First of all, I was not at the meeting but depended upon various people to appraise me of what occurred. Some people took notes; others, well it was from the recollections. I am reprinting what I sent out to several people in an e-mail the day of the meeting, October 24, 2013.
Apparently, at one point in the meeting, it was stated that they would not address various inquiries as to how the status of the company had reached this point of decline and it was made clear that this was merely a meeting to ask for people to "invest". Yet, nothing was said as to what the invested money would represent in the way of stocks in the company; i.e., how much the shares would be worth individually.""For those who did not attend today's meeting of the Board of Directors of Belco, nor live here full time and have no input into the problems facing the island, I offer this e-mail as a "catch up" if you will on the status of the island's electric company, Belco.
A meeting was held on the Cay this morning by the Board of Directors of Belco to announce that if they are unable to formulate a plan or come up with money to achieve their proposed goals, then the electric company will be in bankruptcy come this December and will close their business.
Apparently, according to the individual heading of the meeting, Belco has been in dire straits since 2004. Ever since Mitch they have been struggling but, things really started to fall apart about 2004. They are convinced that their purchase of two large generators some time between 2004 and 2007 was a big mistake. At the time they felt electrical consumption would rise with new businesses opening on the island and the possibility of tourism picking up, along with the fact that 3 fish plants were operating at the time. None of these predictions came to fruition along with the closing of the fish plants. I instead of an increase in electrical output, there has been a decline in consumption. Costs have risen and in spite of the fact that there is a fuel surcharge on the electrical bills representing an absorption of the rising costs of fuel, the company is looking at bankruptcy.
They admitted that they are approximately LPS. 19,000,000.00 in debt to Banco Atlantid and have the owners have been unable to honor their debit. They proposed at the meeting that an account be set up with the Credit Union and anyone willing to come to their aid could deposit money into this account. The account would be used to buy a smaller generator to supplement one of the two large ones presently supplying electricity to the island. According to my sources, nothing was said about what their plans were for the unused large generator that they feel now is unnecessary. They said that even running the one large generator was not be cost effective and, thus, it necessitates the need to purchase a smaller generator. They stated that this account would be monitored by the Credit Union and that as soon as Belco began to make a profit from their business those who deposited money in the Credit Union (similar, I guess to owning shares but nothing was mentioned about the method to accomplish this feat), would be paid back the money they "invested." Nothing was mentioned about any possible sale of the one large remaining generator they have no need for.
There were no flow sheets, no reporting as to how money has been handled, no accounting as to how this situation came to be; just a request that people present lend a hand and loan them money.
Of course I ask the following questions, which have since been reflected by foreigners and Islanders alike:
1. Why did they wait until two months before the announcement that they might have to close the business doors in December that they needed help?
2. Will the books of the company be open for anyone investing so that their business dealings can be monitored to see that the inflow of new money and the subsequent control of credits and debits to rebuild the company will enable them to repay investors?
3. If they owe the bank approximately Lps. 19,000,000.00, does that not indicate that the bank would be first in line to any profits gained by the company starting up again and thus delaying any pay back to investors? What projections are available as to a timetable for pay back to the bank and subsequently to investors?
4. No time table was given for this pay back and no flow charts were submitted to show the possible influx of cash a new generator would bring and/or a table of projected electrical consumption to support the purchase of this generator. Nothing was shown to indicate what the present electrical consumption is and/or projected future consumption of electricity.
5. No information was given as to the possibility of new management or the enlisting of someone who could review their bookkeeping records and correct any present spending that may have contributed to this problem.
6. No explanation was given as to why the fuel surcharge, which is continually rising, has not paid for the fuel consumption or fuel costs each month.
7. Nothing was said about how they planned to collect on all the outstanding bills owed to the company and do it in an effective manner.
8. No other sources of electrical power were discussed and, apparently, some gentlemen from the mainland who are interested in getting solar and wind energy to the island, did not show up for this meeting.
No reports have been forthcoming as to the success of the meeting but it was stated this past week that several individuals were aware that the Board of Directors had left for San Pedro Sula/Tegucigalpa to find investors. Several people have made various suggestions from allowing the Belco Board to go bankruptcy and relinquish their hold on the company so that new management can take over, if such investors for a new company are found.
Going co-op has been suggested where everyone using electricity would have a stake in the business. Quite possibly the electric users in Guanaja could ask for a meeting with the Belco Board and Banco Atlantida to see if this reorganization could be accomplished voluntarily and without interrupting the electrical service. Belco and Banco Atlantida would have to agree along with the majority of the electrical users. As a co-op, everyone having an electric meter would get a share and a vote to elect a Board of Directors who would then hire a manager to run the company and make PUBLIC reports to the shareholders as to the rate charged and dividends.
Some people have suggested that the island copy Utila and go with a pre-paid electric program where the power one uses is paid for in advance. When the meter showing the amount of purchase indicates that there is no money, the power shuts off. Of course the problem of organizing, finding money, finding solid people to run the company will be a huge undertaking.
From an islander, the following was submitted:
"Thanks for forwarding these Email. Its hard to get things accomplish in Guanaja, because we always see the mistakes, but much of the time we don't contribute to fix them; we don't stand for one common goal as a community.
We don't set a vision for the future of our Island, we elect people which can't see any further than the point of their nose, and the sad part is that they don't take any advice [from] those people who might know something about the problem. We have our priorities all messed up; First the Lord, Second our family, Third our friends, Fourth our community, Fifth our country.
Guanaja is sinking, we all agree on this. There are no jobs, there is no industry, there is no money, and we belive that someone from outside is going to fix these problems. When we elect a leader is to lead the community in the right path. There was L26,000,000 given [during] Mel's Government to Guanaja Municipality [and] not 1 penny was used for wind, or solar energy, this is the same person that was reelected. He only had to use half of the money for this purpose, and in a short time this would be a income for our local government. There is a law in Honduras that if you can produce energy cheaper than what it is costing the company, they have to buy it from you. If this had been done we would not be in this problem. I ask the question, what is going to happen when the big oil companies decide they want $200 a barrel of oil? It is going to happen! Are we ready for it?
This is the first meeting BELCO had and there [were] a lot of questions that need to be answered. And note was taken, to be able to answer them, Belco is going to have [to have] another meeting .... and call in a second meeting with the potential investors, to give them answers to their questions.
Of 70 people that were invited about 25 were there and some were not in the list, I guarantee you if the generator went of for 24 hours it would have been a different story.
As a grope united with one purpose it can be achieved.
As you can see from an Islander writing the above comments, it is not only those non-citizens who believe something must be done. More information is needed; the Board needs to present their accounting records, facts and figures in order for anyone to take seriously the thought of investing.
It must be added that there is a division on how much is owed to Banco Atlantida. Reports from the meeting (in notes taken by an individual) stated Lps. 19,000,000.00. Others claim they were told Lps. 9,500,000.00. All in all, no matter what is owed, it is a huge amount and the fact that the Board chose not to face the problem years ago and waited until the eleventh hour to advise the populace of the dire situation was, in my opinion, irresponsible.
Again, the above comments were made by Islanders and foreigners alike. So if someone wants to criticize me, you should first take into consideration that the population of Guanaja has been left in the dark - and will be in more ways than one.
Another thought: If the phone towers have no power - there will be no cell phone usage on the island!
We will be hit twice!
Thanks Sharon, Well said... Jim Mather
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