Fortis buys BECOL, paves way for Chalillo
There is big news in the energy sector, as a major hurdle has been cleared by Belize Electricity Limited in its efforts to implement the Chalillo Hydro Project. In a release dated Friday, Fortis Incorporated, majority owner of BEL, announced that it has purchased ninety-five percent of the shares in BECOL, the company that owns the Mollejon Hydro Plant. BECOL is the major supplier of power to BEL and also owns exclusive rights to develop hydropower on the Macal River. With Fortis now in charge of BECOL, BEL will be free to proceed with Chalillo, once environmental requirements have been met. BEL’s chief executive officer, Lynn Young, Told News 5 that the move by Fortis will end the logjam that has prevented his company from keeping up with the increasing demand for reasonably priced power.
Lynn Young, CEO, BEL
“I think with Fortis owning BECOL, BEL and BECOL will basically be market together as a combined operation to try and get more efficient production of hydropower. Hydro is part of our strategy; we are also looking at the bagasse option if we can get something worked up with BSI. But essentially we want to make sure that we have at least…we can meet our needs here in Belize at least ninety percent, ninety, ninety-five percent without having to rely so heavily for imports of power.”
With BEL and BECOL now firmly joined under the Fortis umbrella, the group will have far more flexibility to meet the nation’s energy needs… but the three companies are not identical. Fortis, the Canadian parent company, owns sixty-seven percent of BEL and ninety-five percent of BECOL. Young says that while the three are related, they will still retain their individual corporate identities.
Lynn Young
“From our point of view, BEL, BECOL, Fortis, it’s just one group that’s doing it. The differences between companies are mostly legal and financial. I think more than likely, it’ll be BECOL, which we’ve always said that BECOL is probably the better one to do the development, BECOL will therefore spearhead the development and we will be involved to a large extent also with engineering and technical assistance and stuff like that.”
Stewart Krohn
“What is going to be the end result to the consumer of this move?
Lynn Young
“Well, to start with, earlier we had mentioned that we’ve had a very hard year and that sale prices more than doubling on us, Mexican prices going up on us. I think this was a very strategic move for us to keep where we are, to thread waters, not having to increase rates as we’ve seen in other areas. We have a commitment to get rates down and we have to explore the Chalillo option, we have to explore the bagasse option. This definitely opens the door for us to further investigate Chalillo.”
Assuming the wildlife mitigation study, due to be completed in June, is favourable, BEL hopes to begin construction on Chalillo in January 2002 and have it completed by mid 2003. Under the new arrangement with BECOL, BEL will no longer have to pay a capacity charge for hydropower not delivered, as was the case when the company was owned by Duke Energy, one of the largest power companies in the United States. Fortis operates twenty-three small hydro plants in Canada and is considered an expert in the field. Purchase price for the ninety-five percent stake in BECOL was sixty-two million U.S. dollars. The other five percent is owned by the Belize Social Security Board. The SSB paid approximately four point seven million Belize dollars for its investment, which the market now values at around six point five. Social Security is also partners with Fortis in BEL, owning twenty-five percent of the shares.
