“Novelo Matrix” – we still want to pay “the totti!”
Posted: 21/12/2007 - 10:56 AM
Author: Colin
Matrix: that which gives origin or form to a thing, or which serves to enclose it. Example: Rome was the matrix of Western Civilization. (Webster’s dictionary)
“The company wanted the Belizean people to hear the truth…the Novelo family will not rest until we have a proper system of transportation in the country…and that the debt (DFC) is paid” …David Novelo to Yaya at opening night of the Novelo Matrix.
“…frankly, I was waiting …to hear the portion for which the Novelos were responsible…I never heard their part” …Senator Godwin Hulse to Yaya at opening night of the Novelo Matrix.
by Colin
In a refreshing disclosure, David and Anthony Novelo told the nation in a documentary, titled the Novelo Matrix, on Tuesday night that they still want to pay the bill, “the totti” (thirty), as they referred to it. So, who’s stopping their arms from reaching into their pockets and shinning out what is owed (30 million) to the DFC and people of Belize? Well, if they’d only get their routes back…
The Novelo brothers told the nation that was looking keenly at their documentary, the Novelo Matrix, that it was racing on the highway, and accidents, and over competition that had crippled the road transportation industry to the point where no one was making money, that ignited the initiative for a single bus line ruling the highways. Two stakeholders made the bold move. The Novelo family (Benque Viejo) bought out Batty’s Bus Line (Belize City) for $5.6 million, and Z-Line (Dangriga) purchased Escalante’s, Urbina’s, and Gilharry’s up North, and Shaw’s Bus Line in the West.
The ailing industry struggled on with 3 bus owners - Novelos, Z-Line, and a small operator in the South, James, who refused to divest from the industry. The competition between Novelos and Z-Line on the highways was especially fierce. The two large bus owners met and Z-Line agreed to sell its shares in the industry to Novelos.
In 1999 the Novelo family, armed with a study by an auditing firm, KPMG, which showed that a consolidated transport industry would produce the “natural synergies” and “economies of scale,” approached the government with a plan to establish a single bus line running from east to west, and north to south. With a government agreement in hand that they would control for 15 years the 96% of the road transportation routes in the country that they originally owned, or had purchased (James refused to sell its route), the Novelo family was able to get a $30 million loan from the DFC at 13% interest. When the Novelos handed over $14 million to Z-Line the same week it received the loan (reportedly), it was as near to monopoly control of the road as modern Belize had ever seen.
Almost total control of the transportation pie turned into a disaster. Some smaller bus lines that the Novelos claimed to have bought out, returned to snipe their runs. Their pleas to government fell on deaf ears. A spike in the price of fuel was another serious blow to the bold initiative. The company’s request to government for a raise in the bus fares sparked unrest in Benque Viejo and Orange Walk. The GoB balked, freezing bus fares. Then a “relentless Opposition”… “lying to the nation”…with malice, turned the loan into a political matter. The UDP accused the government of giving the Novelos a sweetheart deal, saying that the collateral the Novelos had used to secure the loan at DFC was insufficient.
False, said the Matrix. Not only had the Novelos given DFC lien on their properties, they also secured the loans with road service permits (routes), and personal commitments.
The Matrix claimed that the government re-issued routes to Gilharry and Batty’s, routes for which they had already been paid handsomely. Fuel prices went higher. PSU leader Margaret Ventura spoke out against a “reinforced monopoly”…that giving bus lines higher rates (fares) would have adverse effects to the consumer. The consequences of all these unfair accusations and decisions caused the industry to flounder, and the Novelo family had to pump in millions to keep the fleet afloat.
The Matrix family suffered other blows. In the tourism sector the company claims they lost one-half of their income when a rival company, which featured a director of an institution with whom the Novelo family had contracted a large part of their loan - Atlantic Bank, was allowed to break their exclusivity. The Novelo family pumped in more millions to keep the company going.
With the government refusing to address the problems of the industry, the company could not service its loans with DFC and Atlantic Bank. March 2004 proved to be the month of infamy for the proud Novelo Bus Line. The Matrix says that the Novelo brothers were called to the Central Bank for a meeting. There, retired BDF General, Robert Garcia, along with BDF soldiers and police, dramatically wrested the company “in a military takeover” from the Novelo family. According to the Matrix, the receivership’s Kevin Castillo and General Garcia were transportation neophytes. Apart from that, consultants to the receivership, namely Mr. Mark Hulse and Mr. Leo Batty, supposedly milked the company dry.
The receivership destroyed the company, the Matrix says. Still, the DFC/GoB, which watched the receivers destroy the bus line and auction off their properties, did nothing as their runs were given away (some to bus owners who had already received payment for their routes), refused to increase fares when the cost of fuel went up, want to collect on $27.5 million the family owes.
Well, the Novelo’s say they are eager to pay. But to do that, they need back their routes. That logic is clear. The Novelos say they have a bright new plan to bring some stability and improve the transportation industry. They say they will unveil their plan, which will allow participation of others, in the near future.
A lot of what the Novelo family put forward in the Matrix appears to be factual. However, there are many, many things that they did not speak on. It is interesting why the government sold them an exclusivity package, and then took it away. Before Novelos got into this dream of owning the highways, Z-Line had fought off challengers to take total control on the Hummingbird Highway, carved out a chunk on the Southern Highway, purchased every side of the North route except for the substantial Batty’s, and cut in on the West when they purchased Shaw’s. Z-Line had penetrated or controlled every route before they sold out to Novelos. In the next Matrix they should tell us about that epic battle. Then we will understand the government’s hand in all this.
In the next Matrix, they could also explain why they paid Z-Line $14 million, when that company’s share of the industry did not surpass the Batty’s share for which the Novelos paid $5.6 million. It would be good if they also told us what they paid for the palatial bus terminal in Punta Gorda, and other Z-Line properties they received which did not factor other than for speculative value.
Meanwhile, the buses stumble along the highways. Without an audited report available for public viewing, it is not possible to comment authoritatively on the true financial state of affairs. So, as with so many things in non-transparent modern Belize, we have to go by feel. From the outside it appears that the industry is not fiscally fit. There are many routes that seem to be operating at a loss. Many owners are not servicing their buses on schedule, and there is still racing on the highways. But bus owners are now wise enough to know that a route is as valuable as land, so they hold on for future value.
As for commuters, it is like nothing has changed. Public transportation 2007 mirrors 1999 (some 30 million plus dollars years ago)…when local entrepreneurs were dreaming about owning the whole bus industry pie.
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