Sunday, 15 March 2015

A Dark cloud hangs over Grenada’s Electricity Reform Process


In 1994, the government of Grenada signed an agreement with WRB, a little known American company to which majority shares in Grenlec was divested. The agreement was a very much one sided affair which not only transferred controlling interest to WRB but also provided “ self regulatory” powers to the company.
Back then, the current Prime Minister, Dr. Keith Mitchell was in the political opposition. He lambasted the content of the agreement and Chester Humphrey, president of the powerful Technical and Allied workers union joined him on that crusade. Maybe the genesis of their
present alliance was established back then, some 20 years ago.

The country was literally grinding to a halt with interminable blackouts and load shedding. Recall that in the late 80’s, the present Minister of Communication and Works, Hon Gregory Bowen was the manager of the island’s sole electricity company. History records that at a particular juncture, Dr. Mitchell was the Minister of communication and works, the line minister to whom Mr Bowen had reporting responsibility.
Some observers opine that the country’s negotiating position was extremely weak as dubious purchases of second hand equipment under Mr Bowen’s watch, persistent arrears of government receivables to the company, poor employee morale and the trade-mark load shedding were like millstones around the neck of government’s negotiating team.

The rest is now history. Part of that history is the entrenched hostility by Messer’s Mitchell and Bowen to WRB dominated GRENLEC. When Dr Mitchell’s New National Party won the election in 1995, Mr Bowen assumed the Works Ministry portfolio. His hostility to the WRB management personnel especially to Mr. Nigel Wardle, the then manager of the company, is well remembered by long standing employees. However Grenlec made significant investment in plant, equipment and training. Load shedding was left somewhere along the road and the promise of reliable and efficient electricity generation and delivery became a reality. Most Grenadians 25 years and under can hardly remember electricity blackouts and load shedding. However, there is one significant bugbear, high electricity rates.
During the unbroken tenure of Dr Mitchell as Prime Minister 1995-2008, a crude form of peaceful co-existence between Grenlec and the NNP administration was the order of the day. Much of that thaw was due to the efforts of the Jamaican born manager Mr. Vernon Lawrence.

The advent of renewable energy has created new opportunities for the government to promote a new offensive on Grenlec. Mr. Bowen has become an evangelical adherent to the scripture of Liberalisation as he contends that competition in the energy sector will drive electricity rates down.
The facts are that investment cost in renewable energy is still high and that even if it was pursued as a policy imperative; rates reduction will not be realized anytime soon.  Grenlec owns the backbone of the electricity generation and distribution infrastructure and it seems unwise to pursue reform without developing a constructive relationship with the company.

The Mitchell/ Bowen combination in government has now clothed themselves with exquisite fabric namely reduction in rates, attracting investment in renewable sources of energy, reducing the country’s carbon footprint, energy independence et al. This is the perfect suit. The government has now circulated for discussion a draft Electricity Supply Bill 2015. This bill contemplates sweeping powers to the Minister (the Minister of communication and works is Hon Gregory Bowen) at the same time that a regulatory mechanism is being put in place. His functions range from establishing and communicating national energy policy, the power to grant, suspend, modify or extend licences, act as a technical regulator, making regulations etc.

The draft act seems to be a confused menu of powers that is conferred to the minister and ECRA (Eastern Caribbean Regulatory Authority). In fact the minister is given the right of impunity under the proposed legislation as it is riddled with statements like ‘the minister may determine’, ‘as the minister may think fit’, ‘as the Minister considers necessary’. Clearly the overarching presence of the minister in the proposed legislation is anachronistic as it is unacceptable.

At the National Consultation which was held to discuss the Electricity Reform Bill the representative of Grenlec, in an emotional outburst, lamented the fact that the proposed legislation could only lead to politically motivated micromanagement in the sector. It is patently obvious that many of the powers conferred to the minister constitute a level of intrusion that is not in sync with international best practice.  Under section 48 of the proposed legislation, captioned ‘Penalty for unauthorised supply of electricity’ a person convicted under this section and persists in the practice, can be subject to seizure of plant and equipment and other assets. The Minister is cited as the enforcement agent and not the Police. Suffice to say the word ‘Minister’ is used over 100 times in a piece of legislation which contemplates 68 sections. Do the math, it tells an interesting story.

Finally, the draft legislation seeks to repeal the Electricity Supply Act of 1994.  What then will be the status of the agreement signed between the Government of Grenada and WRB? Maybe we the people will just have to wait and see.

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