B.E.L. government shares divested
Today government and B.E.L. released details of the long awaited completion of the electricity company’s privatization. According to its prospectus government will be selling its current fifty-one percent stake in B.E.L., which amounts to fourteen point seven million shares. At the asking price of two dollars and seventy-five per share the offering, if fully subscribed, would yield over forty million dollars for the Treasury. B.E.L. chairman Robert Usher told a press conference this morning that the company has a growing customer base and is exploring several alternatives to increase its generating capacity.
Robert Usher, Chairman, B.E.L.
“These options are being considered in an over-all long term scheme to more towards energy security and our ability in the future to participate in a regional market. A market which is being developed based on the principle of reciprocity not withstanding the fact that while we enjoy a very cheap and heavily subsidized source of electricity from Mexico, we need to look at the future.”
Two studies commissioned by B.E.L., one by a Canadian firm and the other by U.S. giant General Electric will soon be released. It is expected that they will recommend, perhaps with some qualifications, that the best alternative for Belize’s future electrical needs lies in the further development of the upper Macal River.
While the release of those studies may serve to increase debate over the proposed Chalillo Project, rather than resolve it, the dam is not the only question mark in B.E.L.’s future. As part of its electoral manifesto the P.U.P. Government promised to establish a utilities commission which will have the power to control electricity rates and protect consumers from exploitation by monopoly utility providers. When asked how the prospect of controlled rates would square with healthy returns for shareholders B.E.L. Chief Executive Officer Lynn Young advised that each constituency should not expect miracles.
Lynn Young, Chief Executive Officer, B.E.L.
“First of all we have to temp our expectations. It’s not going to be a drastic reduction in rates nor great return for shares. I think the Public Utilities Commission has a task at hand. They have to balance the interest of all the stakeholders which includes the shareholders and the public.
While you’re looking at it, you’re also looking at service, not only rates but also to try to improve the service. Their task mainly is to make sure that the utility makes a decent return and anything in excess of that goes back to the public. I think we have seen examples of other privatization processes in other countries and maybe even in Belize where the public gets really upset over excessive profits after the company gets privatized.
The role of the Public Utilities Commission is to ensure that the company makes adequate profits, takes a return for the shareholders and anything in excess of that gets returned to the public in terms of a reduction in rates.”
Young said that the lion’s share of the offering, amounting to some thirty-five percent of the company’s ownership, would be purchased by a “strategic investor” who would bring industry expertise along with the cash. Government representative Louis Lue showed News Five a short list of six companies in the running to purchase the big block of shares. Among them are major firms based in the U.K., United States, Spain, Canada and Ireland. For Belizeans wishing to purchase shares a special priority will be granted under which any citizen who wants to buy between thirty-six and one hundred and eighty shares is guaranteed the ability to do so provided the subscription form and money are received by noon on September twenty-fourth. A separate allotment of four hundred and seventy thousand shares has been set aside for B.E.L. employees. They in turn can borrow money from government at eight and a half percent interest to make their purchases. And how do B.E.L. shares rate as an investment? A general sampling of the business community indicates that while this will not be an investor bonanza like the B.T.L. privatization of a decade ago, it is a pretty decent proposition. Increased demand for electricity and lower unit costs should provide B.E.L. with steadily increasing profits. While there are no guarantees being made it is believed that dividends should be in the range of twelve percent per year. At the same time, according to Lynn Young, consumers should see a decrease in electricity rates of between thirteen and fifteen percent over the next four years. Copies of the prospectus are available from B.E.L. offices nationwide as well as the Central Bank.
