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Aug 31, 2007

Petroleum fund/ new P.U.C. bills passed in House

Story PictureWhile crime and the effects of Hurricane Dean were the headliners in today’s meeting of the House of Representatives, the bill that caused the most contention were amendments to the Public Utilities Act. Minister responsible for Utilities Ralph Fonseca maintained that the changes regarding tariffs for electricity are designed to benefit the public and regulators.

Ralph Fonseca, Minister of Home Affairs
“First it is designed to better protect the consumers by enabling the minister to set general policy and standards, with respect to the supply of electricity by utility service providers; with particular reference to the methodology and process for the determination of tariffs, charges and fees, to be charged for the provisions of electrical services. Secondly, the bill is intended to insure that all final decisions of the Public Utilities Commission, the P.U.C., relating to tariffs, charges, fees and quality of service standards shall be published in the Gazette, in the form of a statutory instrument, before it can have the force of law. Elaborating on these twin objects of the bill, I refer to section seven of the Electricity Act, which as it now stands, enables the P.U.C. to make bylaws only with the approval of the minister. With respect to various matters, including tariffs, charges and quality of service standards. Under this section the P.U.C. has made electricity, tariff, charges and quality of service standards bylaws. These bylaws are highly complex and have given rise to serious difficulties in practice. Although the bylaws are subject to the approval of the minister, the initiative to make or amend them lies with the P.U.C. and not with the minister. Thus the authority of the minister is limited to either approving or disapproving these bylaws.”

Dean Barrow, Leader of the Opposition
“This will enable the Minister to better protect the consumers? The current bylaws are highly complex, they have given rise to problems the minister has no power to initiate a review? Now the minister will be able to enter into more detailed consultation? That is nonsense. Madam Speaker if you look— remember you know, this Public Utilities Commission was set up after privatization. We borrowed from the experience of other countries and the model in such a situation required that there be this independent regulatory body, called the Public Utilities Commission, which would to some extent try to hold the scales even; but which primarily was set up to protect the interests of the consumer. They had to do it while conceding fair play to the utility providers, but the primary purpose of the Public Utilities Commission in exercising its regulatory function is to protect the interest of the consumer. Principle must give way to what happens in practice, and so that if in practice you find that the principle has not worked then perhaps you might have an argument but where is the evidence? Where is even the assertion, where is even the allegation that the principle has not worked? So why are you changing the principle? Madam Speaker, something is amiss here. There is something completely odd about this. I don’t want to speculate, I don’t want to be unfair. I don’t currently know what it is, but something is going on. This allows the minister in effect now to get with certainly B.E.L. and work a thing. This makes no sense on the face of it, and I am telling you, something is wrong in the state of Denmark, and I will find out what it is and come back to this house and say so. I oppose this Madam Speaker.”

Ralph Fonseca
“What we are doing today is creating more stability, which is something that the U.D.P. would never understand because they do not believe in moving forward. They believe in looking backwards and they do not have an agenda, so it is very difficult for them to understand what is happening today. Now, the one area where the Leader of the Opposition may have been correct, is that I assumed since he is so well connected with the legal system—and I forgot that his law firm, in this particular case, is not involved with the utility provider—that in fact, he might no be aware of the confusion that is being caused between lawyers from the utility commission and from the government as it relates to grey areas in the law. But, if I can help him, you’ve got a bunch of cases in court right now, you’ve also got a whole bunch more cued up which will go on and on and not help any consumer in Belize. It will only add to the cost of electricity to the average consumer if we don’t clarify the situation. In any case, the Leader of the Opposition at no time spoke to the Electricity Act, he used the Public Utilities Commission Act and at no time, even with all of his language, did he ever criticize us for violating this Public Utilities Act— Commission Act, at no time!”

The bill was taken through its three readings today and passed by the House. It will now go before the Senate at its next meeting, set for Monday morning.

Wrapping up our coverage in Belmopan today is the latest on how Government plans to spend monies earned from Belize’s petroleum industry. According to Minister of Natural Resources Florencio Marin, the Petroleum Revenue Management Fund Bill will be used to promote social and economic development.

Florencio Marin, Minister of Natural Resources
“What is tabled before this honourable House is a bill reflective of the concerns and interest of everyone. It is a bill that was designed by extensive consultations from the coroner shop to the Cabinet. This involved the preparation and presentation of a first report on a concept designed for the fund to the Ministry of Natural Resources, the Ministry of Finance, the Department of Income Tax, The Central Bank and the Petroleum Advisory Board. After this round of consultations, a second report was prepared on the detailed engineering design of the fund which was presented again to our partners in development. Public consultations were held in Orange Walk Town, Belize City and Punta Gorda. We involved as many Belizeans in this process. And today’s reading is the result of this collaborative effort and a proposal truly representing the interests and wishes of the Belizean people. We conducted studies of models for similar funds from other countries. The basic principle of funds like these is to strike the right balance between using revenue gain from petroleum to enhance economic growth and social enhancement on the short term, at the same time ensuring benefits for future generations. Madam Speaker, the petroleum fund is the avenue through which all revenue made to government by oil producers will go, including royalties and income tax. This fund is being set up in such a way that there will be proper accountability and transparency, and independent of a sight board will ensure that the fund is managed in compliance with the law. Independent auditors will scrutinize the operations of the fund and all reports on major decisions, with respect to the fund, will be laid before this National Assembly.”

The Petroleum Bill was also taken through its three readings today so it too will now be laid before the Senate for approval.

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