Today the House of Representatives met in Belmopan for the presentation of the Electricity Acquisition (Settlement) Act 2015. The act seeks to facilitate the implementation of the terms of a deed of settlement and compromise between the Government and the Fortis Companies arising from the acquisition by the Government of shares in Belize Electricity Limited held by the Fortis Companies. The announcement of this settlement was made on Monday and as part of the settlement Government had to take the matter before the House of Representatives no later than September 7 in order to lawfully obtain approval to enter into the deed and to make payment to Fortis Cayman Incorporation. Government is paying Fortis a total of thirty five million US dollars and is giving back Fortis 33.3% shares of Belize Electricity Limited. It is a settlement that Prime Minister Dean Barrow is proud of saying that the Government of Belize saved a lot of money. However, several critics have taken out their calculator in an attempt to dispute the Prime Minister’s figures. So today, at the start of his speech, Barrow, broke down the figures.
Prime Minister Dean Barrow
“To achieve such an objective I don’t know how anyone could stop to count the cost in dollars and cents but for those who do, let me correct the blatant miscalculations, the wrong sums, the mathematical stupidity that I have heard coming from some. The government of Belize is now paying $70 million Belize Dollars for 37% of BEL that is what it comes down to. We acquired 70% we are giving back 33% and we are remaining with 37% that together with the SSB shareholding means that the public holding of BEL is something like 61% of the shareholding; but in terms of the particular 37% which the government now gets to keep, we are paying Fortis $70 million. That is the totality of the cash settlement of their claim for compensation, that is it. That’s all , there are no side deals, there are no hidden costs, that’s not the modus operandi of this government and every single provision of the settlement deed and relevance documents are set out as an attachment to the bill we are now debating for not just members, for the entire world to see; but let me return to the mathematics of this settlement. $70 million for 37% , in return for this $70 million government actually gets a value of $131 million dollars because that is what 37% of BEL shareholding was worth according to the audited financials at the close of the 2014 financial year. What’s there not to like and what’s there not to get in terms of those critics? So in effect if we are paying $70 million now for shares that are worth $131 million dollars, this represents a $61 million dollar clear net gain for the people of this country.”
However, Leader of the Opposition, People’s United Party, Francis Fonseca, says that while the Government has told the public that the payment will be 70 million dollars, the totally compensation value is more than 100 million dollars.
Francis Fonseca – Opposition Leader
““Mr. Speaker, it is public information, I’ve read it in the IMF reports that the government of Belize offered Fortis payment of Belize $75 million dollars for the full 70% of the shares that had been acquired. That was some 48,473,737 shares. That was the official offer from the government of Belize, $75 million Belize dollars for 70% of the shares. This Mr. Speaker was based on the advice of their expert Nera Economic Consulting of London who placed a value of Belize $1.54 cents per share that was the government’s expert placing a value on these shares and that was the offer made to Fortis. Now Mr. Speaker the government of Belize has agreed to pay Belize $70 million dollars for slightly more than half that amount, 36.9% or 25,489,075 shares. This is a price of $2.74 cents per share so this is a premium of Belize $1.20 on the valuation given by the government’s very own expert Nira. True Fortis claimed much more but clearly that was to be expected by the property owners, they will always high ball you. The issue of concern to the Belizean people is that this UDP administration paid far more per share than they were advised to pay by Nira their own consultants. Thirdly Mr. Speaker the government has also as you know returned 33.3% of the shares of the company to Fortis the clearest evidence that they were rash when they took the full 70% of BEL that Fortis owned in 2011. The 8th amendment states that government and SSB together must own 51% why then has government kept so much of the shares for so long. During all that time they have incurred millions of dollars in legal fees knowing fully well that they would have to return nearly half the shares they took and what is the value of those shares Mr. Speaker? A governments’ valuation of $2.74 per share they have returned a value of $63 million to Fortis added to the $70 million cash payment which is to be paid forthwith, this brings the compensation value to $133 million dollars.”
Former Prime Minister and the Area Representative for Fort George, Said Musa, criticized Barrow’s previous stance on Fortis when the Canadian company held majority shared prior to the 2011 Government acquisition.
Said Musa – Fort George Area Representative
““BEL the big bad boy, BEL the big bad wolf that was causing rolling blackouts and all that now to quote Don Emilio Awe “She pretty now, Fortis is pretty now, yes?” So much so that the Prime Minister wants Fortis as a partner to own BEL and that is why he is returning as part of this settlement 33% of this company to Fortis International. He was ever so anxious to get rid of Fortis so much so that he didn’t just take 51% that the government needed along with Social Security but took the whole hog and now the day of reckoning has come because the Caribbean Court of Justice was about to make a ruling very shortly and so we are being rushed now with indecent haste to make this settlement with Fortis and BEL. You see if the UDP government was genuinely interested of gaining control of BEL for the Belizean people then why is it that they took over all 70%, all issued shares of the company? Why is it that they are paying now $70 million dollars when according to other people’s math and the Prime Minister was clearly admitting that he wasn’t that hot in math. I was very good at math in St. Michael’s college in fact there was only one person that got higher marks than me in my class and that was Winston Smilling. So Mr. Speaker instead he wanted the whole hog and he’s now paying $70 million and returning 33% to Fortis. Now he can play around with figures all day but as the leader of the opposition rightly pointed out the government is settling at a premium, they are paying a premium to have this settlement.”
Barrow says that whichever way anyone takes it, they should acknowledge that this is a good deal for the Government of Belize and by extension the people of Belize.
Prime Minister Dean Barrow
““Any way one chooses to look at the terms of this settlement the value accruing to the Belizean people they’re from are without precedent. Let me just repeat before I sit down and have the debate start, the net benefits to the people we get 37% of BEL maintaining the majority public ownership, we get the additional value over and above the cash paid out of $75 million dollars in cash and shares, we get Fortis back into the company as a vital strategic but minority investor, we get the immediate discontinuance of all legal claims including those before the CCJ, we have provided for and ensured that the independence and impartiality of the PUC will continue to be protected and we take on no additional debt to settle Fortis’ claim. We pay no damages, we pay no interest and we pay no cost.”