On Wednesday, October 10th, the Chairman of the Social Security Board, Douglas Singh and the Chairman of SSB’s Investment Committee, Nestor Vasquez, met with the media to appraise them of a proposed 15- million-dollar investment, which the Social Security Board will be making in Belize Electricity Limited. According to Singh, the investment committee has made the recommendation to make the investment and the Board has accepted the recommendation. It is now a matter of a legal process where the decision has to be published twice in the Gazette and in two consecutive publications of two newspapers before the disbursement is made.
The 15-million-dollar investment, according to Vasquez, is a solid one and at this time. it is a golden opportunity to secure the SSB’s funds. BEL invited the SSB to purchase debentures, which are being expanded from 17 million dollars to 25 million dollars. As a result of this, there was an offer for the Board to purchase 5 million preferred shares with a guaranteed rate of return of 5% per year for a lifespan of 3 years. According to Singh, the debentures will be purchased for 5 million dollars ,while the preferential shares will be purchased at 2 dollars each amounting to 10 million dollars bringing the investment to a total of 15 million dollars.
According to both Vasquez and Singh, there is an excess liquidity in the SSB with the most recent figures showing that it has 150 million dollars that is earning very little and over the last two years, the returns are consistently being reduced to below 4 percent. Vasquez noted that currently BEL has some 26 million dollars that is available for investment. These monies, he noted, is earning between 1 and 1/4 percent to 2 percent when 15 million can be invested in BEL to receive 7 percent on debentures and 5 percent on shares.
The $15 million, which will be received through SSB, says Singh, will be used to refinance expensive debts. He added that currently, BEL has been successful at reducing debt servicing costs from 13 million dollars to just over 5 million in 2012; that has allowed for BEL to be projecting in excess of 8 million dollar profit this year. Additional uses for the SSB investment will be for the liquidating debts, in particular, debts owed to customers where the Public Utilities Commission determined that in the past BEL overcharged customers and now they have to be refunded. Another use for the money will be as working capital, which is obtained at expensive interest rates.
In pitching the investment, both Vasquez and Singh underscored that BEL is a company that is on solid footing and since SSB holds a 26 percent shareholding in BEL and whatever it can do to increase that and improve the profit capability of BEL will be beneficial to the Board.
