Earlier this week, we told you that the Minister of Agriculture is supporting the four sugar cane farmer associations in their request for an increase in the price of molasses and domestic sugar. He wasn't so sure about electricity generated from bagasse. That would require going to the PUC for approval. However, when the media asked the chairman of BEL about it, he explained that Belcogen's cost of power should actually be decreasing because they've already paid off the capital investment. Minister Mai found that surprising.
Here's what they both explained.
Andrew Marshalleck, Attorney
"What we're obliged to pay is the cost of the power and there's a way to figure out what that cost is. The trouble with the Belcogen facility is the cost of that investment is already recovered. So those prices should be going down not up. If you spend $50 million to build a pond to give me power, we work out how much of the price has to go to giving you back your $50 million. Now the life of that plant is such that they've already recovered the cost of what they put there so far from it, well, contrary to the price going up, it should be coming down because you've actually now gotten the money that you spent."
Reporter:
"But operations?"
Andrew Marshalleck, Attorney
"Well, you cover that it as well."
Reporter:
"So you're saying even taking into consideration operations you have to reduce what you put in?"
Andrew Marshalleck, Attorney
"Look when you figure out the price, there's the capital cost, there's the operational cost. All of that is added together and there is the return, there's the price. If you take out the capital cost because it's already repaid, the overall price is supposed to drop regardless of what the operational costs are."
Jose Mai, Minister of Agriculture
"Wow, if that is what they say."
Reporter:
"Ortega was similarly shocked when he heard this."
Jose Mai, Minister of Agriculture
"Let me tell you why. Belcogen is a great concept. Co generation is a great concept, it's a great investment. If it's done the right way. Unfortunately from what I know, it went under commission in 2010 I think it was, it was a mess. The amount of money that I know that they invested in repairing that co generation plant is amazing because understand that the equipment was inferior, the hardware was all inferior quality, they had to pay welder, every time, welding and welding. Actually they've paid millions more. Now I do not know if they have recovered that, I doubt it very much because they say that they're broke from what I understand. I understand that they lose $5 million every year."
