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It's been
a subject of enduring controversy and debate, but the Chalillo Dam in
the Cayo District is now a reality.
Construction was completed in early September and the commissioning
ceremony was held today at the facility in the Mountain Pine Ridge area.
The dam will store water for the Mollejon Hydroelectric Plant,
effectively doubling that plant's capacity and greatly reducing Belize's
reliance on costly fuel based energy. But that silver lining borders a
terrible cloud, and that cloud is the reality that even Chalillo isn't
enough to protect you from higher light bills. The grim reality of that
rained down on an otherwise upbeat ceremony this morning. 7NEWS was
front row and tonight we examine all the Chalillo issues.
Jules Vasquez Reporting,
It is the greatest engineering feat in modern Belize. At its highest
point it is 150 feet tall and its span is 420 feet. It took 200,000
cubic yards of concrete and holds 120 million cubic metres of water.
This lake that you see here now was created by the dam wall. The Macal
River, about 60 feet across, used to run through here, now its been
replaced by this massive area flooded so that the energy from the water
can be harnessed at converted at this power house, by two large turbine
motors controlled by this very modern computer system, we're told it's
the most modern in Central America. After the system managers and
engineers here make their required energy output, the water is then sent
downriver about 12 miles to the Mollejon Plant where the volume from
Chalillo increases that plant's output from 80 gigawatts hours to 160
gigawatts hours.
This Chalillo facility was constructed at a cost of over US$100 million.
The dam is owned by BECOL which, like BEL, is owned by Fortis. President
of Fortis Stan Marshall cut the ribbon this morning along with the
Investment Minister who pushed it through, Ralph Fonseca. Marshall says
it provides Belize with energy security.
Stan Marshall, President - Fortis
"It is undoubtedly a monumental achievement. The official commissioning
of the Chalillo project represents a quantum leap on the road to energy
self-reliance. With the Chalillo reservoir already over 50% full, the
country could sustain itself for an extended period if the connection to
Mexico were disrupted."
And it is an achievement gained despite attempts by what Minister
Fonseca called irrational critics to undermine and subvert the project.
Hon. Ralph Fonseca, Minister of Public Utilities
"Today punctuates the defeat of those who cannot relate to the concept
of sustainable development, where people must be allowed to wisely tap
into the vast potential of their country's natural resources to advance
their own human fulfillment and a better life. Hopefully today they
realize that they are sticking a finger in the eyes of all Belizeans
when they oppose bold initiatives to advance our developing economy."
And today all the major players agreed that Chalillo came on stream two
years too late to provide Belize relief from energy shocks related to
rising world fuel prices.
Stan Marshall,
"We regret not having reached this milestone earlier. The burden of
today's high oil prices weighs heavy on us."
Hon. Ralph Fonseca,
"This project is two years late, that is why I said it is almost too
late but better late than never."
So while this towering edifice makes it clear that is indeed a
monumental achievement, it comes too late to save Belize from higher
energy prices, and today's opening was tinged with regret.
Lyn Young, BEL - CEO
"My regret is that this didn't happen two years ago because as I stand
here now, we are talking about asking the government for another rate
increase. I know its not good news but that's the truth."
You heard it right, even with the $4 millions in savings that this dam
provides, BEL will be going back to the PUC asking for an increase. How
much this time?
Jules Vasquez,
If you get what you want in December, how much will that be affixed to
the average light payer?
Lyn Young,
"I think its going to be at least 10% and what I hope is that in two or
three years we'll see things start to come down back again. But I think
in the short term, we are looking at high energy prices. And its not
only Belize of course, its all over the world. We are looking at high
energy prices for at least another two to three years."
Higher energy prices, and additionally those energy costs will for the
first time attract a consumption tax, as government gets ready to apply
the 10% GST to some light bills.
Jules Vasquez,
Lyn Young announced here that they are applying, I am told in December
for light rates to go up again, and in fact you all are going to affix a
GST of 10%, for the first time a consumption tax will be added on to
light bills. We are looking then at soaring electricity rates and this
profoundly affects the investment climate and quality of life for so
many Belizeans."
Hon. Ralph Fonseca,
"For a very short period of time, if it does. Again Jules you are
looking at the dark side of things. What Mr. Young made reference to
today has to do with if the fuel prices continue the way they are, if we
cannot negotiate something else with CFE."
But actually what Young said is not that they need the money to pay
forward, they need it to pay back.
Lyn Young,
"What we are applying for right now is the build-up that has built
because remember we kept holding back from increasing rates and what the
PUC had done was setting up a deferred account. So the unfortunate
situation is that we have like $26 million in this deferred account,
which is unsustainable."
And while BEL now goes back to the PUC looking to get that money back in
higher rates, it puts into context the reality that even with this
hulking edifice and all the energy security it provides, there's only so
much it can insulate Belize from rising fuel prices.
Stan Marshall,
"So right now we're at the mercy of oil prices as we were years ago. Now
with this facility on stream, our exposure is less. Unfortunately I
can't shield Belize from oil prices, I'm not in the oil business."
But he is in the power business, and critics say Marshall's Fortis has a
sweet arrangement where he has negotiated to get the right to use
Belize's river to produce energy which we pay him back for in U.S.
dollars. That's paying Newfoundland to produce energy form Belize's
river.
Jules Vasquez,
While it is our river and our natural resource, we continue to buy
energy in U.S. dollars from Newfoundland, because of the arrangement
that your government made in February of 2001 to sign over rights of the
river to Fortis for 50 years.
Hon. Ralph Fonseca,
"Well as usual Jules, while the entire Belizean population is
celebrating, you're trying to look at the dark side and looking at the
glass half-empty. There was no way of possibly attracting a couple
hundred million dollars in investment in the Macal River. As I mentioned
today, in a river that is raging one and its dry the next day, hundreds
of millions of dollars have been invested in Mollejon and now in
Chalillo, there is no other way that it could have been done."
Jules Vasquez,
Sir but it could it not be argued that your government had no problem
in raising money. You all grew the economy significantly, increased the
debt four-fold in five years in office. Could it not be argued that you
could have raised a couple hundred million to build this and Belizeans
would own this and we won't be buying energy from Newfoundland?
Hon. Ralph Fonseca,
"We also increased the economy four-fold, the size of the economy; I am
sure you'll agree with me with that. Let's try not try to confuse the
Belizean people, the project had to be purchased from somewhere. If the
government of Belize had did it, we would have had to borrow the
hundreds of millions of dollars and we would have had to be repaying the
hundreds of millions of dollars."
Of course at the end of that loan we would own it, but the man who does
and will own it and the rights to the river for 50 years is Stan
Marshall and he says he's got to recover his investment.
Stan Marshall,
"We need to get returns because we've invested a great deal of money
here and like anybody that's invested money, we have to get a return on
that. But the price of electricity is fixed. This plant will be here
for a hundred years. I guarantee you that five years from now people
will be marveling at how cheap power is from this plant. Fifty years
from now they'll say the people who built this dam didn't get much
benefit from it, its all the people of Belize. So what we'll get is just
a return of the money we've invested, the rate of return, that's all."
Jules Vasquez,
What is that? 15% or is that a reasonable rate of return?
Stan Marshall,
"Yeah it depends on how much power it produces but it will be around
that magnitude; around 15%. So all we're getting is return from the
money we invested in the project. The economic benefit, which will go on
for a long long period of time goes to the people of Belize."
Jules Vasquez,
But it also accrues to Fortis.
Stan Marshall,
"To the degree we've invested money, we get a return on the money
absolutely. Nobody's going to invest money without getting a return."
Lyn Young,
"You need U.S. dollars to do development so either we borrow the money
from a foreign bank or we get a foreign investor or a combination, which
is really what we've done, a combination. Because we can't buy cement
with Belize dollars outside of Belize, we can't buy steel, we can't buy
gas turbines, we can't pay the contractors---everybody wants U.S.
dollars so at the end of the day where are we going to get all that U.S.
dollars."
Jules Vasquez,
But Belize can access foreign capital.
Lyn Young,
"Well Fortis has a very good rating and so that is one of the very big
advantages. We've not a project like this in Belize. Jules perhaps ten
years ago I would have been (a) excited young engineer and said yes we
can do it. Having gone through it I can tell you that we wouldn't have
succeeded in this if we didn't have the experience of Fortis behind us.
And we couldn't have succeeded in it if we didn't have the money of
Fortis behind us because we haven't borrowed a penny to do this project.
Fortis did this project out of its cash flows."
And according to Marshall, the money they will make back from this
investment even with a 15% rate of return is just a drop in the water
for Fortis.
Stan Marshall,
"In economic terms, it's of course a very small part of our company but
my personal perspective is very important to me. I have a very personal
attachment to Belize, I have my own home here in Placencia, I spend as
much time as I can here, and I am very much enamored with the people and
the country."
And as much as he has affection for Belize, Marshall and Young admit
that the grueling trials associated with Chalillo have left them battle
scarred.
Jules Vasquez,
If somebody told you right now, knowing what you know about the
resistance, would you do this again?
Lyn Young,
"That's a good one Jules, I've thought about that a lot of times---yeah.
Maybe halfway through it if you had asked me that question, I would have
said I wouldn't have done it but now that its finished and we are
reaping the results of it, yeah its worth it."
Stan Marshall,
"At the beginning I had to think really serious about doing it because
its taken a lot of effort, a lot of my time, but I'm glad I'm here
because it's the right thing to do."
The right thing for Fortis surely, and the right thing for local non
petroleum based energy security - but only time will truly tell if this
foreign dam on this local river is the right solution for Belize's
energy future.
With Chalillo online, presently Belize gets one third of its power from
hydroelectric sources.
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