nationalization - NATIONALISATION OF BELIZE ELECTRICITY...

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NATIONALISATION OF BELIZE ELECTRICITY LIMITED 28.10.2011 NATIONALISATION OF BELIZE ELECTRICITY LIMITED On 20 June 2011 the Government of Belize nationalised Belize Electricity Limited ("BEL"), the major supplier of electricity to the Belizean public. The nationalisation was achieved, not by compulsory acquisition of all shares in BEL, but rather, by the acquisition of 70% of the shares in BEL which formerly belonged to the Canadian-based Fortis Group of Companies. In this regard the nationalisation of BEL is similar to the nationalisation of Belize Telemedia Limited ("Telemedia") in August 2009 and the re- nationalisation in July 2011 where the Government compulsorily acquired only the shares of companies it believed to be affiliated with Lord Michael Ashcroft. In both nationalisations, the shares of Belizeans were left intact. While the Prime Minister has admitted that the nationalisation of Telemedia was a deliberate attempt to put control of telecommunications beyond the reach of Lord Ashcroft, he has asserted there is no dispute between the Government and Fortis. When presenting the Bill in the National Assembly, the reason the Prime Minister gave for nationalising BEL was to prevent Belize from being plunged into rolling blackouts. The start of problems for BEL In 2008, the Government introduced legislation that changed the methodology by which electricity rates are determined. Based on expert advice, BEL concluded that the implementation of the new methodology would have resulted in a rate decrease, while BEL needed a rate increase to sustain its operations. In order to prevent the implementation of the new methodology which would have dire financial consequences for BEL, proceedings were initiated by BEL in the Supreme Court challenging the validity of the new methodology, and in separate proceedings, sought and obtained an injunction restraining the implementation of the new methodology. The rate review proceedings scheduled for 2008 were therefore not conducted and BEL's rate has remained at $0.44 per kwh since 2008. BEL's financial woes BEL does not generate its own electricity. It purchases electricity from several sources including Belize Electric Company Ltd. ("BECOL"), Belize Co-Generation Energy Limited ("BELCOGEN"), Hydro-Maya and Comision Federal de Electricidad ("CFE") of Mexico for distribution to the Belizean public. The cost of electricity from CFE is considerably higher than the cost of electricity from BECOL. However, BECOL is a
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nationalization - NATIONALISATION OF BELIZE ELECTRICITY...

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