Government to Pump $73M Into BEL as Utility Seeks Higher COPA Charge
The Government of Belize is investing approximately $73 million in Belize Electricity Limited (BEL) through preferential shares, as the utility grapples with mounting financial obligations and limited options for raising the money it needs.
During this morning’s episode of Open Your Eyes, Chief Executive Officer in the Ministry of Public Utilities Dr Leroy Almendarez said BEL considered three ways to address its financial pressures.
The first was to raise electricity tariffs. Rates currently sit at about 42 to 43 cents per kilowatt-hour, and recovering $75 million would require an increase of at least five cents. “That is option A, it is out,” he said.
The second was borrowing from commercial banks, which was not possible. “BEL is so indebted that what a bank will do when it assess your viability, your ability to repay a loan, and the ratios does not allow them to go into the debt market.”
That left seeking funding from shareholders. Under the BEL Investment Bill, government will buy 8,138,020 preference shares at $9 each, totalling about $73 million.
Under the arrangement, BEL issued 8,138,020 preferential shares to the Government at a premium of nine dollars per share, which would bring the investment to approximately $73 million.
The move comes as BEL faces outstanding obligations to power suppliers, including Mexico’s Comisión Federal de Electricidad (CFE) and Hydro Belize. The utility is also seeking Public Utilities Commission approval to double the cap on its Cost of Power Adjustment (COPA) from 5% to 10% due to rising power generation costs.
Almendarez said the COPA request is separate from the share purchase and remains before the PUC. He explained that the existing cap allows an adjustment of up to 1.5 cents per kilowatt-hour against the reference cost of power. If approved, the proposed ten per cent cap would allow an adjustment of up to three cents per kilowatt-hour.
Almendarez said BEL is now leaning on diesel generation at about 80 cents per kilowatt-hour. He said, “At this point in time, we don’t have any load shedding, but what are we using, what is it being generated from, the source? It is diesel, and that is about 80 cents per kilowatt hour. And if you average those with the others, you will see it has increased.”
The PUC has opened BEL’s COPA application to public feedback. The preferential-share investment, meanwhile, represents the Government’s chosen route to strengthen BEL’s finances without relying on an immediate tariff increase to recover the outstanding amount.
“You have an opportunity to say why or why not, but of course you can’t say yes or no; you have to have a reason why you believe this should not be taken into consideration,” Almendarez said.