BELIZE CITY, Wed. May 1, 2024
Pending appeal, the butane/LPG landscape in Belize is poised to change, following a significant Court of Appeal decision handed down on Tuesday, April 30.
For context, in 2019, the then Barrow administration introduced a law disallowing anyone, except the new National Gas Company Limited (NGCL), from importing liquefied petroleum gas (LPG), one form of which is butane. As a result of an amendment in November 2021, the only way anyone else could import butane was if they constructed a storage facility with a capacity of a minimum 1.5 million US gallons. The NGCL, which was comprised of PUP-affiliated individuals and oligarchs who have financed the campaigns of UDP politicians, was capitalized to make that required investment. UDP ministers had described NGCL as a “good monopoly” which would replace the then oligopoly that controlled the market. In the judgment delivered on Tuesday, Belize Natural Energy Ltd. is described as NGCL’s predecessor.
At the time, in a nationalist push, the Government made the case that the change would lead to reduced prices given that, within the then existing landscape, four local businesses of Mexican and Central American origin that had been importing butane for some three decades, trucked it by land from three Central American countries and Mexico. In contrast, NGCL would import via marine shipping only directly from the U.S. Gulf Coast to its Big Creek marine terminal and then to two regional depots, one in Orange Walk and the other in Belmopan. The case made for the public-private partnership was that Belize required competitive and transparent pricing, following reports of price and scale manipulation.
As per the National Liquefied Petroleum Gas Project (NLPGP) Act passed on September 4, 2019, after 15 years, the Government of Belize will have 100% ownership of the NGCL. The Government currently has 25% ownership of NGCL, equivalent to 5,000 shares. NGCL’s largest shareholder (7,800 shares) is BWT Holdings from Minnesota. Other Belizean shareholders are Bowen and Bowen Limited (6% or 1,200 shares), G.A. Roe & Sons Limited, Bedco Limited and M & M Limited.
By virtue of the new law, the then importers were relegated to merely retailing butane. Their last import date was April 30, 2020. They therefore challenged the constitutionality of the new law. Despite the November 2021 amendment by the Government to the NLPGP Act to remove the monopoly, the companies had a partial victory in September 2022 when then Supreme Court Justice, Michelle Arana ruled that the companies’ constitutional right to property was violated by virtue of the new importation monopoly. On every other claim, i.e., equality before the law and freedom of association, she ruled in favour of the Government. She ordered damages of $10.89 million, but did not make any award of vindicatory damages. Likewise, she did not find that the claimants’ right to work was violated with the storage capacity requirement which they deemed as onerous and impossible to meet.
Both the Government and the claimants appealed the decision, and the Court of Appeal has now ruled that the former butane importers’ right to work was in fact breached. One of those importers actually reports having gone out of business since the 2019 changes. That company is Southern Choice Butane Ltd., doing business as Zeta Gas. The others are Gas Tomza Ltd., Western Gas Company Ltd., and Belize Western Energy Ltd.
In the Supreme Court trial, the Government was represented by Senior Counsel Andrew Marshalleck along with Crown Counsel Agassi Finnegan; while the claimants retained Senior Counsel Douglas Mendes, Audrey Matura and Jose Alpuche.
At the Court of Appeal level, both parties had gone for elite legal representatives. On the Government side, King’s Counsel Edward Fitzgerald out of Britain, who represented Julian Assange, was enlisted to assist Marshalleck and Angeline Welsh KC. In the case of the companies, King’s Counsel Godfrey Smith and Hector Guerra were brought on to join Mendez and his junior counsel out of Trinidad, Luke Hamel-Smith. Observers have noted that the top-notch representation betrays just how high the stakes are in this case. Counsel for the claimants, Godfrey Smith told Amandala, “It’s natural to expect that Government will appeal.”
In the Court of Appeal judgment, it was found that the Trial Judge erred in not concluding that the claimants’ right to work was violated with the “unjustifiable legislative fetter [that] was placed upon their ability to engage in their business of choice …” The Appeals Court has therefore struck down the section of the NGCL law that imposed the inordinately high storage requirement for any other entity wishing to import butane. However, as it relates to the $10.89 million in damages granted, the Court of Appeal ruled in favor of the Government and has remitted the case back to the High Court for a fresh assessment of damages, stating that the figure “was not pleaded or proved,” and so it is not proven that those were their actual losses. The Appeals Court also upheld the Trial Judge’s decision not to make a vindicatory award. As it relates to costs, the Appeals Judges ordered that each party bear its own costs, given that both were partially successful.
The Government argued in Court that they were not breaching importers’ rights, as those enterprises are free to import LPG as long as they are able to build the required storage facility. However, Smith affirmed, “it’s impossible; it’s impractical; it can’t be reached, and it effectively stymies your right to work, your right to freely choose to be an importer of LPG.” According to Smith, the companies are now free to build a storage facility that they can afford and thereafter apply for LPG import permits.
As to the potential implications for the Government, Smith pointed to the July 10, 2018, Definitive Agreement between NGCL and the Government which “may have had something in there to the effect that, because of the size of the investment the National Gas Company was making in this project, they had to be assured and maybe even guaranteed certain returns …” Whether those returns not being met could potentially lead to litigation against the government on the part of NGCL is left to be seen. Based on a feasibility study that was presented by NGCL, the net income of the company was projected to total BZ $72 million over the 15-year project life. Of that figure, $34 million was projected to be paid in dividends with $38 million remaining as retained earnings. The investment funding that was sought to capitalize the NGCL project was BZ $60 million.
Attorney General Anthony Sylvestre told Amandala that the matter is under review and the Government has 42 days following the decision to enter an appeal.