Press release – Friday, May 13, 2011 – On May 12, 2011, Belize Electricity Limited (BEL) held its Annual General Meeting (AGM) of Shareholders for the year ended December 31, 2010, at the Best Western Belize Biltmore Plaza.
In 2010, the Company’s profits decreased to $3.4 million from $8.9 million in 2009. Had the increase in business tax on BEL (which is fully paid to the Government) not been deferred, the Company would have recorded a loss of $2.4 million. The reduction in profits continues to reflect the decrease in the Value Added of Delivery component of the electricity tariffs by the Public Utilities Commission (PUC) in its 2008 Final Decision.
As a result of the low profit levels, BEL remains in breach of loan covenants. The Company is consequently unable to borrow and is restricted from paying dividends. During the meeting, Shareholders expressed concern about the Company not paying dividends since 2008. In responding to these concerns, BEL’s President and Chief Executive Officer Lynn Young explained that the Company’s profits are determined by the PUC and therefore the current situation is beyond the control of BEL.
“Indeed for the last three years it seems like the PUC has misconstrued its responsibility to balance the interest of the consumer and the Company while ensuring that Belize has a reliable and viable electric service,” said Young.
“Rather than secure that we are able to finance our activities for customers and shareholders, the PUC instead seems obsessed with destroying what we have built over the last thirty years.”
Nonetheless, Young assured Shareholders that BEL will continue all efforts to resolve the situation. In the meantime, the Company’s main source of financing continues to be revenues generated from the sale of electricity. Young explained that while profits are low, the capital intensive nature of the electricity industry continues to require BEL to invest in its operations, in order to maintain a reliable supply of power to customers.
The Company invested approximately $44.3 million of revenues in service improvement initiatives in 2010. In fact, the benefits of BEL’s initiatives were on prominent display during Hurricane Richard in 2010.
Several shareholders congratulated the Company for the quick restoration of power following the storm. Young confirmed that the investments made to strengthen the power systems, yielded these positive results and also an overall reduction in the frequency of power outages by 24 per cent in 2010.
While service performance has improved, Young stated that the Company is currently struggling to pay cost of power from Independent Power Producers that supply over 99% of the total electricity needs of the country of Belize so far in 2011. This situation follows a significant increase in oil prices since January 2011. With oil prices hovering over US$100 per barrel cost of electricity from Mexico has increased by 51 per cent since January 2011.