Belize Electricity Limited - your power company, is bankrupt! At least that's what the Prime Minister said today at his quarterly press conference which was held at the Biltmore.
The power company has been crying on hard times for years and even though it grossed 186 million dollars last year - and its sales are robust - the company says it can't meet its debt obligations or its power purchase payments.
The Prime Minister said he spoke with CEO Lyn Young on Monday who told him that if the company is to continue operations going forward, it will need a government bailout - further to a letter of credit which government had already guaranteed.
PM Barrow outlined the situation - and discussed government's options:
Prime Minister Dean Barrow
"What I gather is that basically, BEL is bankrupt. Now as I said, how it got there, and what happened when BEL was making huge profits, is quite another story. But I saw in the newspaper that Mr. Lynn Young basically said, "Well, we don't have any money to pay for energy from CFE, the Mexicans who supply us with the bulk of our power. We don't even have any money to pay our sister company, BECOL, from which we get the hydropower. And so basically, power will be cut off, the country will be plunged into rolling, if not a continuous black outs, and Government better solve it." Well, I'm not sure if the way - let me put it this way. Goverment will solve it. I'm not sure that there will joy on the part of BEL and its parent company, Fortis, in terms of how Government will solve the problem. But to that extent, Mr. Young is absolutely right. This government has a responsibility to its people, to the consumers, and Government will not allow a situation to occur in which this county is not guaranteed a stable supply of electricity. The Government is prepared to do whatever is necessary to assure a stable electricity supply to this country. This government, the party that is now in government, was always ideologically opposed to the privatization of essential resources. So, wherewithal apart, as a matter of philosophy and what conviction and what we think is right, we believe that the people of this country should own BEL."
And while Barrow certainly played up to an audience dominated by dozens of workers with the Southside Poverty Alleviation project - turning this press conference, unfortunately, into a sort of pep rally - the practical considerations of BEL's imbroglio are certainly daunting.
The company's hard and fast position is that under the current regulatory framework - it cannot continue to be viable - meaning basically that it wants a big raise in rates, which the PUC refuses to give. In fact the PUC says BEL actually owes consumers!
The Prime Minister discussed the differences between BEL and the PUC:
Prime Minister Dean Barrow
"Mr. Young then says, "But, the banks will be prepared to lend us if you, Mr. Government, can guarantee that the PUC will in effect, consent to an almost - my words, not his, and I am interpreting as best as I can - an almost unlimited rate increase. Now, ladies and gentlemen, if I ever did that I would need to have my head examined, or perhaps taken off by the Belizean people. First of all, we don't tell the PUC what to do. The PUC is there as an honest broker between BEL and the consumers, and as I said, there is legal regulatory framework."
And so, how far is government prepared to go to stabilize the power supply and rectify affairs at a bankrupt BEL?
Remember, government already owes compensation for one utility company - that's BTL and is fighting lawsuits all over the world to try and settle that case.
So the last thing it would seem to need is another take-over headache. But the prime minister empathically declared today the philosophically - public utilities should be in the hands of the Belizeans people:
Prime Minister Dean Barrow
"But if BEL can't get money to pay for energy, then it seems to me that BEL is on the brink of becoming non-operational. And I am saying to you, ladies and gentlemen, that the Government of Belize cannot have that happen. I will try to report again to you as quickly after that meeting on Friday, as I can. They're at the margins, so Mexico is threatening to cut us off again. Government is prepared to pre-pay another couple of months electricity bills, 4 million dollars, and that will buy us 12 days or so. And it is my promise to the Belizean people, that within that 12 days, a solution will be found."
As a flourish, The Prime Minister speculated that with BEL in its present troubles, unable to pay for power, unable to pay its debt - the company's shares may actually have a negative value.
And while all that talk floats in the electronic ether - on Friday the Prime Minister expects to get down to brass tacks when he meets with BEL CEO Lyn Young after he returns to the country on Thursday.
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