BELMOPAN, Wed. Sept. 2, 2015–Today at a meeting of the House of Representatives, a bill “for an Act to facilitate the implementation of the terms of a deed of settlement between the Government of Belize and the Fortis Company” was taken through all its stages and was passed with majority support from the ruling United Democratic Party.
The deal, which will reportedly be finalized on Tuesday, September 8, 2015, will see the government pay to Fortis a cash settlement of US$35 million or BZ$70 million, plus return 33.3% of BEL’s shares to Fortis, out of the 70.2% the government had acquired in nationalizing the company four years ago. The government had taken 48,454,152 ordinary shares from Fortis, and it is now returning 22,984,662 shares to them.
In defending the bill, Prime Minister Dean Barrow said, “What is happening today closes the circle and represents the final vindication of the government’s policy and philosophy with respect to Belizean ownership … of the essential utility companies in this country.”
He went on to say that the nationalization of BEL was necessary since they believe that all the important utilities should be owned by the government and people of Belize.
The Prime Minister recalled that at the time government acquired the company, “BEL… had reached an impasse with the Public Utilities Commission, the body set up under law in this country to regulate utility companies and to hold the balance even between the companies and the consuming public.”
Barrow recalled that BEL appeared to be having liquidity problems, and the national interest demanded that they act to safeguard the wellbeing of the economy and the citizenry.
Barrow pointed out that with the passage of the Act today (1) Fortis will withdraw its challenge to the nationalization which it had filed at the Caribbean Court of Justice; (2) Fortis will be back in the company as a vital strategic but minority investor, and (3) BEL (of which 37% will be owned by GOB, 26.92% by the Social Security Board (SSB), and 2.88% by Belizean shareholders) will still be Belizean-owned—with 66.7% of the company being owned by these Belizean interests.
He added: “…we take on no additional debt to settle Fortis’ claim, we pay no damages, we pay no interest and we pay no tax.”
The Prime Minister stressed that they are paying $70 million for 37% of the BEL shareholding that is actually worth $131 million dollars, based on the company’s 2014 audit. Barrow claimed that this constitutes a net gain of $61 million dollars for the people of Belize or a discount of 60%.
“Since the nationalization in 2011, Government has collected $14 million in dividends minus the $70 million purchase price and what it means is that the settlement is now conferring on the people of Belize a gain that with respect to its value in cash and shares, amounts to $75 million,” said the PM, who added, “that is what we are walking away from the table with.”
The Prime Minister then looked at it from another angle. He said, “When the Fortis claim was $310 million plus, of course, interest for the four years since the acquisition plus costs, that could total as much as $400 million…The 33.3% that Fortis is getting back is valued at $117.9 million and we are giving them $70 million, a total of $188 million for the entirety of the shareholding…. That means that the government would have saved the people of Belize anywhere from $120 million to $200 million.”
While the Opposition People’s United Party welcomed the fact that a settlement has been reached, it took issue with the terms of the settlement, which it says comes at a high cost to Belizeans.
Opposition leader Francis Fonseca, PUP member for Freetown, pointed to a range of tax and duty exemptions which had been carved out for Fortis as part of the settlement.
Barrow’s defense was: “This is before the courts! This is by way of compensation; compensation does not attract taxes, fools.”
Fort George area representative for the PUP, Said Musa, said the Government of Belize is paying for the shares at a premium rate.
Fonseca pointed to a recommendation made to the government by NERA Consulting in a December 2011 report, estimating the fair market value for the BEL shares at BZ$1.54, significantly below the share price the Government is paying in the settlement agreement.
“The NERA valuation was on the low side; that was the starting point…” said Barrow. “The NERA valuation was the valuation that applied at the time we nationalized, when the company was illiquid under Fortis’ stewardship. In the 4 years since then, the company has made these phenomenal advances recording now the greatest annual profit ever in history. Of course, now the shares have to be more valuable than what they were worth at the time of the NERA valuation.”
Belize Rural Central area representative, Opposition member Dolores Balderamos-Garcia, said: “Really, what does it mean for children, poor mothers and fathers, the settlement that was made? We must ask ourselves at what cost? We are looking at a situation where profits are placed above the people.”
The Senate meets tomorrow, Friday, at 10:00 a.m. The bill to facilitate the BEL settlement is one of the main agenda items.