We looked at the professional ones and the price was quite high, but working with the World Bank they agreed that if we conduct a study, they will make recommendations as if they were the managers,” Bowen disclosed. “Ideally, if we get a consultant, they do not want any executive position so as opposed to getting that company that would have charged a significant amount of money, we have tailored it into a consultancy and the consultancy will be working with the management of the company.
“So it is in that context that we are moving forward as opposed to a professional company coming and taking everything and charging you a sum of money… We can get the same result with the consultant,” Bowen said.
These are the words of Minister Gregory Bowen, the Minister responsible for Energy in an on-line article captioned, “Government to hire consultants to administer Grenlec’s affairs”. What exactly does this mean? As is usually the case, utterances from this Minister are jumbled phrases (oral or written) stitched together which leaves listeners/readers completely befuddled.
Examining the words of the Minister, it seems that a management consultant will be hired – to do what? Will they look at Grenlec’s operations and make recommendations to Grenlec’s management as to how the operations of the company could be improved? If that is the intent, then that is perfectly okay. However, it gets a bit confusing by the words “the consultancy will be working with the management.”
Does that mean that the consultant will be looking over the shoulders of the Grenlec CEO and his management team? Bottom line, the role of the consultant should be made crystal clear. It makes me wonder how the present Grenlec management is viewing this development – I’m sure with some trepidation.
The only thing I can surmise from this statement by the minister is: it is designed to disguise the fact that despite earlier pronouncements by the Prime Minister that Government does not wish to run Grenlec, Government, it seems intends to run it – and Minister Bowen thinks he is being clever by using the hiring of a consultant and invoking the name of the World Bank as cover to get the duos (you know who I mean) claws back into Grenlec!
The World Bank has been consistent in its views that utility companies such as electricity, water and telecommunications are best left to the private sector to own and operate.
There are many examples especially in developing countries where Governments have been in control of these type of businesses, and the result has been inefficiencies, poor service and plenty of corruption. This leaves me fairly confident that the World Bank or its sister institutions such as the International Finance Corporation (IFC) will frown on a Government-owned Grenlec.
But again, Bowen, calling on the World Bank to help with consultancy services may be an attempt to buy time. With the oil and gas promises made on the eve of the last election failing to materialise, perhaps the next grand pre-election promise will be to offer a reduction in electricity rates.
On the issue of electricity rates, there has been some chatter involving Grenlec, the PURC and the Government about lowering the non-fuel (NFC) component of the electricity tariff which by the way the NFC has seen only modest increases over the last 27 years and in fact has been static for many years (currently there is a formula based on cost of living for adjustment of the NFC). A word of caution here.
The non-fuel component of the tariff is what allows Grenlec to operate and maintain its generating plant and transmission and distribution system, meet its debt obligations, and pay dividend to its shareholders.
Indiscriminate lowering of this component of the tariff could have serious negative effects on the quality of service and profitability of Grenlec.
According to Grenlec, the PURC is currently looking at a different basis for determining the NFC – one based on a fixed return on rate base (rate base is the costs on which the utility is allowed to make a specified return – these costs are usually items such as plant and equipment but generally includes costs that the utility incurs to provide its service).
If Government is intent on providing rapid rate relief then they should consider subsiding the cost of the fuel used by Grenlec.
One final thought that I believe lays bare Government’s intent with regard to the ownership structure of Grenlec. In the present construct, out of a nine (9) member Board of directors, Government of Grenada has six (6) seats on the Board of Directors and from those six, the chairman and deputy chairman are selected.
The National Insurance Scheme has one director by virtue of its slightly over 10% shareholding. One director is selected by the Grenlec rank and file workers, leaving one vacant seat.
A special resolution was put forward in the last Annual General Meeting that the remaining seat should be reserved for the minority shareholders and as such, the NIS should not be allowed to vote in selecting that director – the Government and NIS used their shareholding power to kill the resolution.
Minor shareholders who collectively own 17-18% of Grenelc’s shares were shut out from having any representation on the Board. That vacant seat will be effectively filled by a person hand-picked by the Government (NIS is a Government institution).
Nice going Mr. Bowen and your cabal.