring all such property as may be required to assume control over the supply of electricity in Belize. This is to be done where circumstances have arisen such that it is necessary in the public interest for government to assume control over electricity supply in order to maintain the continuity of that supply to the country. In trying to keep up with CFE payments, we have been having difficulties in meeting some major obligations to other creditors including the Caribbean Development Bank (CDB) and BECOL. We currently owe BECOL in excess of ten million Belize dollars. Now that BELCOGEN is back on line, we are receiving power from them but will have problems meeting payments to BELCOGEN as well. We are also struggling to make a payment to the European Investment Bank (EIB) that is due at the end of this month. Since the Government is party to the agreements with CFE and BECOL, as well as the loan agreements with CDB, the IBRD and the EIB, and thus exposed, we are seeking the Government’s assistance in helping the company to manage its way through this very difficult period.

CFE has advised that we do not have—this was the twenty-fourth of May. I believe that was a Tuesday. CFE has advised that we do not have sufficient credit for power purchases to take us through this weekend and will interrupt supply of services on Friday if no arrangement is made for any payment or extension of credit. We need an urgent response in order to determine how and when we should start planning rotation power outages for the country as appropriate. So people have to understand that this is not something that was likely to happen. This was something that was about to happen. There are some who say, well why don’t you wait. How can we wait when from as early as the twenty-fourth of May, we were told that the country would be plunged into blackouts by the Friday of next week; except government stepped in again to bail out B.E.L. When we gave that four million dollars last Wednesday, we thought it might buy us a couple of weeks. But it turned out that in addition to the just under ten million dollars owed to CFE for power, and the twelve million to BECOL, B.E.L. also owed five point one million Belize dollars to BELCOGEN as of BELCOGEN’s May invoice. Still, B.E.L. was giving none of the four million dollars that we gave it last Wednesday to BELCOGEN. I have the breakdown of how they were apportioning that four million. The bulk of it was going to CFE, some was going to Fortis and some was going to the EIB—none was going to BELCOGEN. And that Mister Speaker became a real tipping point. BELCOGEN needs money to service its own foreign debts, which are cross-referenced to the BSI sugar factory loans. I knew that the BELCOGEN people were travelling to Washington for a meeting last Friday with the international bankers that are BELCOGEN’s financiers. The purpose of the meeting was to discuss the rescheduling of the BELCOGEN loans. Now Mister Speaker, BELCOGEN’s sole reason for being is to convert bagasse into energy for sale exclusively to B.E.L. Without B.E.L. as a buyer in good standing, BELCOGEN would ultimately also collapse. And because of the cross-default clauses, if the BELCOGEN loans are called the BSI loans are also called. It was therefore critical, in my view, that BELCOGEN should be able to assure its creditors that it will be able to collect for its electricity sales to B.E.L. and the only way that could happen is if government is in charge and make those payments. Otherwise, exit now the entire sugar industry.”

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31 Responses for “Government nationalizes B.E.L.”

  1. So who pays now? says:

    As the government has no money of its own, only what it gathers in taxation, the question now is who will pay for the electricity we all need?
    Worldwide the cost of fuel to generate electricity has escalated but the PUC, head in the sand, refused to allow BEL to raise tariffs to cover costs. A financial impossibilty that has resulted in no money to pay suppliers and that will likely end with suppliers not supplying!!
    Government does not have any money, currently spending more than income and gradually sinking deeper into debt, and will not be able to pay suppliers.
    Result – electricity will soon be back to 50 years ago.
    Our political leaders all seem full of their own importance but financially incompetent.

  2. crime free belize says:

    For the people,by the people.foreign investors has milked our cow’s long enough.

  3. fromafar says:

    and how is a cash strapped government going to come up with the money it needs, eh? which projects are going to get benched so Barrow can pull this one off? which neighborhood’s going to get put on the back off the pile.

    Lets see how this one pans out in the global forums…

  4. EMS says:

    Apparently Belize continues isolating itself from the global financial, economic system! What next Belize? Perhaps the banking system? or the oil industry? Imagine the possibilities!

  5. EMS says:

    For the people by the people is the biggest myth ever. This ideology is simple unrealistic and doesn’t exist any where on the planet Earth. Perhaps for some people amongst some of the the people. ie: family, cronies, lackees etc, etc.

  6. Somewhere in time says:

    Who will be CEO now? Shyne?

  7. andrew says:

    i fil sorry for people who has elec.from goverment nmow dean barro will take up the rates and enjoy his life with the moneyy

  8. Justice says:

    Rodwell Williams is the Chairman, He is also Barrow’s law partner, whoi do you think will be made in charge? Belizeans stand up for your rights!

  9. Curious says:

    who will be his eyes on this Board ? Shyne Moses David Levi Barrow, grandchild of an Ethiopian Queen..

  10. Get it right says:

    Come on people. The government has a duty to the country and its people. They can’t allow a company such as BEL to simply continue ripping us off and let the country become stagnant because they want a rate increase. They were willing to let the country go into continuous black outs just so the PUC will be forced to increase rates indefinitely. Why do you think Fortis didn’t want to sell the company at the negative value. Any smart business man, especially one that sees a company supposedly going bankrupt, would be quick to sell off instead of continuing realizing a state of continuous diminishing returns which is resulting in their so called bankruptcy. They asked GOB to bail out a privately owned company, not borrow, but pay their debt from tax payers money in order to keep Belize running. Come on, no sane person would do that without owning a piece of what they are paying for. It like you paying a house loan for someone else’s house and you don’t live there. It was all a ploy to raise the rates and it back fired on the money hungry Fortis.

  11. jer says:

    Chairman of PUC was working with BEL once. I am seriously wondering if he didnt leave there with sour grapes hence now that he is in such position it is pay back time as he really had it against the electricity people it looks like. See government can do whatever he can in its power to rub it in on you and frustrate you when he has an agenda against you. Barrow will now holler its in the interest of the Belizean people. Where was he when chairman of \PUC was harrassing the foreign investor? WE will talk about foreign investor raping us. WE are a developing nation and we need developers to come in and help us grow and be able to compete. My thing is, in the interest of developing our economy, where was Dean BArrow? This thing is not only a Belizean picture its a global picture. \if we are to make it in the global picture we cant do it on our own. We need foreign investments. Now what message is this sending to foreign investors? This is the second one being ripped from the owner. Which one will be next?

  12. Business Man says:

    this GOB now has to pay 400,000,000 to BTL and another 400,000,000 to BEL. both of these companies don’t generate any foreign exchange, and with this government’s track record in the production sector, (i.e. bananas, sugar, citrus, fisheries) belizeans need to brace themselves for reeeeel hard times.

  13. looui says:

    yes da bout time we take back our assets and try to take the belizean out of poverty because most of the monies these foreign companies make go abroad belizean first

  14. Concerned says:

    But without the foreign investment we will never see real progress. How on earth are we going to pay 450 million for the company? The government didn’t allow them to raise ratesa when rates were going up everywhere and now they take it! Belize needs to be seen as a place where investments are respected. If not, no one will want to invest their money here. This is a short sighted solution that will not be good for us in the long term.

  15. Madaz says:

    How much did Fortis invest in Belize? The Dam? They still own that. How much have they taken out of the country?

  16. crime free belize says:

    Most belizeans tend to rationalize instead of analying,what happened to who put our country in this position in the first place?Foreign investors does not have to be accountable to the belizean people,who will force them to pay monies owed,in order to get B.E.L back in good standings?Why continue to operating a company that is’nt profitable?How can a billion dollar company not pay it’s bill’s?Bankrupt mean’s going out of business……People let’s put our political ideology aside,and think about the real issue at hand,the real hard cold fact’s.In this world,there are thinker’s and doer’s,which one are you?The PUP(People Under Price)ideaology was yesterday’s thinking.

  17. OWBZeanCiTiZeN says:

    This time I’m wit d Prime Minister, it seems Fortis was trying to play a FAST one on the Belizean people. It looks like because they couldn’t get their rate increase which was not justified according to the independent consultant they were making sure they take the money and not pay for the electricity they are buying. For the most part, BEL does not produce electricity they are just the distributor. Mind you if you dont pay your bill, they will cut off your electricity in a heart beat…so we pay, the money is there…Fortis just took it……
    now the issue i have are the following: 1. Mr. Barrow said nobody will get fired. I guarantee somebody will get fired in less than 2 months because of political victimization.
    2. Rest assured electricity rates will go up by next year this time.
    3. BEL money will be used to fund other stuff…….like political campaigns.

    i just hope these don’t happen…..can we still trust our Belizean politicians…not jus this UDP politician but all the ones present of both parties and even the upcoming VIP ones.

  18. Concerned says:

    Belize will get the reputation of not being investor friendly. We can’t just keep taking companies! Whether you like it or not, any country, especially a developing one needs capital. Without investors feeling safe about their property, we will keep sliding financially. Belize needs jobs. To get NEW jobs we need new businesses. Withour new investments we won’t get them.

  19. Joe McGuire says:

    Belize is now officially screwed which Foreign Investors will want to come and invest in Belize now?

    There is no point when ….. Mr Clean can just come in and take away all your lifes work in a blink of an eye.

  20. Somewhere in time says:

    The PM will soon go on tv and try to justify a rate increase. He will say it is necessary to keep BEL afloat. Which is what Young has been saying the entire time. Maybe Barrow thinks it will sound smarter because it is coming out of his arrogant mouth. When the banks crashed 3 years ago, the US Govt. didn’t just push people aside. Remember that SSB has 24% share in the company, and SSB is responsible to GOB. So saying that Fortis alone is at fault is not entirely true. I agree something had to be done, but not what Barrow did. He is an arrogant dictator that bodes well for Belize.

  21. Earl Grey says:

    So what happened between ….BELIZE ELECTRICITY BOARD and……….. TODAY??????????????????

  22. crime free belize says:

    Foreign investors has many other belizean market’s to invest in,we just can’t allow foreigners to hold our country hostage,by monopolizing our basic necessities we often take for granted.What people dont realize,investors is merely into making a profit,and leaving when their pockets are full.Yea they might invest a few millions,but will end up taking tens of millions,and i am Dam! sure those monies will be going back to their country of origin.And what was realy the deal with the hydro dam,was’nt it built with tax payers money,and then sold,to then sell us back what we rightfully own?

  23. Maverick says:

    Investor confidence will be crucial, but most investors will understand the difference between a national good (a utility in danger) vs a hostile takeover. This action was certainly not hostile; in fact the hostility was from Fortis who were the ones threatening blackouts to a poor nation, while refusing to follow the rules of the PUC an refusing to invest to recover the company to live up to its mandate to serve the public at a reasonable and agreed profit margin. Fortis is facing a similar onslaught in Turks and Caicos where the same tactics have been used in their investment in that national utility. Hopefully T&C will take a page from Belize and remove them from that country as well.

  24. cali says:

    we stupid belizean! just take anything they tell us. when would we wake up? when its too late our country our houses and livelihood is being take away from us by these these thief and we don do anything about it. lets open our eyes see who is benefiting from all these deal? Surely none of us are. when late did any one of us took a weekend vacation to Miami. Wake my belizean brothers and sister were not moving forwards we moving back into when our country first got started. WAKE UP PEOPLE

  25. cali says:

    we stupid belizean! just take anything they tell us. when would we wake up? when its too late our country our houses and livelihood is being take away from us by these these thief and we dont do anything about it. lets open our eyes see who is benefiting from all these deal? Surely none of us are. when last did any one of us took a weekend vacation to Miami. Wake my belizean brothers and sister were not moving forwards we moving back into when our country first got started. WAKE UP PEOPLE

  26. proudbelizean says:

    Look Here, I am not PUP nor UDP, I steer clear from politics, but let me tell you all something, BELIZE HAD TO DO THIS BECAUSE BELIZEANS WERE NOT BENEFITING FROM BEL, CANADA AND FORTIS WAS. UNU SIMPLE OR WAAAT. Unu really tink Barrow and dem deh tek money. THINK ABOUT THIS NOW, FORTIS OWNED 70% OF BEL, THEREFORE THE MONEY WAS GOING OUTSIDE OF BELIZE, BELIZEAN PEOPLE WERE NOT BENEFITING FROM THE ELECTRICAL COMPANY. BELIZE WAS TOO BUSY MAKING OTHER NATIONS RICH AND KEEPING OUR NATION POOR. IF THE GOVERNMENT OWNS BEL THEN THE MONEY WILL BE PUMPED INTO THE BELIZEAN ECONOMY. JAMAICA SOLD EVERYTHING AND THATS WHY ALOT OF JAMAICANS ARE POOR, THATS WHY THE EXCHANGE RATE IS SOOO HIGH. WE WERE TOO BUSY PAYING A COMPANY THAT DIDNT GIVE A DAMN ABOUT BELIZE. FORTIS IS A BILLION DOLLAR COMPANY, WERE WE GETTING THAT, NO WE WERE NOT. WE BELIZEANS TEND TO PRAISE OTHER FOREIGN PLACES THAT DO NOT EVEN KNOW HOW TO SPELL BELIZE, DONT EVEN KNOW WERE BELIZE IS LOCATED, BUT THEY WE DAH FOOL FOOL FI GIVE FOREIGNA FU WE MONEY DOH. WAKE UP BELIZEANS, BELIZE IS BEING RETURNED TO US. IF WE SELL OUT EVERYSINGLE COMPANY IN BELIZE THEN WE NEED TO CHANGE THE NAME FROM BELIZE TO NEW FOREIGNLAND BECAUSE BELIZE WAS BEING SOLD OUT. OUR MONEY WAS BEING SENT TO OTHER NATIONS, WE WERE NOT BENEFITING FROM IT. SO PLEASE STOP PEOPLE. U ALL ARE JUST MAD BECAUSE ITS BARROW AND UDP WHO IS DOING THIS AND ITS NOT MUSA AND THE BLUE MACHINE. BUT IF IT WAS PUP, UNU WOULD GO OUT DEH AND WAVE THE BLUE FLAG LIKE IT WAS NO TOMMOROW. You all please stop putting politics into this and think about BELIZE AS A WHOLE OK

  27. setra2 says:

    we should consider solar panels……just a thought…it’s cheaper

  28. A Young says:

    Well now Barrow and the UDP own it all.
    If they want to win the election.
    Give FREE Electricity, Telephone, Internet & Water for Everyone in Belize.

  29. mylegacyb4mypeople says:

    I cannot disagree with the move that the PM has made in taking over the utility which is a very important part of the infrastructure of Belize and should never be used as a tool to keep the Belizean public hostage which was occasionally practiced by BEL under its former management a foreign interest should never have such control over a country there are many other areas for foreign investors in Belize which will not grant them such at will control over the entire country on the other hand Mr. Barrow will be very wrong if he uses this situation as an opportunity to compensate any of his supporters or family members regardless of their qualifications, My Legacy B 4 My People.

  30. Diehard Belizean says:

    All developing countries, including developed countries, always look for foreign investment as a way to help their country grow. The wise leaders of these countries give incentives to investors to go to their countries to invest their money. These leaders know the power of investment in creating more jobs for the people. No leader wants to chase investors away.

    Now in Belize, it is different. Barrow uses his flowery language to fool the people that taking away foreign assets is nationalistic and tells anyone who believe otherwise as anti-nationalistic. Guess who is making a lot of money in all these transactions? Because for every transaction of this kind highly paid lawyers are given the contracts to carry out paper work. Guess who IS /ARE the lawyer(s)? Hmmm, boy if you don’t know, then…OPEN YOUR EYES.

    Do you believe that electricity rates will go down? NO, of course not! After GOB took over BTL… have telephone rates gone down..NOOOOOOOOOOO, it hasn’t. For Barrow to play with your emotion to tell all of us that the Belizean people will own the company..Brother..tell me how you ordinary Belizean owns part of BTL or BEL??

    Every investor puts his money in because he wants to make money. Man, that’s the way business works…. and investors come from any part of the world.. Americans, English, Chinese, Taiwanese, Mexicans, etc. Don’t be fooled that investors are bad for our country! Be smart and learn! Not everything Barrow spouts out is for you to believe.

  31. Get it right says:

    @ DIehardBelizean-No one is saying foreign investment is bad for Belize. Foreign investment has its pros and cons with the biggest benefit being jobs for the country. In this case which don’t make any difference bc BEL was there from before PUP sold it out to Fortis. THe jobs were there already in place and Fortis did nothing but buy out Government’s share at less than the market value. SO it was a deal that gave Belize an increased short term cash flow and all of us knew that in the long term the effects would be dire. Which has proven to be true today.

    The GOB has an obligation to the people of this country and despite what you think, they needed to keep this country up and running instead of being held hostage by a Billion dollar company who just wanted to increase rates to make more money. You want to know how BElizeans own BEL and Btl? Through tax payers money my friend. Once GOB owns the companies its for Belize. You look at the personal direct meaning my friend. They saying that its for Belizeans dont literally mean that each and every Belizean will be the owners. Some fortunate people who have the money will be able to gain shares in the company, but in the end all the money collected by the company will be pumped back into the economy instead of going to Canada. I do agree that investors are bad for Belize, i will say that not all are good for the country. A Billion dollar investor trying to hike up a rate on an essential utility in a poor country and threatening blackouts is not an investor you want in your country. Especially when they have not contributed anything to this country. So get it right my friend.

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