Belmopan, Tues. Oct. 26, 2021 — Since 2020 the National Gas Company Belize Ltd. (NGCL) has enjoyed a monopoly in the importation and sale of Liquid Petroleum Gas (LPG) after the passing, under the previous Barrow administration, of the National Liquified Petroleum Gas Project Law which named them as the country’s sole importers of LPG. The law triggered legal resistance from LPG providers such as the Western Gas Company, Gas Tomza, Southern Choice Butane and Belize Western Energy, who contracted attorney Audrey Matura to represent them as they challenged the law in the Supreme Court.

The Barrow administration had claimed, when it passed the law that established the National Gas Company as the country’s primary LPG provider, that the move would safeguard the Belizean public from gas shortages and irregular pricing due to external market shocks and potential contention between importers and the GOB. The four competitors argued, however, that the law jeopardized their livelihoods and right to participate in the LPG industry and was therefore unconstitutional. The complainants also argued that the law was designed to enrich stakeholders of the National Gas Company using the Belizean taxpayer’s dime. Notably, the country has experienced numerous gas price fluctuations between 2020 and 2021, which seem to bolster the argument of these sidelined LPG sellers.

At last week’s meeting of the House of Representatives, however, the current PUP administration introduced a bill to amend the existing laws in order to lower the legal risks of GOB in connection with the LPG lawsuit they’ve inherited from the UDP. Once passed, the law will allow for a tendering process in butane importation and distribution and will introduce a new methodology for LPG pricing. Minister Francis Fonseca rose to introduce the bill on behalf of the Attorney General. He first explained the nature of the rights granted to the National Gas Company. “The National Liquified Petroleum Gas Project is a public-private partnership between the Government of Belize and the National Gas Company Limited, wherein import bulk terminal for LPG located at the Port of Big Creek and two strategic distribution depots located in Belmopan and Orange Walk have been established. The project is aimed at addressing energy security, transparent pricing, and quality assurance. Under the NLPGP, government currently owns 25% of the company and after financing has been repaid, which is estimated to be over a fifteen-year period, 100% of the company will be vested in the Government of Belize. The agreement was executed between NGCL and Government of Belize in 2018. And the National Liquified Petroleum Gas Act was passed by the National Assembly in 2020,” he said.

He then went on to describe the legal challenges now faced by the government as a result of that imitative. “That act is now the subject of a legal challenge grounded primarily on the effect of the exclusive right to import conferred by Section 5 of the act on the fundamental rights of the claimants. Under the agreement NGCL was given an indemnity that if the exclusive agreement given for them to import LPG was declared invalid or unenforceable, the government would indemnify the company for any liability lost or damage. Based on our legal advice it is important to move this amendment to seek to mitigate government’s liability,” he outlined.

Hon. Fonseca said that the amendment being introduced was an effort to reduce GoB’s liability through a deletion of section five of the act, which is to be replaced with “ a new section which provides that the right to import LPG into Belize and to engage in the business of selling and distributing LPG shall be subject to section 3 for the Supplies Control Regulation, so it removes the right to be granted import licenses” as well as through the introduction of “a new requirement for the acquisition of LPG for importation only by way of a supervised tendering process.” He explained that this would prevent “the practice of transfer pricing by those companies who purchase LPG for importation into Belize from affiliated companies.” Fonseca also noted that “the price structure provided for in the schedule to the act is being revised to include a wholesalers margin and regulate wholesale pricing including wholesale pricing by NGCL to create a more level playing field in the wholesale distribution market.”

Hon. Fonseca also noted that NGCL has been consulted about the amendment and has agreed to the restructuring of terms presented to the House.