A Public-Private Partnership that Benefits Our Nation

A public-private partnership (PPP) is when a business or service is funded and operated through a partnership between the government and one or more private sector companies. Public-private partnerships are designed to raise private capital for investments in infrastructure improvements, technical advancements, and expansion of business services.

Grenlec is an excellent example of a successful public-private partnership between the Government of Grenada, the electric utility, its shareholders, and the public. It’s a long-term partnership with a proven track record for benefitting all stakeholders.

How the Grenlec Public-Private Partnership Began

Today Grenlec is a world-class electric utility with 99.99% reliability and sound financial performance.

Some of us may remember when, 20 plus years ago, electricity service was less efficient, less reliable and not universally available. Customers experienced frequent outages and blackouts, and public funds were not readily available to meet the nation’s increasing demand for reliable electricity services.

In 1992, as part of an economic structural adjustment programme recommended by leading international authorities including the Caribbean Development Bank, the Organization of Eastern Caribbean States, and the East Caribbean Central Bank, the Government of Grenada, which owned and operated Grenlec, moved to convert Grenlec to a public-private company.[1] Grenlec needed investment capital for improvements in infrastructure to build capacity, upgrade the quality of service, increase reliability, control costs, and eliminate the burden on public funds.

After a competitive bidding process in 1994, the Government sold 50% of its Grenlec shares to WRB Enterprises, a private company with decades of experience in successfully rebuilding, upgrading and operating utilities in the Caribbean. The remaining 50% of shares were retained for the Government, Grenadian, regional and other investors.

Diverse Base of Local Shareholders

The Government of Grenada owns 10% of Grenlec shares, the National Insurance Scheme (NIS) owns 11%, and 29% of shares are held by a diverse base of over 1,800 Grenadian, regional and other shareholders, including Grenlec employees. All shareholders participate in the success of Grenlec through dividends and share-price valuations.

Serving Our Nation

All citizens benefit from Grenlec’s consistent operations and profitability. The Company has an excellent record of paying annual dividends to its shareholders. As shareholders (investors), the Government of Grenada and the NIS benefit directly from these dividends. The Government receives revenue to help support the nation and the NIS is funded to help secure social services and security benefits for citizens in need. Since 1995, more than EC$136 million has been paid to shareholders.

Investments for Performance Improvements

 Since 1994, over EC$250 million has been invested by Grenlec to modernise our electrical system, double installed capacity, peak load and customer connections, and integrate more renewable energy.

Emergency operational systems are in place to expediently restore power when hurricanes hit.

The chart below highlights some of the operational improvements since Grenlec’s privatisation and management as a public-private partnership.

Performance Highlights – 1995 to 2015

Source: Grenlec 2016

 Lowering Electricity Prices

 Stabilising electricity costs is of paramount importance to our Company and country. In 2015, both fuel and non-fuel charges decreased significantly. Consistent with the current requirements of the Electricity Supply Act of 1994, the fuel charge declined to $0.3117/kWh in December 2015─a 42.5% decrease in fuel charges compared to December 2014. Effective January 8, 2016, the fuel charge decreased again to $0.2869/kWh. The current fuel charge is at its lowest level since 2004, a reflection of the low world fuel prices over the last 18 months.

The non-fuel charge was lowered twice over the past 15 months: a 3.2% effective November 1, 2014, followed by a 2.36% effective January 1, 2016. In total, the combination of fuel and non-fuel charge reductions resulted in a price decrease of 23.8% from November 2014 through December 2015.

The reductions comply with the Electricity Supply Act and demonstrate the effectiveness of current legislation in controlling electricity pricing. Since the privatisation of Grenlec, the non-fuel rate has decreased by 31.8% when adjusted for inflation. The current regulatory framework benefits customers by regulating the monthly fuel charge based on Grenlec’s cost of fuel, and the non-fuel charge with a price cap formula to keep adjustments lower than the Consumer Price Index (CPI).

Contributing to Our Community

The Grenlec Community Partnership Initiative (GCPI) continues to contribute 5% of Grenlec’s pre-tax profits to support community, educational, environmental, and social service initiatives. Since 1994, more than EC$18 million has been invested to help our youth, elderly and families.

Creating a Better Environment for Economic Growth

As a proven, successful public-private partnership that benefits all Grenadians, Grenlec looks forward to working collaboratively with the Government of Grenada, national stakeholders, businesses and customers to build upon the world-class electric system that helps fuel our nation today. Together with our employees, customers, board and shareholders, we can continue to increase our use of renewable energy, stabilise electricity prices, advance new technologies, increase our energy security, while reducing our nation’s reliance on fossil fuel imports.

Grenlec is committed to maximising value for all our customers and shareholders. We will continue to expand our partnership with all stakeholders by introducing more renewable energy and increasing efficiency for the reliable, safe and affordable delivery of electric service to benefit all our customers.

For more information, please visit www.grenlec.com/energise.

[1] Source: Castalia Strategic Advisors, LLC, September 2014