The Hon. Prime Minster met with Mr. Lynn Young, President and Chief Executive Officer of the Belize Electricity Limited (BEL) to discuss the current financial postition of BEL, on Friday, June 20, 2011. ALso present at the meeting were the Legal Counsel in the Ministry of Finance and the Financial Secretary.
The Prime Minister asked Mr. Young to convey to Fortis Inc., the majority shareholder in BEL, the Government’s interest in purchasing majority shares in BEL so as to assume control of the company. Mr. Young undertook to immediately relay this message to Fortis Inc. and to convey their response as soon as possible.
In the meantime and in order to ensure an uninterrupted supply of power from CFE and other producers of BEL, and also to provide time for possible negotiations with Fortis, the Government has agreed to pre-pay a further sum of $4Mil Bze toward its future utility bills with BEL.
FORTIS INC. Responded with the following press release:
– Press Release, Fortis Inc., June 13, 2011 – The Government of Belize (the “Government”) issued a media release on Friday, June 10, 2011, announcing the Government’s interest, “…in purchasing majority shares in BEL so as to assume control of the company.” No purchase proposal has been received by Fortis Inc. (“Fortis” or the “Corporation”) (TSX:FTS).
Fortis holds an approximate 70% ownership interest in BEL, an integrated electric utility and the principal distributor in Belize, Central America, following investment at the invitation of the Government in 1999. In addition to its investment in BEL, Fortis owns Belize Electric Company Limited (“BECOL”), a non-regulated hydroelectric generation business that operates three hydroelectric generating facilities in Belize.
In June 2008 the Public Utilities Commission of Belize (“PUC”) issued a rate order that has had a significant negative impact on the financial condition and operations of BEL. 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. BEL appealed the PUC rate order to the Supreme Court of Belize.
On March 15, 2011, the court rendered its judgment dismissing BEL’s application and finding that, among other things, the generally accepted concept of Good Utility Practice is not applicable in Belize. BEL has appealed this judgment to the Court of Appeal of Belize; however, a hearing is not expected until the first quarter of 2012.
On May 16, 2011, the Supreme Court of Belize granted BEL’s application to enjoin the PUC from engaging in any rate making proceedings or taking any enforcement or penal actions against BEL pending the appeal of its judgment. BEL has been in default of covenants under its long-term lending agreements since 2008 and has had no access to credit during this period.
As of March 31, 2011, the assets of BEL represented less than 2% of the total assets of Fortis; the combined assets of BEL and BECOL represented approximately 3% of the total assets of Fortis.
Fortis is the largest investor-owned distribution utility in Canada, with total assets of approximately $13 billion and fiscal 2010 revenue totaling approximately $3.7 billion; the Corporation serves approximately 2,100,000 gas and electricity customers. Its regulated holdings include electric distribution utilities in five Canadian provinces and three Caribbean countries and a natural gas utility in British Columbia, Canada. Fortis owns and operates non-regulated generation assets across Canada and in Belize and Upper New York State. It also owns hotels and commercial office and retail space primarily in Atlantic Canada. Fortis shares are listed on the Toronto Stock Exchange and trade under the symbol FTS. Additional information can be accessed at www.fortisinc.com or www.sedar.com.
