Belize considers nationalising private struggling utility to avert shutdown

The Canadian parent company of the Belize Electricity Limited (BEL) said it has received no purchase proposal from the Dean Barrow government, amid signals from the administration that it is considering a takeover of the utility.

Prime Minister Barrow said last week that his administration favours nationalisation of the cash-strapped BEL in which the Canadian-based Fortis, holds a 70 per cent interest.

BEL has warned of the pending blackouts citing financial problems and its inability to meet its obligations to its creditors, including its primary supplier of power, Comisión Federal de Electricidad of Mexico.

But in a statement, Fortis said a June 2008 electricity-rate order by the Public Utilities Commission (PUC) had "a significant negative impact on the financial condition and operations of BEL".

It said that the order "effectively disallowed the recovery of previously incurred fuel and purchased power costs in customer rates and set customer rates at a level that does not allow BEL to earn a fair and reasonable return."

Fortis then took its case to the Supreme Court, but it was dismissed in March 2011.

In the statement, it said the court found "the generally accepted concept of good utility practice is not applicable in Belize."

The matter is now before the Court of Appeal.

US$2.05 million budget

Barrow said his administration will be making BDZ$4 million (US$2.05 million) available to BEL to help avert a planned blackout in the country.

"We would expect to give them the money by Wednesday," he said, adding that the countdown "starts from about next Wednesday and we would have to be able to reach an agreement on a voluntary buyback within".

He said if BEL "comes back for more money and we have not been able to reach an agreement, then government will have to act," Barrow said on local television in Belmopan.

"If you borrow to float a company or to try to recapitalise or to give working funds to a company that the government and people own, that's one thing," he said, "but I can't see borrowing to give BEL when there is no assurance at all it will stop anytime soon. There is no assurance that BEL will come out of the crisis."

BEL chief executive officer, Lynn Young, said the company remains an attractive business and that it has won two awards from the Caribbean Association of Electric Utilities (CARLIEC) for lower rates and for improved reliability, improved service.

"I know that BEL has moved from being one of the poorest performers in the region to one of the best. And to be recognised by your peers is extremely gratifying to me and I think the employees of BEL, despite all the noise out there, should hold their heads high," said Young.

"In spite of the fact that all the political noise is blurring the vision of the Belizean public, I think they need to see that this is a good company and the employees there are Belizean and they have done a marvellous job and I want to publicly acknowledge them for what they've been doing."

BEL, which is the primary distributor of electricity, has a customer base of about 77,000.

- CMC