by Linda Straker
- Deal provided for WRB Enterprises monopoly for approximately 80 years from 1994
- Decision to gain control of utility is to liberalise sector and bring benefits to customers
- Government has already paid US$60 million; another US$3 million due in 2 years
Prime Minister Dr Keith Mitchell has warned that expected benefits such as reduced electricity rates which will be the outcome from the repurchasing of the majority shares in Grenlec, will not come overnight, but over a period.
“I want to caution, that this is not something that will come tomorrow morning and you will see the price of electricity will drop, it does not work so,” Mitchell said as he contributed to the debate on a motion in the House of Representatives on 15 January 2021.
The motion sought to affirm the settlement of the Award of The International Centre for Settlement of Investment Disputes in Case No. Arb/17/13 Between the Grenada Private Power Limited and WRB Enterprises, Inc and Government.
“We have to be cautious of how we proceed; the company has to continue to be viable. The options are going to be made available, every aspect of the arrangement must be studied carefully. We are confident that over a period of time the arrangement will benefit all and sundry. but it’s not going to be with the stroke of a pen or overnight. It will not work that way.” He stressed that the decision to gain control of the electricity company is to liberalise the sector and in turn, bring benefits to customers.
All 15 members of the House of Representatives contributed to the debate, and at the conclusion the motion was approved. Under the negotiated settlement which was reached after the International Centre for Settlement of Investment Disputes ruled in favour of WRB, Government has already paid US$60 million, with another US$3 million due in 2 years.
Prime Minister Mitchell in his debate provided historical insight into the work done through the rural electrification programme between 1985 and 1990. He said that the government programme significantly increase the availability of electricity in many communities across the country, which meant that when WRB Enterprises purchased the company, it was well poised for further development.
Describing the transaction of the lone electricity company by the National Democratic Congress (NDC) Government as the worst sale undertaken by any Government of a national asset, he continued to question the decision to rush into the sale of a monopoly national security asset just before an election. The deal provided for WRB Enterprises, an American company, to have a monopoly on the local electricity sector for approximately 80 years from 1994.
Quoting from the Hansard, which is the official record of Parliament, Dr Mitchell said his sentiments regarding the sale of Grenlec then, and his sentiments today, are the same, the conditions of the sale were not in the best interest of the country.
The dispute was triggered after the Houses of Parliament approved the 2016 Electricity Supply Act which was the outcome of a World Bank project involving Grenada and St Lucia but which, at its conclusion in 2019 was described as “moderately unsatisfactory” according to the World Bank’s Implementation Completion and Results Report published in 2019. The objective of the project was to establish and operationalise a regional approach to the development of the electricity sector.
The legal action by WRB was grounded in a clause in the 1994 Share Purchase Agreement signed by the then NDC administration which provided the company with a monopoly on the generation and distribution of electricity, a monopoly which also imposed restrictions on individuals and corporations seeking to generate electricity for their own use.
Public Utilities Minister Gregory Bowen said that the company will continue to operate as a private company under Grenada’s Companies Act. Government has already approached the World Bank and the International Renewable Energy Agency (IRENA) to procure the services of a world-class management company to operate the utility, facilitate the divestment of the shares through public offering, and to advance the country’s objectives towards greater use of renewable energy and achieving energy security returned reliability and lower prices.
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At last, the PM has muted an accurate assessment that the expected benefits such as reduce electricity rates will not be immediately forthcoming. Indeed, by the time a complete assessment of the operating plant is completed and a management consultancy is in place (if not already in the background). Any benefits would have been absorbed.
And yes, these shares need to form part of a Public Offering as soon as possible. I wouldn’t want them used as collateral to borrow more money.
yes time we grenadians invest for the future!