by Sandra Ferguson
What is the status of the Grenada Postal Corporation and the Gravel and Concrete? Has the Government of Grenada divested itself of the control and ownership of these State-owned Enterprises? Has it entered into partnership with any other entity or individual? What is Government’s intent?
These are some of the queries that citizens of Grenada have been seeking answers to over the last year and a half? Direct questions to the “authorities” have not elicited answers which shed any clarity on the matter. This article notes the references to the Grenada Postal Corporation in a number of reports and documents in the search for clarity.
Who or What Is the “Small Partner” Providing Commercialized Services to the Grenada Postal Corporation?
The May 2017 report of the sixth and final review of the IMF mission re Grenada’s implementation of its three year Structural Adjustment Programme, 2014-2016, provides a clue. According to the report:-
“While strategic partners are still being sought to convert the Grenada Postal Corporation (GPC) into a financially independent entity, a small partner has been involved in providing commercialised services. However, these transactions have been under discussion for an extended period. Staff urges the government to conclude the negotiations and to provide greater transparency about the process to allay public concerns”.
Who is this “small partner” who has been involved in providing commercialised services to the Grenada Postal Corporation? Why the secrecy about the arrangement? How was this partner chosen? What agreement was entered into with this “partner”? What services does this small partner provide?
SOEs and the Structural Adjustment Programme:
The Grenada Postal Corporation is a State-owned Enterprise. Under the three-year Structural Adjustment Programme, 2014-2016, the Government of Grenada committed to undertaking reforms to “secure fiscal discipline” and “improve financial performance” of Statutory Bodies and State-owned Enterprises, noting that they represented an important source of contingent liabilities to the Government of Grenada.
It committed to undertake a review of the State-owned Enterprises and statutory bodies with technical assistance from CARTAC and to develop a strategic plan for the sector by October 2014.
The plan would:-
· provide up-to-date information on the financial viability of each statutory body, including the sustainability of any long-term pension arrangements;
· classify each as being in line for liquidation, privatisation or retention, and provide a time schedule for such action; and
· lay out concrete plans to restructure financially weak statutory bodies that have been retained
Based on information from the December 2014 report of the first IMF Review, the review was undertaken and Cabinet had set up a Committee to “consider the reform strategies for individual institutions”.
CARTAC Review and Recommendations :
In respect of the Grenada Postal Corporation, the following were the key issues identified by the CARTAC consultants:-
· Large accumulated and ongoing losses (3 Mn EC);
· No formal debt but large and growing payables to the Universal Postal Union (2Mn EC);
· Parcel Rates unchanged since 1973;
· Ownership of multiple small-scale post offices across Grenada
The CARTAC Review recommended as follows:-
· franchising of post offices should be explored as an option to reduce costs and increase revenues
· parcel rates should be increased only as part of a wider structure of the cost base
Cabinet Committee Recommendations
The strategic plan approved by Cabinet in respect of the Grenada Postal Corporation was as follows:- The Grenada Postal Corporation would be restructured to improve efficiency, including through the possibility of franchising by the end of 2015. The costs of restructuring was estimated at EC$4million. The IMF 2nd Review Report noted that the reform strategy proposed by the government went beyond the CARTAC recommendations.
In its Memorandum of Economic and Financial Policies attached to the report of the second IMF review, the Government of Grenada acknowledged receipt of US$5 million in loan financing from the World Bank to complete the restructuring and commercialisation of the Grenada Postal Corporation (GPC) and Gravel, Concrete and Emulsion Production Corporation. Grenada Postal Corporation was expected to be commercialised in the first half of 2016.
Retrenchment of Workers:
According to a report of March 23rd, 2016 in New Today newspaper:_
· 146 workers received severance packages amounting to EC$9.0m at the end of February 2016.
· 96 workers were recalled to work and 50 were retrenched
· Prime Minister Mitchell had indicated that he did not know who will be taking over the operations of the state-body;
· During a radio programme, Deputy Prime Minister Elvin Nimrod advised that an entity had been identified but declined to release the name because discussions were ongoing.
Amendments to the Grenada Postal Corporation(Amendment) Bill, 2016:
The Grenada Postal Corporation (Amendment Bill) 2016 was tabled and passed in both houses last year. The amendments are quite instructive and may be taken as an indication of the plans/actions already agreed/acted upon by the Government of Grenada.
The Principal Act, Grenada Postal Corporation Act Cap 1300 has been amended as follows:-
· Insertion of a new Section, Part II a Agreements with entities and undertaking joint ventures”
· Amendment of Section 8 of the Principal Act.
1.1. Part II a: Agreements with entities and undertaking joint ventures
Among the amendments and their provisions are the following:-
1.1.1. Power to Enter into Agreements:
· Transfer GPC Assets: With the approval of the responsible Minister, the GPC may enter into an Agreement with an entity or entities, or participate in a joint venture with an entity or entities and transfer the tangible and intangible assets of the GPC including the responsibility and authority to provide postal services and related services throughout Grenada.
Agreement: Agreement means a “contractual arrangement between the Corporation and a private entity or private entities, or a joint venture entity as the case may be to provide postal and other goods and services throughout Grenada:”
1.1.2. Provisions of Agreement:
The following are among the provisions provided for by the terms of the Agreement, with the approval of the Minister:-
i. Transfer of the Corporation’s Property and Rights: Transfer of the Corporation’s property, rights to an entity, or entities, or joint venture
ii. Management Structure: The composition and manner of functioning of the management structure of the new arrangement including its directorate
5.1.3. Rights of an Entity, Entities or Joint Venture:
· Exclusive Rights to Provide Postal Services: The entity/entities/joint venture shall have exclusive right to provide postal services and other related services throughout Grenada
· Transfer of Property and Rights agreed by the Parties: Properties and rights shall be transferred to the entity/entities or joint venture.
· Vested in the entity/entities/joint venture: Any interest, rights and liabilities created in accordance with the Agreement shall be vested in the entity/entities/joint venture.
1.1.3. No Transfer of Liability or Obligations upon Signing of Agreement:
· “no duty, liability or obligation conferred or imposed on the Corporation by any law or otherwise whatsoever, and existing to prior to the commencement of this Act, shall be deemed to be conferred or imposed on an entity, entities or joint venture as the case may be ; except the duty, obligation or liability is necessary to protect the interest of the users of the postal service”.
1.2. Amendment of Section 8 of Principal Act: Board of Corporation
· Section 8 of the Principal Act makes provision for the Board of the Corporation.
· Sub-section (2) provides for a membership of seven members to be appointed by the Minister, “to represent such interests, including that of Government, as the Minister determines”.
· Amendment re No. of Board Members: The amendment to sub-section (2) provides for a “maximum of seven members and a minimum of two members”.
· It is useful to note that the Minister appoints the Chairperson and Deputy Chairperson of the Board. This provision has not been amended.
2. IMF Fifth Review, December 2016
An update re the reform of the state owned enterprises and statutory bodies advised that Cabinet had approved a “reform agenda broadly consistent with CARTAC recommendations” and “implementation has focused on the restructuring of the Postal and GCEPC Corporations”
In respect of the Grenada Postal Corporation:_
· the private sector had been involved in the restructuring process
· Staff redundancy was resolved in February 2016 – 150 workers had been retrenched and received severance; the way was paved for private participation in the operation of the postal service;
· Total severance costs were estimated at EC$7.5 m or 0.3 percent of GDP
· Greater transparency about the plans for this new entity and/or and the timing of conclusion of the deal would be desirable.
3. Budget Presentations in 2016 and 2017:
It is interesting to note the following:
· Budget Statement 2016: Annex X, page 119, Financial Summary for Statutory Bodies and State Owned Enterprises, presents financial information on a number of the State Owned Enterprises – e.g. assets and liabilities, revenues and expenses, employee expenses etc. However, there is no information on the Grenada Postal Corporation. All columns are blank.
· Budget Statement 2017: There is a summary quarterly report to September 2016. A net profit of $503,714.04 was recorded. The value of equity was noted as zero.
– Status Unclear: The summary also has a note on the status of the various SOEs. The status of the Grenada Postal Corporation has been described as unclear.
4. Observations/ Queries:
Based on the foregoing, the following observations/queries are made:-
· Transparency: When will the Government of Grenada tell the citizens of Grenada what is the TRUE situation in respect of the Grenada Postal Corporation? Does it still belong to the citizens or has the government given it away?
· Private Entity/Small Partner: Currently, a private entity, “a small partner”, is involved in providing commercialised services to the Grenada Postal Corporation. What is the identity of this partner? What are the terms under which this partner is operating?
· Amendments to the GPC Act 2016: The amendments to the Grenada Postal Corporation Act 2016 suggest that the Board of Directors may have just two members. This seems to gives some indication re the type of private entity.
· Restructuring Costs: How much has restructuring of the GPC cost the Government to date? How much of the US$5 million loan from World Bank has been used in respect of restructuring the GPC?
· Severance Pay: What was the amount paid in respect of severance pay? The figures vary from $5 million to $9 million depending on source of information.
· Payment of Arrears to Universal Postal Union: Has the approximately EC$2 million been paid off or arrangements made for payment?