Kisha Samuels can handle just about any other natural disaster that comes her way in Belize. But soaring energy costs are another matter.
"We can cope with floods to some extent," Ms. Samuels said yesterday from the Bird's Eye View Lodge, about 60 kilometres north of Belize City, where she was busy evacuating the front office as a storm raged outside. "But rising prices are making it very difficult for us."
They are also making life difficult for Fortis Inc., which controls Belize Electricity Ltd., or BEL. The company, based in St. John's, is running into fierce opposition from authorities in Belize as it seeks to raise electricity rates to compensate for the soaring cost of oil.
With food, gasoline and oil prices already soaring, electricity rates have become a new burden for people in Belize and elsewhere in Central America and the Caribbean.
Most countries in the region rely on diesel-fuelled power stations to produce electricity and the cost of generating that power has skyrocketed with the price of oil. Electricity rates have jumped by as much as 30 per cent in some countries this year and blackouts of up to 14 hours are commonplace. Protests over power costs have broken out in Honduras, El Salvador and Nicaragua, where electricity rates have been increased five times in the last few months.
The situation in Belize has reached crisis proportions, said Stan Marshall, president and chief executive officer of Fortis. In a blunt speech to BEL shareholders last month, Mr. Marshall said the company needs to raise rates by 25 per cent immediately or the country will face blackouts.
Belize is wedged between Mexico and Guatemala and it buys about half its power from Mexico, which relies largely on natural gas and oil to fuel its power plants. Mr. Marshall said the price charged by Mexico tracks the world price of oil.
"I can't understate the seriousness of the situation," Mr. Marshall told the meeting after pointing out that oil is well above $120 a barrel.
He also took a shot at the local government, and recently elected Prime Minister Dean Barrow, for refusing to allow an increase in rates. "Belize has been the most frustrating jurisdiction I have ever experienced in my 30 years in the business," he said.
His comments drew sharp attacks from many local groups who accused Mr. Marshall of issuing threats. Several organizations have criticized BEL for seeking what they called "unconscionable" rate hikes while turning a profit of roughly $15-million (U.S.) last year.
Mr. Barrow, who came to power in February promising to lower prices for electricity and food, said he was "displeased" with Mr. Marshall's comments and promised to call an emergency meeting of his cabinet.
In an interview yesterday, Mr. Marshall stood by his comments and said he was not making threats. "It was simply a statement," he said, adding that an arbitrator has been appointed to review BEL's rate request.
Mr. Marshall said that when Fortis bought control of BEL in 1999 he was assured the company would be able to pass on price hikes charged by Mexico. But in recent months Belize authorities have prevented any pass-through, causing BEL to absorb roughly $15-million in extra charges this year.
"If this carries on and we can't pass through the price of oil, Mexico won't get paid. If Mexico doesn't get paid then it will result in blackouts," he said.
He also expressed some sympathy for Mr. Barrow and his election promise to cut electricity rates. "With oil prices going up there is no way that can happen."
Mr. Marshall said Belize is actually better off than many other countries in the area because about 40 per cent of its power comes from hydroelectric sources. He noted that Fortis also operates in Turks and Caicos and Cayman Islands, which are completely reliant on diesel-powered facilities, and electricity rates there have increased by 30 per cent over the past year.
"There's no question that these rapidly rising oil prices and hence electricity prices causes hardship, there's no question about that at all," he said.
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