Minister of Health, Nickolas Steele who has emerged in recent months as the chief spokesperson for the ruling New National Party (NNP) government has commented on the decision by the major shareholders of Grenlec to approach a United Nations body for arbitration in a matter involving the State.
Speaking at last week’s Tuesday’s post-Cabinet press briefing, the senior government minister said that what the electricity generating company has simple done is to trigger the mechanism that relates to a particular issue in the Share Purchase Agreement when the company was privatized in 1994.
“….They have exercised the buyback clause which exists in the Share Purchase Agreement. There is a mechanism that that initiates – one has to prove that such an incident occurred, and two, if such an incident occurred, then there is discussions on the value of that buy back and if any of those two are not agreed on, then it is referred to arbitration…so that is where we are right now with communication”, he told reporters.
According to Minister Steele, the position of the NNP regime since returning to power in 2013 is not to get rid of the U.S-owned company, WRB Enterprises and its subsidiary, Grenada Power Providers (GPP), which are the major shareholders of Grenlec.
He said the intention of the administration is to end the monopoly that exist in the electricity generating industry so that the people of Grenada can benefit from lower electricity costs.
“We believe, and we still believe that with the change of legislation, there is still more than enough ability for the current owner of Grenlec to perform and to perform with reasonable profit, and to exist as quite possibly the sole or major provider of electricity in Grenada.
“… With the mechanisms that are now put in place based on the legislation to ensure that in terms of the Public Utility Regulatory Commission, in terms of the legislation that would allow other investors of other entities to come in and bid for the provision or the level of providing electricity to Grenada.
“However, it can be assumed that because Grenlec has been here, Grenlec has so much infrastructure, Grenlec should be able to out bid anybody because they have existed here for so long , supposedly providing electricity at the best possible price for the people of Grenada.
The relationship between government and Grenlec took an all-time low after the Mitchell-led government took legislation to Parliament to pave the way for other providers to enter the market.
Grenlec has accused the government of not engaging in serious discussions on the issue.
On March 22, GPP issued an advisory for the Government of Grenada to repurchase its shares in Grenlec.
The SPA requires government to repurchase shares that government sold to GPP in 1994 if government elects to take certain unilateral actions.
The NNP government is now obligated pursuant to the SPA to repurchase the Grenlec shares held by GPP at a price calculated using the contractually mandated formula specified in schedule II of the Electricity Supply Act of 1994.
According to Grenlec, the total amount, calculated according to contractually mandated formula is EC $176.65 million and under the terms of the SPA, the government had 30 days from March 22nd within which to make the required share purchase payment to GPP.
With no purchase being made, GPP announced that it has filed for arbitration with the World Bank’s International Centre for Settlement of Investment Disputes (ICSID).
The Grenlec release said in part: “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.
“Despite these circumstances, GPP and WRB are open to comprehensive and collaborative negotiations with the Government to best serve Grenlec’s customers, shareholders and the people of Grenada”, it added.
Prime Minister Mitchell has stated publicly that government prefers to sit down with Grenlec and resolve the issue and not go the way of arbitration since it can hurt the country’s image.