On Wednesday, December 30th, 2020, Hon. Gregory Bowen and Hon. Oliver Joseph, hosted a press conference to address the people of Grenada on Government’s Repurchase of the WRB Shares GRENLEC, in keeping with the Arbitration Tribunal’s Award to WRB, rendered on March 19th, 2020.

1. Source of Government Funds for Refinancing

Foremost on the mind of we the people was the source of financing for the repurchase of shares and the other payments that Grenada was required to make in keeping with the award of the Tribunal – a whopping bill of approximately XCD182 mn. given our cash strapped situation made worse by the unexpected demands of a COVID-19 pandemic.   Imagine the surprise and confusion of we the people when Hon. Bowen, the recently minted Minister of Finance and other things including Public Utilities,  advised:-

• Financed by State Coffers;   The repurchase  was financed by the state’s coffers!!??
• Savings from the Implementation Shortfall:  The repurchase was SAVINGS arising from the implementation SHORTFALL of various capital projects.  There was a XCD180mn. “savings” from the shortfall in implementation in 2020.  (Wasn’t such a situation normally described as “implementation deficit”?)
• Aided by COVID-19:   Hon, Bowen suggested that COVID-19 may even have helped since it had affected the implementation of a number of capital projects.
• Not a Loan:  The Government did not have anyone lined up to provide loan financing.  It had the wherewithal to purchase the shares.
• Which Projects:  Neither Min.  Bowen nor Min. Joseph offered any information on  the specific projects on which these savings had accrued as a result of shortfalls in implementation or otherwise. 
• Replenishment of Expenditure:  But Min. Bowen advised that the monies would have to be replenished from various sources.  He mentioned the following.  e.g. sale of lands; Levera; 2 projects in St. David’s.  As we the people will recall, those projects are citizenship by investment projects.
• Min. Bowen’s Explanations/Clarifications:  The Hon. Minister of Finance explained:
• Moving Around Capital Expenditure:  Capital Expenditure could be moved around and reallocated without Parliamentary Approval. 
• Resolution to Approve Expenditure:    An “allocation is the authority/permission to spend; to raise the cash and spend”.   The Approval for the expenditure was already given, in accordance with the Public Finance Management Act, for capital expenditure under for the 2020 allocations.

Hon. Bowen’s explanations left many of us gasping, “I can’t breathe!!”

1. Observations/Queries/Comments:Capital Expenditure or Public Debt:
2. Settlement of Tribunal Award:  Min. Bowen advised that buying back the WRB shares was a “capital expenditure”.  To we the people, this seems to be to more appropriately a public debt which has to be settled.

1.1.2.    The 2020 Capital Expenditure

• Financing the 2020 Capital Budget[1]:  The sources of finances targetted re  the 2020 Capital Budget were as follows:-  grant financing of XCD 201.8 mn; loans of 12.4 mn. and local revenue of 11.1 mn.  The National Transformation Fund was targetted to provide XCD145.5 mn. of grant financing.
• The 2020 Capital Expenditure Allocations:  A review of the Fiscal Summary 2020[2]  in respect of Capital Grants  and Capital  Expenditure yielded the following information:

Source:  Table 11, Fiscal Summary, Sources of Capital  Estimates

• Shortfall in Grants 2020:  Given the significant shortfall in capital grant inflow presented by the 2020 Fiscal Summary, where is/was  the room for “moving around and reallocation of capital expenditure?
• Allocation: Authority/Per/mission to Spend/Raise Cash and Spend
  • Act 10 of 2019 Appropriation (2020) Act, 2019:  This Act approved the Estimates of Revenue and Expenditure 2020.
  • 2020 Budget Loan Authorisation Act 11 of 2019:    This Act authorized the Minister of Finance   “to borrow from various sources, an amount of One Hundred Million Eastern Caribbean Dollars (EC$100,000,000)”.  The Schedule also states that, “All agreements signed pursuant to this Loan Authorisation Act will be tabled in Parliament as soon as practicable”.
  • Capital Estimates 2020, Loans:  The loan amount targetted by the 2020 Capital Estimates was XCD12.4 mn.  Why was Authorisation sought for XCD100mn.
  • Citizenship by Investment, Heng Sheng “Developers”:  In August 2019, Min. Bowen led the Grenadian delegation to “promote”the Grenada Levera National Tourism Project citizenship investment programme with the Heng Sheng “developers”.  Was he “selling lands”  and citizenship to raise money for the purchase of the shares in GRENLEC? 

• Government’s Wilful Malfeasance Arguments

Wilful malfeasnance on the part of GRENLEC  was a  justification put forward by the Respondent/Government  for its  intervention,  via 2016 legislation,  to put an end to GRENLEC’s monopoly licence.  Minster Bowen advised the press conference:-

• In Line and Well Put:  The wilful malfeasance arguments were “in line and well put”. 
• Prior Actions:  However, the Tribunal indicated that there were things that should have been done prior to these arguments being put forward.    There was adequate proof for the wilful malfeasance arguments had another route been taken.

• The Tribunal’s Observations on Wilful Malfeasance

The Tribunal noted as follows:-

• No Evidence:  The evidence put forward by the Government did not support the “wilful malfeasance” argument.
• Procedurally Inadmissible:  The wilful malfeaseance argument was procedurally inadmissible.  In order for the defence of “wilful malfeasance” to apply, the SPA 1994 clearly requires “prior ICSID determination BEFORE not after a licence abrogation”.
  • The Tribunal further noted the benefit to the Government of the provision, “This provision therefore provides the Government with an opportunity to test its allegations of wilful malfeasance risk-free before an ICSID Tribunal without triggering a Repurchase event.”   Government did not follow this procedure.

• Tribunal’s Observations re GoG’s Arguments

The Tribunal offered the following general observations on the arguments put forward by the Government of Grenada as the Respondent to the WRB’s claim:-

• Political Rivalry:  The New National Party, then in opposition, had opposed  the privatization recommendation that was embraced by the administration of the National Democratic Congress (“NDC”)   “This political rivalry played out over the next 20 years and provides essential background to many of the events that led to the current dispute.”
• Lacked of Factual Evidence:   “The main difficulty confronting the Respondent was not so much that the Government lacked legal arguments (on which point the Respondent was very CREATIVE) as it was the lack of  FACTUAL evidence necessary to sustain the legal arguments that were put forward with considerable gusto.” (Own emphasis)

3.         Expect Load Shedding:

Min. Bowen warned we the people to expect load shedding – with the government repurchase of shares, the country may  face a SPATE of load shedding.  He advised that if the main generator is taken out   service for maintenance, and the base set  is unable to function, then load shedding will occur.   He advised that load shedding had already occurred.  It is ironic that Min. Bowen is describing the same situation, load shedding, that had become the norm in the country when that the electricity company was under his watch as General Manager.

The reality is that transitioning to renewables requires a PHASED approach in order to ensure STABILITY.  The reliability and capacity of the renewable plants have to be tested as the utility company (GRENLEC) provides the necessary back-up.  To date, the Government has not shared with Grenada, the proposed plan for transitioning the electricity sector into renewables. 

• Transfer of Shares from the Government to the People

It is noteworthy that the Ministers have advised that the Government will retain ownership but GRENLEC will retain the status of a private company and that the Government will be offering shares to the people of Grenada.  The company will remain on the Eastern Caribbean Stock Exchange but Government would have to take action to make it simple to sell shares to people since, in order to sell shares on the ECSE, one must get a broker/agent.   

• Queries/Observations:

The Government of which Min. Bowen is a senior member in not known for its adherence to procedure so this should cause some lifting of eyebrows.  Clarifications are required:-

• Transfer of WRB shares to GoG:  Given the listing on the Stock Exchange, what was the procedure followed for the transfer of shares to the Government of Grenada?
• PURC Regulations:  Have the PURC Regulations entered into force and when?
• Network Licence:  What is the status of the PURCregulations which grants a licence to GRENLEC and what is the status, particularlySection Q, Termination of Licence for Expiration of its Term.
• Section Q 1.:    Transfer of shares of GRENLEC to the Government:  “When the  Term of this Licence expires in accordance with Part II.C.2, the property of all shares of GRENLEC held by private persons shall be irrevocably transferred to the Government of GRENADA free of charge and without payment for such transfer.”

• Aided by COVID-19:

“COVID-19 might have helped.  There was a shortfall in the implementation of certain projects in 2020.”  This remark by Min. Bowen is noteworthy. 

• Re-opening of External Borders/Unequal Application of COVID-19 Protocols:  When the Government re-opened the borders, why did it  apply COVID-19  protocols UNEQUALLY, in respect of testing and quarantine resulting in the crisis that Grenada  now experiencing,  knowing full well that, date, there had been no case of community transmission, and  the threat from Grenada came from outside?  
• Suspension of Fiscal Rules:   Was it of some advantage to the Government to maintain a certain level of COVID-19 incidence in Grenada?    Was one of those advantages the suspension of the fiscal rules that would restrain the Government from undertaking certain expenditure and incurring debt?
• Eligibility to Access Certain Funding:  Does a certain level of COVID-19 incidence make Grenada eligible to access certain funding mechanisms?  Are/were these funds being used/used to address COVID-19 or for other purposes?
• Sustainable and Inclusive Debt Approaches(?):  Is the Government making a case for debt swaps, blue bonds, green bonds etc. which will merely increase and/or “kick the and debt further down the road” and affect the people’s access to and use of their natural resources?
• Lock Down Measures:  Does the Government want to have a justification and means to restrict the freedom of assembly and freedom of movement  of we the people?

• Misinforming/Misleading/Disrespectful:
• Poor Performance in Spin:  The Press Conference hosted by Min. Bowen and Min. Joseph was a poor performance in SPIN.  It was an exercise in misinforming and misleading we the  people of Grenada.  WHO wrote the script for these two Ministers?
• Disrespectful:  It blatantly insulted the intelligence of we the people!  Do they really think we are that stupid?
• Full Disclosure:   Full disclosure of  the people’s business must be demanded of the  Government of Grenada.  How do we the people address a situation where members of the Executive  BLATANTLY misinform and mislead we the people?  Action and measures are required. WE MUST STAND UP FOR GRENADA!

[1] Pg xiv, Table 11 Sources of Capital Expenditure 2020 in Estimates of Revenue and Expenditure 2020

[2] Reference, Table 1, Fiscal Summary, Capital Grants 2020, Memorandum of the Revenue and Expenditure Performance for 2020  in  pg “i”  in the Estimates of Revenue and Expenditure 2021