by Linda Straker
The Government of Grenada is surprised by the decision of Grenada Private Power/WRB Enterprises – the parent company of the Grenada Electricity Company (Grenlec) to file an arbitration claim with the International Centre for Settlement of Investment Disputes.
“It is with great concern and surprise that the Government of Grenada has been made aware of recent communication issued by the International Centre for Settlement of Investment Disputes (ICSID), advising of Grenada Private Power/WRB’s request for arbitration regarding their offer to the Government of Grenada for a repurchase agreement,” said a news release issued by the Grenada Government Information Service (GIS).
The GIS release was issued after Grenada Private Power’s (GPP) release stated that “On 5 May the company had filed a request for arbitration with the World Bank’s International Centre for Settlement of Investment Disputes.”
“The purpose of this arbitration is to enforce the Government of Grenada’s contractual obligation to repurchase the 50% Grenlec shareholding that Government previously sold to GPP,” the release said.
The Grenada Government claims that it has always maintained its willingness and openness to engage in discussions with GPP/WRB, and have specifically requested of WRB a meeting to hold discussions on said matter, to which their response was encouraging, and pending a mutually convenient date to hold the same.
“As a Government that is primarily concerned about the development of our people and our country, we continue to maintain a consistent position in regards to GPP/WRB and the liberalisation of the energy market. As a result, the Government continues to invite GPP/WRB to sit around the table and engage in discussions aimed toward an amicable solution,” the release said.
“GPP and WRB commenced the ICSID proceeding in follow-up to a formal share repurchase demand that GPP submitted to Government on 22 March 2017. GPP submitted that repurchase demand pursuant to the Share Purchase Agreement that Government, GPP and WRB entered into in conjunction with Government’s privatisation of Grenlec in 1994. The SPA requires this repurchase to be completed within 30 days following Government’s receipt of GPP’s repurchase demand. Given that Government has not made the mandated repurchase payment, GPP and WRB have no alternative means for protecting their contract rights other than by pursuing the ICSID arbitration as dictated by the SPA,” the release from GPP explained.
Robert Blanchard, Jr Chairman & Managing Director of GPP, and President of WRB Enterprises said, “During the past 3 years, Grenlec, GPP and WRB have made every possible effort to initiate good-faith, collaborative negotiations with Government focused on facilitating responsible and effective electricity sector reform in Grenada, and thereby avoiding the necessity of our taking legal action to protect our contractual rights.”
“Unfortunately, Government has consistently elected to rebuff these efforts by the Grenlec team, opting instead to pursue a unilateral approach for restructuring every aspect of how Grenlec’s system should be owned, operated and regulated,” he said.
Grenlec’s owners said that these unilateral actions led to Government’s enactment of the Electricity Supply Act 2016 and the Public Utilities Regulatory Commission Act 2016, which took effect on 1 August 2016.These 2 Acts cause substantial adverse operational and economic consequences for Grenlec, including (although by no means limited to) Government’s effective abrogation of the Grenlec licence that the SPA parties committed to establish as the central aspect of Grenlec’s privatisation in 1994. This unilateral and injurious course of conduct has left GPP and WRB with no choice but to enforce their contractual repurchase rights in the manner dictated by the SPA.
However, the GIS release said the accusation from Grenlec’s owner is not truthful. “It is simply not true that Government did not engage WRB in the reform of the electricity sector. In addition to the many stakeholders’ meeting in Grenada, at which WRB made detailed presentations outlining their sentiments toward the reform, Government and WRB met in Washington under the auspices of the US State Department to try to arrive at a consensus.”
“The 2 parties continued the process with a meeting again at St George’s University, Grenada. After it had become clear that WRB did not want to move from their position of an unregulated monopoly, Government went further to engage a facilitator, The Rocky Mountain Institute/Carbon War Room, to try to reach agreement. And we continue to request dialogue,” it further explained.
“We have ensured that in the context of the reformed sector, all competitors should operate under a fair set of rules in an open electricity market, as is outlined in the decision taken by Government in 2016 to enact the Electricity Supply Act — a decision that has not only been endorsed, but mandated by International Financial Institutions. This Act has liberalised the electricity market from decades of monopoly rule that GPP/WRB has had,” the Government release said.