Belize Reporter
November 2002

BEL Bleats While Profits Soar
by Meb Cutlack

Lynn Young, CEO of Belize Electricity Limited, wrote an article claiming that BEL may need to raise electricity rates as a result of the delay in building the Chalillo dam.  (Amandala newspaper of Belize in early November 2002).  This is a response by columnist Meb Cutlack in The Reporter:

What a disgraceful confidence trick BEL and Fortis are playing on the Belizean people. While BEL bleats that it will have to raise electricity prices because of increased costs, Fortis have just proudly announced increased profits and earnings from BEL and BECOL and unashamedly revealed that Belize is proportionately their best profit maker and income earner.  A press release issued in St. Johns, Newfoundland on October 30th says it all : "Fortis Earns Record $18 million (Canadian dollars) in Third Quarter". A look into the release shows BEL revenue for the first 9 months of 2002 soaring from $53,486,000 (Canadian) to $58,417,000 and BECOL earnings up from $9,596,000 to $12,302,000. In fact BEL and BECOL between them were far and away the proportionately biggest earners of ALL the power companies owned by Fortis.

Significantly, as BEL and Mr. Young whimper on about the need for Belizean consumers to pay more, Belize's earnings per kilowatt hour remain ridiculously high. A simple comparison between Fortis's earnings and energy returned from Belize versus the earnings and energy from Martime Power or Canadian Niagara Power reveals that Belizeans are paying almost three times more than Canadians for their power per GWh.. Are Fortis asking for price rises in Canada to cover their lower earnings from their Canadian subsidiaries? The answer is almost certainly "No", Because utility pricer contros do notallow them to get away with it in Canada!


Now, to add to Belize's ever sliding eco-reputation abroad, one of the world's top travel writers, Simon Worrall, has just published a long and comprehensive analysis of Mollejon and Chalillo in the London weekend Guardian.  The lengthy article is unsparing:in its criticism of the
entitre hydro project: "A proposed dam scheme in Belize threatens to destroy one of the world's richest natural habitats. But should the project ever have got off the ground?". It is a stunning exposť of not just the damage to the wildlife and the environment which Chalillo will cause but also an accurate account of the dirty dealing done first to promote Mollejon and then Chalillo.  Mr. Worrall's credentials are unchallengeable and indeed both the Prime Minster, Said Musa, and finance supremo, Ralph Fonseca, gave him lengthy interviews.

Here is a small excerpt from the article: "The proposed Chalillo dam compounds and magnifies the problems that marked the construction of an earlier, smaller dam on the Macal River in 1991.  The Mollejon dam was the result of a deal between two powerful Belizean politicians: Ralph Fonseca, chairman of Belize Electricity Board (BEB), and WH Courtney, acting treasurer of Belize's other state power company, Belize Electric Company Limited, or BECOL.  BECOL produced power. BEB distributed it to the customer.

"In January 1991, Fonseca invited bids from international companies to construct and operate a hydroelectric facility at Mollejon. Packed with generous concessions, including exclusive water rights to the Macal River, the contract was weighted in favour of the purchaser. It was snapped up by Dominion Energy International, the North Carolina-based power giant, for $12m. At the time of the negotiations, Fonseca was a minister of state in the prime minister's office (a non-elected role), as well as chairman of the board at Belize Electricity; he, rather than the minister of finance, signed the tripartite deal with Dominion on behalf of the government, as well as in his capacity as BEB chairman. 'I ran the ministry of finance', he told me when I asked him if he had overreached himself.

As soon as the Mollejon dam's turbines began to spin in 1995, it became clear that it could never produce the amount of power for which it had been contracted. But under the contract signed by Fonseca, Dominion was guaranteed $8.5m per year, whether or not the dam lit a single light bulb. These costs were passed on to the Belizean consumer, who ended up paying far more for their power than they should have done.

Two years ago, as part of the ongoing privatisation of
public utilities being urged upon it by the International Monetary
Fund and the World Bank, the last portion of Belize's electricity
industry was auctioned off. The theory behind privatisation is
that, by breaking up state monopolies, it will increase competition
and lower prices. The effect is usually the opposite.

The man overseeing the privatisation of Belize's economy
is Ralph Fonseca, the present minister of budget management,
investment and public utilities.

I will skip over Mr. Worrall's speculation about Mr. Fonseca's financial holdings abroad, and go on to where the article gets back to the subject of Chalillo. Mr Worall writes: "Five companies, including one from Taiwan, expressed interest in investing in Belize's electricity network when it came up for privatisation. All balked at building a second, far larger dam on the Macal River, at Chalillo. It made no sense economically. The cost to the environment was too high. A Canadian company, Fortis, which owns substantial commercial real estate holdings along the Canadian Atlantic coast, rushed in where others feared to tread.  "Under its bullish CEO, Stan Marshall, Fortis was aggressively expanding its operations. It had tried unsuccessfully to acquire a monopoly over Newfoundland's electricity industry in 1994. In Belize, it saw an opportunity to achieve what it could not at home. Most importantly, Fortis had no qualms about dams.

Before a moratorium banned the building of dams of the
size envisaged on the Macal, it had built most of Newfoundland's
hydroelectric facilities. In 1999, despite its own law that
prohibited any one investor acquiring more than a 25% stake, the
Fonseca-Musa government allowed Fortis to buy controlling interests
of 65% and 95% respectively in BECOL and BEL (Belize Electricity
Limited, as the old BEB was renamed when it was partially
privatised), giving it a monopoly over both the generation and
supply of power."

Mr Worrall describes Prime Minister, Said Musa as, "a dapper, compact man of Palestinian origin who holds a law degree from Manchester University, who talks the talk as well as anyone. 'Our people suffer from poverty,' he told me, as we sat in his office in the capital, Belmopan. 'We need development in our country. And much as we want to preserve our environment for this and future generations, we have to develop.' When I pointed out that there is a moratorium in Newfoundland on the size of dam that his government is allowing Fortis to build in Belize, he grew testy. 'Canada continues to build dams,' he said. 'The European countries continue to build dams. But little Belize is not allowed to build dams? Is that what you are telling me?' "

There is an alarming footnote in Mr Worrall's article which I am sure that few Belizeans realize: "Fortis has been given something else no company could ever hope to get in the developed world: exclusive water rights. Fortis now effectively owns the Macal River. It can charge farmers or fruit growers for extracting water for irrigation. It can store and release water when it chooses. The agreement also indemnifies Fortis against any third party damages. If Julio Sosa's children happen to be swimming in the river when the sluice gates are opened and are drowned, Fortis is not liable. If there is a dam burst and an entire village is swept away, Fortis has the right to sell the dam to the Belizean government for $1, thereby absolving it of all repair or decommissioning costs."

How much more have Belizeans NOT been told?

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