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It's been a subject of enduring controversy and debate, but the Chalillo Dam in the Cayo District is now a reality.
Construction was completed in early September and the commissioning ceremony was held today at the facility in the Mountain Pine Ridge area. The dam will store water for the Mollejon Hydroelectric Plant, effectively doubling that plant's capacity and greatly reducing Belize's reliance on costly fuel based energy. But that silver lining borders a terrible cloud, and that cloud is the reality that even Chalillo isn't enough to protect you from higher light bills. The grim reality of that rained down on an otherwise upbeat ceremony this morning. 7NEWS was front row and tonight we examine all the Chalillo issues.
Jules Vasquez Reporting,
It is the greatest engineering feat in modern Belize. At its highest point it is 150 feet tall and its span is 420 feet. It took 200,000 cubic yards of concrete and holds 120 million cubic metres of water. This lake that you see here now was created by the dam wall. The Macal River, about 60 feet across, used to run through here, now its been replaced by this massive area flooded so that the energy from the water can be harnessed at converted at this power house, by two large turbine motors controlled by this very modern computer system, we're told it's the most modern in Central America. After the system managers and engineers here make their required energy output, the water is then sent downriver about 12 miles to the Mollejon Plant where the volume from Chalillo increases that plant's output from 80 gigawatts hours to 160 gigawatts hours.
This Chalillo facility was constructed at a cost of over US$100 million. The dam is owned by BECOL which, like BEL, is owned by Fortis. President of Fortis Stan Marshall cut the ribbon this morning along with the Investment Minister who pushed it through, Ralph Fonseca. Marshall says it provides Belize with energy security.
Stan Marshall, President - Fortis
"It is undoubtedly a monumental achievement. The official commissioning of the Chalillo project represents a quantum leap on the road to energy self-reliance. With the Chalillo reservoir already over 50% full, the country could sustain itself for an extended period if the connection to Mexico were disrupted."
And it is an achievement gained despite attempts by what Minister Fonseca called irrational critics to undermine and subvert the project.
Hon. Ralph Fonseca, Minister of Public Utilities
"Today punctuates the defeat of those who cannot relate to the concept of sustainable development, where people must be allowed to wisely tap into the vast potential of their country's natural resources to advance their own human fulfillment and a better life. Hopefully today they realize that they are sticking a finger in the eyes of all Belizeans when they oppose bold initiatives to advance our developing economy."
And today all the major players agreed that Chalillo came on stream two years too late to provide Belize relief from energy shocks related to rising world fuel prices.
Stan Marshall,
"We regret not having reached this milestone earlier. The burden of today's high oil prices weighs heavy on us."
Hon. Ralph Fonseca,
"This project is two years late, that is why I said it is almost too late but better late than never."
So while this towering edifice makes it clear that is indeed a monumental achievement, it comes too late to save Belize from higher energy prices, and today's opening was tinged with regret.
Lyn Young, BEL - CEO
"My regret is that this didn't happen two years ago because as I stand here now, we are talking about asking the government for another rate increase. I know its not good news but that's the truth."
You heard it right, even with the $4 millions in savings that this dam provides, BEL will be going back to the PUC asking for an increase. How much this time?
Jules Vasquez,
If you get what you want in December, how much will that be affixed to the average light payer?
Lyn Young,
"I think its going to be at least 10% and what I hope is that in two or three years we'll see things start to come down back again. But I think in the short term, we are looking at high energy prices. And its not only Belize of course, its all over the world. We are looking at high energy prices for at least another two to three years."
Higher energy prices, and additionally those energy costs will for the first time attract a consumption tax, as government gets ready to apply the 10% GST to some light bills.
Jules Vasquez,
Lyn Young announced here that they are applying, I am told in December for light rates to go up again, and in fact you all are going to affix a GST of 10%, for the first time a consumption tax will be added on to light bills. We are looking then at soaring electricity rates and this profoundly affects the investment climate and quality of life for so many Belizeans."
Hon. Ralph Fonseca,
"For a very short period of time, if it does. Again Jules you are looking at the dark side of things. What Mr. Young made reference to today has to do with if the fuel prices continue the way they are, if we cannot negotiate something else with CFE."
But actually what Young said is not that they need the money to pay forward, they need it to pay back.
Lyn Young,
"What we are applying for right now is the build-up that has built because remember we kept holding back from increasing rates and what the PUC had done was setting up a deferred account. So the unfortunate situation is that we have like $26 million in this deferred account, which is unsustainable."
And while BEL now goes back to the PUC looking to get that money back in higher rates, it puts into context the reality that even with this hulking edifice and all the energy security it provides, there's only so much it can insulate Belize from rising fuel prices.
Stan Marshall,
"So right now we're at the mercy of oil prices as we were years ago. Now with this facility on stream, our exposure is less. Unfortunately I can't shield Belize from oil prices, I'm not in the oil business."
But he is in the power business, and critics say Marshall's Fortis has a sweet arrangement where he has negotiated to get the right to use Belize's river to produce energy which we pay him back for in U.S. dollars. That's paying Newfoundland to produce energy form Belize's river.
Jules Vasquez,
While it is our river and our natural resource, we continue to buy energy in U.S. dollars from Newfoundland, because of the arrangement that your government made in February of 2001 to sign over rights of the river to Fortis for 50 years.
Hon. Ralph Fonseca,
"Well as usual Jules, while the entire Belizean population is celebrating, you're trying to look at the dark side and looking at the glass half-empty. There was no way of possibly attracting a couple hundred million dollars in investment in the Macal River. As I mentioned today, in a river that is raging one and its dry the next day, hundreds of millions of dollars have been invested in Mollejon and now in Chalillo, there is no other way that it could have been done."
Jules Vasquez,
Sir but it could it not be argued that your government had no problem in raising money. You all grew the economy significantly, increased the debt four-fold in five years in office. Could it not be argued that you could have raised a couple hundred million to build this and Belizeans would own this and we won't be buying energy from Newfoundland?
Hon. Ralph Fonseca,
"We also increased the economy four-fold, the size of the economy; I am sure you'll agree with me with that. Let's try not try to confuse the Belizean people, the project had to be purchased from somewhere. If the government of Belize had did it, we would have had to borrow the hundreds of millions of dollars and we would have had to be repaying the hundreds of millions of dollars."
Of course at the end of that loan we would own it, but the man who does and will own it and the rights to the river for 50 years is Stan Marshall and he says he's got to recover his investment.
Stan Marshall,
"We need to get returns because we've invested a great deal of money here and like anybody that's invested money, we have to get a return on that. But the price of electricity is fixed. This plant will be here for a hundred years. I guarantee you that five years from now people will be marveling at how cheap power is from this plant. Fifty years from now they'll say the people who built this dam didn't get much benefit from it, its all the people of Belize. So what we'll get is just a return of the money we've invested, the rate of return, that's all."
Jules Vasquez,
What is that? 15% or is that a reasonable rate of return?
Stan Marshall,
"Yeah it depends on how much power it produces but it will be around that magnitude; around 15%. So all we're getting is return from the money we invested in the project. The economic benefit, which will go on for a long long period of time goes to the people of Belize."
Jules Vasquez,
But it also accrues to Fortis.
Stan Marshall,
"To the degree we've invested money, we get a return on the money absolutely. Nobody's going to invest money without getting a return."
Lyn Young,
"You need U.S. dollars to do development so either we borrow the money from a foreign bank or we get a foreign investor or a combination, which is really what we've done, a combination. Because we can't buy cement with Belize dollars outside of Belize, we can't buy steel, we can't buy gas turbines, we can't pay the contractors---everybody wants U.S. dollars so at the end of the day where are we going to get all that U.S. dollars."
Jules Vasquez,
But Belize can access foreign capital.
Lyn Young,
"Well Fortis has a very good rating and so that is one of the very big advantages. We've not a project like this in Belize. Jules perhaps ten years ago I would have been (a) excited young engineer and said yes we can do it. Having gone through it I can tell you that we wouldn't have succeeded in this if we didn't have the experience of Fortis behind us. And we couldn't have succeeded in it if we didn't have the money of Fortis behind us because we haven't borrowed a penny to do this project. Fortis did this project out of its cash flows."
And according to Marshall, the money they will make back from this investment even with a 15% rate of return is just a drop in the water for Fortis.
Stan Marshall,
"In economic terms, it's of course a very small part of our company but my personal perspective is very important to me. I have a very personal attachment to Belize, I have my own home here in Placencia, I spend as much time as I can here, and I am very much enamored with the people and the country."
And as much as he has affection for Belize, Marshall and Young admit that the grueling trials associated with Chalillo have left them battle scarred.
Jules Vasquez,
If somebody told you right now, knowing what you know about the resistance, would you do this again?
Lyn Young,
"That's a good one Jules, I've thought about that a lot of times---yeah. Maybe halfway through it if you had asked me that question, I would have said I wouldn't have done it but now that its finished and we are reaping the results of it, yeah its worth it."
Stan Marshall,
"At the beginning I had to think really serious about doing it because its taken a lot of effort, a lot of my time, but I'm glad I'm here because it's the right thing to do."
The right thing for Fortis surely, and the right thing for local non petroleum based energy security - but only time will truly tell if this foreign dam on this local river is the right solution for Belize's energy future.
With Chalillo online, presently Belize gets one third of its power from hydroelectric sources.
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