by Linda Straker
- Government repurchased majority shares owned by WRB Enterprises since 1994
- New directors will need to be appointed as required by Companies Act
- World Bank and International Renewable Energy Agency approached to procure management company to operate utility
“Grenlec will continue to operate as a private company under the Companies Act.” This was the response from Finance Minister Gregory Bowen when asked to explain the new legal structure under which Grenlec will be functioning, in light of Government’s repurchase of the majority shares owned by WRB Enterprises since 1994.
“There will be a shareholders meeting. There is a good quantity of small shareholders around, they will meet,” said Bowen who also serves as Minister for Public Utilities. “They will just continue in the same strain and maybe what they will have to do, is maybe at the shareholders level, we will meet and authorise that it be run by a management company,” he said.
The Companies Act requires the appointment of directors as the directors appointed by WRB Enterprises are now void. Government said it 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 advance the country’s objectives towards greater use of renewable energy and achieving energy security, returned reliability, lower prices, and greater access, including the provision of much-needed renewable energy powered streetlights across the country.
“The company will continue to report to the Board, but there will be certain prerogative with the World Bank/IRENA onboard monitoring their plans. It will not be like WRB but more of a transition into renewables and to ensure that Government’s energy policy is followed, because that policy is based on 2035 policy,” Bowen said.
Through a US$63 million settlement, which is US$12 million less than the arbitration award, Government regained control of the 50% shares sold to Florida, USA based WRB Enterprises in 1994. In addition, Government has also acquired the 11.6% shares in Grenada Private Power Limited – a WRB affiliate company.
Government had to repurchase the shares when WRB initiated legal proceedings in 2017 following the passage of laws by the Parliament of Grenada to liberalise the electricity sector under a World Bank-funded OECS project.
“That project sought to diversify Grenada’s energy sector to include renewables, thus enabling the country to meet its international commitments to reduce harmful greenhouse gases and to reduce the cost of electricity to support private sector development,” said a release from Government.
The legal action by WRB was grounded in a clause in the 1994 Share Purchase Agreement signed by the then National Democratic Congress (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.
WRB Enterprises legal team successfully argued before the International Centre for Settlement Investment Disputes that certain clauses in the 2016 Electricity Supply Act will negatively impact its financial operations.
The 2016 law was a direct outcome of the 2011 World Bank’s Eastern Caribbean Energy Regulatory Authority project. That project sought to put the legal framework in place to liberalise the energy sector in Grenada and St Lucia.
The ECERA was part of the World Bank Group’s Regional Partnership Strategy 2010–2014 discussed by the World Bank’s Board on 8 June 2010. Establishing a regional regulatory authority was seen as instrumental for increasing efficiency improvements in electricity service delivery and helping to optimise the utilities’ fuel choices and procurement of renewable energy.
Specifically, said the final report, the regulatory authority was tasked with exerting pressure for efficiency on electricity companies that were not subject to regulatory oversight and improving the scrutiny of the incumbent utilities’ generation capacity expansion plans, requiring them to purchase power from independent producers in cases where doing so could lower the total system costs.
The final report dated June 2019 said that the overall outcome rating is unsatisfactory based on a Project Development Objective. “The project design and objectives were relevant and of strategic importance. However, the restructured project continued to focus heavily on the outcomes relevant to the establishment of the ECERA agency and did not fully capture the modified outcomes with respect to the National Regulatory Authorities,” said the report under the subtopic labelled as justification for ratings.