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Jun 10, 2011

Barrow wants to buyout B.E.L. from Fortis

Will the lights go out when Belize Electricity Limited’s bank account dries up? That has been the burning question in many homes since the country’s sole electricity provider declared that it could not meet financial debts with its suppliers on schedule.  Prime Minister Dean Barrow announced at his quarterly press conference on Wednesday that B.E.L. should have never been privatized in the first place, but he would await the return of BEL’s C.E.O. Lynn Young to see if its parent company, Fortis, would inject the millions of dollars in cash that it needs to remain operational. The company has managed to stay afloat with four million dollars drawn from government coffers. After the sit-down with Young today, the PM said that there was clearly still no way out of BEL’s financial dilemma. The company remains in the position that it can’t pay its bills and it cannot pay for the power supply that the country cannot do without. So Barrow told Young that the government is ready to take over control of BEL by buying out Fortis’ shares.

Via Phone: Dean Barrow

Dean Barrow

“At the end of the meeting, it was agreed that Mister Young would convey to Fortis in Canada [that] Government offer to buy out Fortis’ majority shareholding in B.E.L. That’s really where we are. In the meantime, Mister Young has promised to do this today and to try to get back to us with an answer as quickly as possible. In the meantime, to stave off any possibility of interruption in the power supply, government will find another four million dollars as prepayment it will mean we would have been paid up in our monthly bills up to September of this year. That Mister Young tells us will buy us about twenty-one, twenty-two, twenty-three days grace. And in that period, we are hoping we can come to some arrangement with Fortis assuming that Fortis is interested in selling the company back to Belize.”

Jose Sanchez

“Assuming Fortis would sell back, the devil is in the details. The PUC is saying that Fortis through B.E.L. owes the consumers $50 million in rebates. That and other outstanding loans would also be discounted from whatever price they come up with?”

Via Phone: Dean Barrow

“Well right, this will be a matter of negotiation but we will have to make that point. In terms of the price that Fortis would be asking, you have to input all those factors before you can arrive at a fair price.”

Jose Sanchez

“Is it possible then that; can the government continue paying these four million dollar advances?’

Via Phone: Dean Barrow

“No we can’t and that’s just it. We are then saying that the twenty-one to twenty-eight days window that is now available as a consequence of the four million dollar payment that government will make by next week is the last of it. So we must have a solution before that window closes. The whole objective of the government is to avoid blackouts period. So whatever will be needed to be done will have to be done before we reach the point where B.E.L. stops paying and the blackouts begin.”

Jose Sanchez

“Is there an estimate that the government believes B.E.L. is worth through its assets at this point?”

Via Phone: Dean Barrow

“No, we first have to find out whether Fortis is even prepared to talk. We even had a preliminary look at the financial, but it is far more than that. If Fortis says it is willing to sell, then we will try to get a proper, professional evaluation taking everything into account and that is the offer we would make or perhaps Fortis might want to tell us initially what it is they want to sell for. But we will still do our due diligence and we would have to perhaps make a counter offer.”

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14 Responses for “Barrow wants to buyout B.E.L. from Fortis”

  1. The Searcher says:

    The nationalizing of BEL should not oberseved as a negative or unacceptable approach by the government. Western Economics (Freidmanism) thought througout our high school and tertiary institutions instills that government owned companies are inefficient and not profitable. This economics doctrine of selling off our resources, mostly benefits the rich, multi-billion dollar corporations, and their executives. With a sound leader in control, BEL can be operated efficiently regardless if government owned.

  2. Zeena Wills says:

    This is just a scheme to make the Government of Belize look bad and deliberate acts such as these is also against the Belizean People because we are the ones who would suffer from power outages . If the previous administration had not privatize our utility companies none of this would have happened in the first place. BEL BRUK sounds like a deliberate conspiracy to undermine the Government and Belizean consumers. Take back BEL for the love of our people

  3. Michael says:

    At the rate Belize is going and the opinions I have seen that things should go back to the way they were in the past, then lets really take things back to the past. And I mean back to the past before Independence because at the rate this country is going around in ever diminishing circles its just a matter of time before we become a failed state. Either we move forward into the future and adopt to change and to the present or regress backward in fear. We cannot have it both ways. What in God’s name happen to the vaunted Bzean courage, ingenuity and adaptability. We need our sober, farsighted, nuetral and deep analytic opinion on these issues from Belizean academics. Lets stop the knee jerk reaction to rethoric from every jack and his brother. For the sake of the nation, please stop the rethoric and let the sober farsighted reflection into the real state of the nation begin. And lets begin the serious dialogue before deciding whether Gov’t should repurchase BEL. If Gov’t can hadrly pays its current bills and is on the verge of bankruptcy how in God’s name can we purchase and run an electric utility that has become much more complex than the Diesel fired power stations of the past. this is share madness.

  4. Maverick says:

    interesting conundrum. Fortis wants its cake and eat it too and the taxpayers get shafted. If PUC buckles and gives in we get rate increases. If PUC does it job like its doing and protect consumer interests to keep service rational and rates down, Stan Marshall will threaten our national security and our economy with rolling blackouts, and GOB has to essentially pay a bribe to keep the lights on. The bottom-line is that their tactic has ensured that the company has negative equity so then let’s buy it at that negative value and put it back in shape. Get away from the internal raping of funds into BECOL and let’s get to a national energy strategy that will benefit Belize’s interests above the predatory ownership that is now in place. I say that PM should hold his ground and put the Belizean public interest first.

  5. Maverick says:

    Fortis profit rises 17 percent

    On Wednesday May 4, 2011, 7:33 am EDT
    (Reuters) – Fortis Inc posted a 17 percent rise in quarterly profit helped by better performance of its regulated utilities in western Canada.

    The utility’s first-quarter net profit rose to C$117 million, or 67 Canadian cents a share, from C$100 million, or 58 Canadian cents a share, a year ago.

    Fortis, which is one of the largest investor-owned distribution utilities in Canada, said quarterly revenue rose to C$1.16 billion from C$1.07 billion, a year ago.

    Analysts on average had expected the company to post earnings of 62 Canadian cents a share on revenue of C$1.18 billion, according to Thomson Reuters I/B/E/S.

    Shares of the company closed at C$32.30 on Tuesday on the Toronto Stock Exchange.

    (Reporting by Maneesha Tiwari in Bangalore; Editing by Don Sebastian)

  6. OneBelize says:

    Fortis just reported first quarter earnings up by 17% to $117 million Canadian dollars. Are they saying that they will not demonstrate corporate responsibility and assist their subsidiary company in Belize? Fortis has a responsibility to BEL and the people of Belize who have been their loyal customers for years. This is an internal problem between Fortis and BEL and they need to resolve it quickly. For Fortis to do otherwise would be acting totally in bad faith. Of course, any responsible government will have to intervene if Fortis doesn’t do the right thing. But the government has already bought them some time to work out their problems by prepaying $10 million in utility bills up until September. This is in addition to the $10 million Letter of Credit guaranteed by the government to BEL. I have little faith that Stan Marshall will do the right thing after seeing how personal and petty he got in his last TV performance in Belize. How can you run a multi-billion dollar energy company and act so childish! Fortis has all the resources necessary to resolve this internal problem and spare us blackouts. Belizeans have been excellent customers. We don’t deserve this treatment from Fortis.

  7. Mylegacyb4mypeople says:

    If it is left up to BEL and Fortis Belize will be placed in darkness as vindictive as they are they don’t care if Belize is in darkness or not I think that GOB should make it clear to them that if the light is turned out that there will be a forced take over and that a penalty will be implemented for every minute that the light remains off and the sum of this penalty will also be deducted from the final value of the company at takeover. Remember, My Legacy B 4 My People.

  8. Belizean says:

    Why the image of the dam, does BEL own the dam or Fortis? Isn’t the Dam’s owned by Becol? Prime minister we need Becol to be also owned by government not only B.E.L.

  9. Maverick says:

    Michael, I think you are on to something here. GOB should not take over BEL in the state it’s in. Quite frankly if you examine what BEL really is, its a management company that buys power from various sources and distributes it through what is really a publicly owned distribution network at a profit.(we the public and businesses paid for the network with our exorbitant connection fees, and this is a legally arguable point) A long-term smart energy policy would be to use deregulation to dissect the company into its parts and create a new refreshed entity less all the baggage that BEL has accumulated over the years. Imagine, the PUC is the regulatory body to protect consumer interests, why cant we have a quasi GOB body to replace BEL’s management services and subcontract out everything else, including power generation, and local distribution which would eliminate 90% of line maintenance costs, and would provide opportunities for small contractors to everything from generating power using renewable technology, to mini-distribution systems in remote areas, with the Management company taking responsibility for the national grid and the central control center only. I believe that taking over BEL as it is as a corporate entity would be buying a puss inna bag.

  10. Pablo says:

    BEL is a shell company that owns nothing. It purchases power from BECOL, BSI, Mexico etc. so it the GOB is to purchase BEL it gets nothing in y estimation. As Belizean has said, we need to purchase both BEL and BECOL from Fortis if there is an option to buy. We cannot be played in this one.
    I agree that Fortis is playing a hardball game as they want increase in electricity that PUC has been holding back, PUC must stand with the Bzn people and continue to refuse the increases, things are already hard in Belize as is.

  11. belize is going nowhere says:

    look around people, we are purchasing power from Mexico, look at our football team, about to be sanctioned and banned by FIFA, look at the level of footbal by our neighbors in centtral america in this present goldcup..
    look at the buses in chetumal and the bus terminal, then look at our buses and add to that the present mess we are in. our poor people with cancer need to go to chetumal and guatemala for treatment, and there is no plan to change that. now our goods are coming through Puerto Barrios in Guatemala insted af port of Belize, because of politicking again. now for agricultural show the mexicans come in and display their goods. how can this be,, it is the NationalAgricultural Show. my point is while we quarrel and fight and smoke we weed and kill up each other our neighbors are working and building. we need to wake up and smell the coffee lest we be the Haiti of Central America..

  12. sulemy25 says:

    Que Dios nos Protejec…..Que es lo que nos esta pasando ………
    la gente de afura quire apoderias se tierra ajena , ya nos quieren dejar sin luz, nos cortan y que pas acon las cosas que se queman ………se tu puedes Ministro ay que poner cosas en marchar ….

    se que usted es una persona honesta ,aunue aveces hacemos errores pero somos human no intelligetes…

    Belizenos tenemos que rezar porque hay mas descracia para Belice… lo que mas me duele es ver los joven que van a suffrir y mas maldad.

  13. 14Rancho says:

    Pablo and Belizean are probably onto something. What exactly does purchasing BEL mean? Are you purchasing just distribution(The wires, transformers and substations that directly send power to homes and businesses)? Or does that include Generation(hydro dams and power plants stations)? And then how about transmission(the large power lines that carry power from power plants, hydro dams and mexico)? It could be that the reason BEL is broke is that you might have internal charges between Fortis/BECOL to BEL for these different services that are meant to make it look broke so they could try for force rate increases!

  14. Ricky Malthus says:

    The idea is to repurchase BEL in toto . The price must include all assets minus liabilities. It would be silly to buy only power lines or other parts. When one buys a product ,one buys a functioning product not a salvaged one. I hope the GOB has the competence to deal with this in a truly professional manner in which efficiencies, economic externalities, and maximum optimalties will be the linchpins of any agreement.

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