{"id":43169,"date":"2021-02-05T14:15:17","date_gmt":"2021-02-05T14:15:17","guid":{"rendered":"https:\/\/www.climatechangenews.com\/?p=43169"},"modified":"2021-02-08T17:34:44","modified_gmt":"2021-02-08T17:34:44","slug":"grenada-nationalise-electricity-60m-pursue-renewables","status":"publish","type":"post","link":"https:\/\/www.climatechangenews.com\/2021\/02\/05\/grenada-nationalise-electricity-60m-pursue-renewables\/","title":{"rendered":"Why Grenada had to nationalise its electricity for $60m to pursue renewables"},"content":{"rendered":"

With abundant sunshine and three active volcanoes, the Caribbean islands that make up Grenada are perfect for solar and geothermal power. Yet, despite the government\u2019s concern about climate change, they get nearly all their electricity from expensive and polluting diesel.<\/strong><\/p>\n

Speaking to Climate Home News, Grenada’s finance minister Gregory Bowen said successive governments were desperate to change this but had their hands tied by a privatisation deal made nearly 30 years ago.<\/span><\/p>\n

On advice funded by the World Bank, the current government pursued reforms to support renewables – only to be ordered to renationalise the electric utility by a World Bank tribunal, for $58 million plus legal costs.<\/p>\n

As the government seeks to recoup some of the costs by selling shares in the utility, Bowen held up the three decade-long struggle as a cautionary tale. \u201cIt has significantly prevented us from going into renewables and we do not believe any country, any small country, should enter any such agreement,\u201d he said.<\/p>\n

In the 1980s, <\/span>almost all developing countries<\/span><\/a> had nationally owned electric utility companies. The only major exception was Chile, then run by free-market dictator General Augusto Pinochet. In the 1990s, they started to sell them to private companies, cheered on by institutions like the World Bank.<\/span><\/p>\n

One of those countries was Grenada. In 1994, on advice from the World Bank, it privatised its electric utility, Grenlec. The then government sold a controlling interest to a small family firm in Florida called WRB Enterprises, which made its money primarily by selling Caterpillar construction machinery and whose only electricity experience was in part of the Turks and Caicos.<\/span><\/p>\n

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Bowen, who ran Grenlec when it was state-owned<\/a>, described the privatisation contract as one-sided and \u201cthe worst deal that could ever have passed\u201d for Grenadians.<\/span><\/p>\n

Bob Blanchard, chief executive of WRB, disputed that characterisation, telling Climate Home News the company shouldered its fair share of risk. “Every decision we made if it backfired came on the stockholders not the rate-payers,” he said.<\/p>\n

Among the deal’s conditions was that, if the country\u2019s currency collapsed, there was civil unrest or its power supply was wrecked by a hurricane, flood or fire then the government would have to buy Grenlec back. Any change to the law that impaired the value of Grenlec’s assets could trigger a “repurchase event”. The price would be determined by a formula in the contract which Bowen says \u201chad nothing to do with fair value\u201d.<\/span><\/p>\n

Meanwhile the rate-setting framework allowed Grenlec to pass on any increase in the oil price to consumers.<\/p>\n

Between 2011 and 2015, Grenada\u2019s energy costs per kilowatt hour were between four and ten times more expensive than those in the USA, although similar to some Caribbean neighbours’. In a recent press conference<\/a>, Grenadian foreign minister Oliver Joseph described high electricity costs as “stifling economic growth” by putting off manufacturing companies from investing.<\/span><\/p>\n

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Gas prices are going up again today. Grenlec also said that their fees are increasing because of the rise in the cost of fuel.<\/p>\n

\u2014 Ashleigh🥑🌻 (@_Ashess_) July 17, 2018<\/a><\/p><\/blockquote>\n