An electricity distributor in Belize has called on the government to put up a letter of credit (L/C) that is double the value of the one it currently provides to the power provider.

The government has so far resisted the calls and describes the partially privatised Belize Electricity Limited (BEL) as a bankrupt company.

Credit limit

Partially privatised BEL says it wants a government issued standby L/C worth US$20 million rather than the current credit of US$10 that it is currently provided by the state.

But Prime Minister Dean Barrow has said he is not prepared to up the L/C value and argues that this would not be a prudent use of taxpayers' money.

Mexican supplier

The state through the Social Security Board of Belize has a 26.5 per cent stake in BEL while Fortis of Canada has a 73.5 per cent stake in the power company.

It is heavily indebted to a major supplier, Comisión Federal de Electricidad of Mexico, to which BEL has to make daily debt service payments.

Debt obligations

The Mexican company has reportedly threatened to stop supplying BEL if it fails to meet its debt obligations.

A higher value L/C would essentially allow BEL to borrow more money in order to keep up with its debt repayments.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.