by Linda Straker
- NDC government’s priority will be seeking strategic partner to take over majority shares of Grenlec
- In December 2020, NNP government repurchased majority shares from WRB Enterprises
- Repurchase of shares based on 1994 Share Purchase Agreement by then Nicholas Brathwaite lead NDC government
8 days after being elected to run the affairs of Grenada for the next 5 years, Prime Minister Dickon Mitchell has disclosed that one of his government’s priorities within the coming year will be seeking a strategic partner to take over the majority shares of Grenlec so that the company can continue “on a path of being well run” and “profitable.”
In December 2020, the former New National Party (NNP) government had to repurchase the majority shares in the lone electricity company from WRB Enterprises Ltd of Tampa, Florida, because of a dispute which was triggered after the Grenada Houses of Parliament approved the 2016 Electricity Supply Act. That piece of legislation provides for the liberalisation of the electricity sector.
The repurchase of the shares was based on a Share Purchase Agreement entered in 1994 by the then Nicholas Brathwaite lead National Democratic Congress government which was voted out of office in 1995.
WRB Enterprises said that the enactment of the 2016 Electricity Supply Act violated sections of the 1994 agreement and proceeded with arbitration using the International Centre for Settlement of Investment Disputes. WRB won the case and the government and WRB Enterprises settled for a payment of US$63 million to repurchase the majority of the shares.
In a news release issued in December 2020 after the repurchase, the then government said that it had 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.
The Prime Minister, in an exclusive interview with WPG10, said, “What we need to look at is to find a strategic partner or strategic shareholder in conjunction with the Grenadian shareholders. Because you have to remember that the National Insurance Scheme, the Grenada Ports Authority, at least another 1,600 are shareholders of that company, they have depended over the years on being paid their dividend over the years and having a well-run company. The employees have benefitted, have been well paid and for the most part, are probably some of the highest-paid employees in Grenada.”
The interview was aired shortly after he took the oath of office to include Finance, National Security, Home Affairs, Public Administration, Information and Disaster Management as part of his ministerial portfolio.
“What you want is a strategic partner that can allow the company to continue on that path of being well run, profitable, where we have a reliable supply of energy and at the same time begin the process of transitioning to renewables,” he said.
“That is also critical, as long as we are burning fuel, we are subject to the vicissitudes of the ups and downs of oil, and so it’s important for us to have a strategic partner who also wants to invest in renewables and who wants to follow up and say we need to have as much of our grids,” he said.
With regards to the measures put in place by the former administration to minimise the cost of electricity for consumers, Prime Minister Mitchell said there will be an assessment to determine the way forward. “It was meant to be a temporary measure. The management of Grenlec is concerned about the impact of it on its revenues, so that has been flagged already by Grenlec and the PS in Finance, so that will be a talking point,” he said.
“If it is that the measure has a deleterious effect on Grenlec revenue,” he added, “then we honestly have to look. It is a situation where I am sure the citizens will not want power out, so obviously we have to do a balancing act and see whether outside of that measure there are other measures that we can take towards addressing the cost of electricity or other items relating to the cost of living. Maybe the further zero-rating of other items, obviously we will need to do a trade-off,” he added.
Goverments must learn from others. Vital resource cannot and must not be give majority holding into the hands of private companies. Private companies must make profit for its share holders. At Grenada expense. Grenada 51% company 49%. At least we gave controll.
Is that how being a majority shareholder in a cooperation works? If only I had known this a few years ago!
You also need to realize that a MAJORITY shareholder of Grenlec can charge whatever price they want for services. A MAJORITY shareholder of ESSENTIAL SERVICES that is foreign not always in the interest of the people.
– I understand what he’s trying to do(apart from enriching his law office and partners)
-But for us to remove our selves from oil dependency and for us to create a more dynamic power grid we need to own grenlec.
-why would a someone want to own majority shares in a power company that is trying to reduce consumers bills(both non fuel and fuel charge is less for most renewable installations)
-geo thermal energy , inter Caribbean connected power grid(placing solar panels , wind turbines etc in places that are not affected by hurricanes) will not be possible
– the proposal for an inter Caribbean connected grid is being thrown around because renewables are fragile
-But if we find oil then its okay(kinda)
– lets face it if we don’t find oil grenlec will have to shrink, not now but in the near future as renewable technology becomes better and better
– dickon need to do some consolation first , you can’t step into the ministry of finance listen to one person and making bold statements like this
-in my view his initial statement is short sighted
Here we go