A lawsuit filed by 4 former importers of LPG in Belize has concluded with the granting of a judgment award of close to 11 million dollars to the claimants. The National Gas Company, however, will remain the primary importer of butane to Belize.
BELIZE CITY, Thurs. Sept. 29, 2022
The Government of Belize will have to once again determine whether it will appeal a multi-million-dollar judgment award handed down against it, this week following a ruling issued in the Supreme Court in response to a lawsuit filed by four former importers of butane to Belize. The presiding judge, Justice Michelle Arana, has ruled that a BZD $10,896,619.25 judgment award is to be paid to Gas Tomza Ltd., Western Gas Co. Ltd., Southern Choice Butane Ltd., and Belize Western Energy Ltd. to compensate them for losses suffered when the government passed legislation that essentially designated one official importer of butane to the country: the National Gas Company. The companies, seeking to regain their place in the local butane industry, had also requested that the legislation, the National Liquefied Petroleum Gas Project (NLPGP) Act, be struck down, along with four other constitutional claims, but were only granted relief to compensate them for their losses claimed before the 2021 amendment of the 2019 legislation.
In her judgment, Justice Arana, who will soon ascend to the Court of Appeal, reasoned that the passing of the NLPGP Act amounted to an expropriation of the property once held by those companies which had dominated the industry for a considerable number of years, since they had engaged in importation of butane for countless years (three decades) prior to the passing of the legislation by the Barrow administration in 2019.
Those companies, which are Central American enterprises, thus lost their place in the industry after being supplanted by a single entity that is partially owned by government (25%), while private shareholders own 75%. According to remarks made by attorney Audrey Matura in 2020, the private entities with partial ownership include M and M Limited of Sittee Street; GA Roe and Sons, of Coney Drive; BELCO of Mile 63 of the George Price Highway; Gilbert Canton and Bowen and Bowen Limited. But she noted that the largest number of shares was held by an American-registered company by the name of B.W.T. Holdings LLP, whose address is listed as 164 Industrial Parkway, Jackson, Minnesota, U.S.A.
That new monopoly entity, the NGC, was given a 15-year tax break. A Belize Chamber of Commerce and Industry Policy Tracker stated in 2020, “In terms of exemptions, the Bill proposes to exempt the National Gas Company (Belize) Ltd. (the ‘Developer’) from duties, taxes and imposts levied or imposed under the likes of the Income and Business Tax Act, the General Sales Tax (GST) Act, Customs and Excise Duties Act, and the Exchange Control Regulation Act.”
“The direct effect of the exercise of legislative power in this at the bar is that, in one fell swoop, customers in Belize who formerly relied on the Claimants to provide their LPG needs for the past 30 years became customers of NGC, the sole importer licensed under both Acts to date,” Justice Arana’s written judgment states.
Last October, the Government of Belize moved to adjust the NLPGP Act, thus opening the door for importation by private entities under an amendment that allows a tendering process for butane importation.
This amendment involved the removal of section 5 of the original legislation which referenced the exclusivity of the right to import that was granted to the NGC, which, in the view of the claimants, who were already in the industry, was a breach of their constitutional rights. The amendment was geared at instituting a tendering process to allow other companies to import butane, but the claims are that the standards set in the amendment are too high for the former importers to meet. Notably, under the amendment, LPG can only be imported through supervised tendering.
Today, when interviewed by reporters, attorney Audrey Matura, who was representing the former butane importers, outlined how difficult it would be for a company other than the NGC to meet those standards.
“So the law is saying now, okay, you could import. But you could import if you one of two things — the first one is you can build you own terminal that NGC has. The terminal has to be 1.5 million US gal. capacity and the terminal have to meet all the requirements that we say and we’ll give you a license. However, the reason it is unattainable is because, 1. NGC already has the leg up, 2. The market is not big enough for two terminals, 3. NGC got concession and tax exemptions, and so many investments from within the government…..and even after, if my clients go and invest in a facility, nothing in the law says that they will be given the license.” Matura said today.
In an interview today, Matura pointed out that a portion of Justice Arana’s judgement notes that had the law not been amended in October 2021 by the PUP administration, all claims made by her clients would have been successful.
“In my respectful view, if the original Act had remained unamended, the Claimants would have succeeded on all the issues raised in this claim, because the monopoly created by that original Act clearly violated all the Claimants’ constitutional rights as they have averred,” the judgement states.
During the interview, Matura noted, “What I notice has happened, it was a trend of the Barrow administration, that any time they are losing in court, they hurry change the law to win, and I was very disappointed that the Briceno administration would stoop so low to that kind of strategy as well, and so that amendment and they made that they believed cured everything could not have cured everything, because the main thing is, can these people really import?”
In November 2021, following the introduction of the amendments to the legislation, Matura had lamented, “It is at the point where we were making final legal submissions in writing and then we were to have oral submissions in December and the judge would give her decision in writing. But when we saw that this new legislation came out, of course we were shocked, because here we have a case that touches and concerns the very issue that this legislation is seeking to amend. And we were never consulted, our clients were never approached or anything. And so, we believe that it’s unfortunate that in Belize that the government is able to take the power of the legislature to try and undermine the actual process of the court.”
She had further remarked, “…. And the funny thing is that it is a propaganda that the government went on to say, ‘oh, there will no longer be any monopoly’. That is a lie. There is a monopoly now even more cemented in the new amendments that are being proposed. When I read the provision, it was as if they took our legal submission and for every point, they made an amendment. That’s how I see it. That is my personal view; It is to defeat something that’s already before the court. And I will say that with a bit of fear, because now I understand the level of power…”
At this time the National Gas Company stores all the butane it imports into the country at its marine bulk terminal at the Big Creek Port in Independence, Belize, and at two distribution depots, one in Belmopan and another in Orange Walk.
Lead attorney for the Government, Andrew Marshalleck, has told local media that only a fraction of what was being claimed by the companies was granted in the judgment. He further reasoned that while the approximately 11-million-dollar judgment may seem to be a staggering amount to the average Belizean citizen, on an industry level such an amount is just a drop in the bucket.
Marshalleck, after stating that “the compensation is the court’s estimate of the value of the goodwill that was taken and passed over to NGC when the law was passed,” pointed out the following to a 7News reporter: “… You also have to balance it against what was gained. If it were, for instance, that you were dealing with the compulsory taking of your national telecommunications company, and the challenge resulted in a 10-million-dollar award, you have to look at it in the overall context of the overall value of what was being dealt with. So, while you’re stunned by the 10-million-dollar figure – and that’s a lot of money for you and me, in terms of the industry, that might not be the case.”
A September submission outlined some new claims by the companies, but those were not upheld by the court, since they were not substantiated, according to the presiding judge. The written submission of claims made in March 2021 was, however, upheld and is as follows:
Gas Tomza and Western Gas claimed $1,963,441.28 for loss of wholesale clients. Gas Tomza also claimed $2,120,698.00 for loss of sales from retail customers, and another 1,405,123.00 for loss of sales from distribution and its concession plant. Western Gas claimed $574,105.00 for loss of sales from non-retail customers and $572,402.00 from losses at bulk and wholesale and distribution and concession plant sales. Zeta Gas recorded a total loss of $2,488,937.12. In addition to this, $1,772,074.85 was paid to Belize Western Energy as damages for loss of goodwill.
No vindicatory damages were awarded. The attorneys representing the claimants were Douglas Mendez, Senior Counsel; Audrey Matura and Jose Alpuche.
The government or claimants will have the option to appeal this judgment within the next 28 days—a possibility that Marshalleck said would be looked at closely. One of the attorneys for the former butane importers, Audrey Matura, said that they will follow the instructions handed down by the clients in regards to a possible appeal, but pointed out that the precedent set in this case should be of concern to all Belizeans.
“In terms of commerce, every business person doing business in Belize should be worried, because right now in the tourism industry the government could say, ‘okay, I don’t think everybody should just own their own hotel. I think there should be one government establishment for all hotel, and if you want to feed into our system, then we will allow you.’ You all have to see the implication,” Matura said.
“Literally you [the Belizean people] are the big losers here. You’re the big losers because, at the end of the day, one government started a monopoly and the second government continued it because nobody will be able to come and invest that 60 million that NCG said they paid for that facility,” she said.