Prime Minister says Government has secured excellent terms in Fortis settlement

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Updated: August 31, 2015

Today Prime Minister Dean Barrow announced that the Government of Belize has arrived at a settlement with Fortis Corporation over Belize Electricity Limited. In June 2011 the Government of Belize announced a decision to acquire the majority shares in BEL then held by Fortis of Canada as part of its policy that would ensure that the major utility companies in Belize – BEL, BTL and BWSL – would be majority owned by Government on behalf of the Belizean people. Since then Fortis has been legally resisting the takeover with its claim reaching the Caribbean Court of Justice for a decision. . After the June 2011 acquisition, Government also initiated a move to amend the Constitution so that future governments would be unable to privatize or sell majority shareholding in these companies. Fortis held about 70% of BEL shares and claims over three hundred and ten million Belize dollars million as compensation for these shares. But today, Prime Minister Dean Barrow announced that the settlement is even near that ball park but considerably less. The Government of Belize will pay Fortis Corporation thirty five million US dollars that would come from Governments consolidated fund.

Prime Minister Dean Barrow

“As compensation totality for GOB’s original acquisition of all of Fortis’ 70% shareholding in BEL GOB will now pay to Fortis $35 million USD in cash and GOB gives back to Fortis a 33⅓ share holding interest in BEL. Government keeps the rest of the 70% it acquired and together with SSB which has something around 26.9% we will continue to own well in excess of the 51% mandated in the constitution and required for majority ownership and control. We expect the new arrangement to serve BEL and Belize well. Fortis’ well established multinational role in energy generation and distribution plus its familiarity with our local circumstances should see it contribute greatly to BEL’s further advance and development. Their expertise and resource will also help Belize in its quest for energy security and sustainability in particularly Fortis’ interest in renewables especially solar can no doubt ultimately be done to our national benefit.”

Barry Perry – Fortis representative

Since our initial involvement in Belize in 1999 Fortis has grown dramatically. Our assets are now totaling more than $28 billion dollars Canadian and we serve more than 3 million customers across North American and the Caribbean. Most recently we purchased Tucson Electric Power which supplies electricity to the city of Tucson Arizona so we believe that the expansive operational experience and technical resources that Fortis has will prove very valuable to the country of Belize. In conclusion I’ll share a short story with you all. At one point in our negotiations the Prime Minister referred to me as the Shiloh, I have to admit that I did not know the meaning of the world. I did look it up. It’s a biblical term and it means one who brings peace, Prime Minister I hope that what we’ve done today will be the start of a long and peaceful relationship between Fortis and the government of Belize.

But before the Government makes the payment, Prime Minister Dean Barrow has to follow procedures. First he will introduce a bill at a Special House Meeting on Wednesday in Belmopan where it will go through all its readings. It will then go to the Senate on Friday and by Monday it is expected it will be signed by the Governor General and payment would be made by Tuesday. But if the settlement and partnership turns bitter in the future, Prime Minister Dean Barrow that they were also able to agree on an opt-out.

Prime Minister Dean Barrow

“After four years or earlier on the happening of certain specified events Fortis can serve notice that it wishes to sell back to GOB it’s 33⅓ shareholding. GOB then immediately reacquires will have to years to pay for that reacquisition on the basis of the value of the shares at the time of the buy back. To complete the circle GOB has undertaken that Fortis would be completely free to continue without let or hindrance to lawfully operate BECOL its other interest in Belize. Truly then this is a turning of the page, a revitalized partnership with Fortis on the accepted basis of majority Belizean ownership of our essential electricity utility company.

As for the dynamics of who will now run BEL, Prime Minister Barrow shared that Fortis will have three directors on the board will GOB and SSB together will have nine directors. The Chairman of the Board will continue to be Senior Counsel Rodwell Williams. Fortis representatives will include the CEO of BECOL, Lynn Young, the former President of the Belize Chamber of Commerce and Industry, Kay Menzies and one of Fortis’s President Earl Ludlow.

Prime Minister Dean Barrow

“The chamber and GOB have had their difference but when it comes to Ms. Menzies not as chamber president or ex chamber President Ms. Menzies the individual, the personality she is phenomenally bright, absolutely quick and very much pro Belize. I therefore was happy to say to Mr. Perry that I think Ms. Menzies’ membership on the board will see her offering a stellar contribution. In terms of Lynn Young, Lynn Young never had a difficulty with the company neither difficulty with GOB because GOB acquired a the time he is as far as I know a consummate professional and I certainly don’t anticipate or understand why there should be any problems in terms of Lynn’s new role but perhaps you’d want to ask him.

Reporter

Mr. Young how do you feel back on the board if not at the helm of BEL and do you foresee it being an adversarial tenure.

Lyn Young

“Well first of all you have to separate the ownership of a company from the management and what the management is trying to do. I don’t know if it was you but when I left BEL I was asked what was going to happen at BEL and my response was that I expect BEL to continue to do well because there are good people in BEL. I spent roughly thirty years at BEL and myself and all the older folks who worked to build that company none of us want to see that company go down, you would never want to see that so as long as I’m able to assist BEL I will.

In the past, when Fortis held majority shares in BEL, the relationship with the Public Utilities Commission was very sensitive. Back then, Fortis believed that the PUC was in its way. Barrow says that Perry has come to acknowledge PUC’s regulatory role.

Prime Minister Dean Barrow

“This is a completely different situation. Then Fortis was the majority owner of the company. There is nothing in the agreement, which will be fully disclosed which will be attached as a schedule to the bill we are taking to parliament, there is nothing in the agreement that requires us in any way to even attempt to fetter the PUC. Mr. Perry understood quite clearly from the start that our PUC is independent and operates under and according to a particular law in this country. Mr. Perry and the people at Fortis are of course brilliant business persons and they would no doubt have done their homework in terms of BEL and would have recognized profits have served from $3.1 million at year end 2011 to $36.2 million that highest ever at year end 2014 this is even as the PUC mandated a fall in electricity from 44.1 cents per kilowatt hour in 2011 to $0.35 cents in 2015 a 20% drop. The point I’m making is that even with the PUC’s regulatory role this company has made tremendous progress under the stewardship of the current board and the current CEO. We don’t, Mr. Perry can speak for himself, but we don’t expect that Fortis’ membership on the board and its 33⅓ shareholding will in any way interfere with or retard this magnificent trajectory that we’ve seen from BEL.

Fortis also owns and operates BECOL, which generates and sells hydroelectricity to BEL.