On May 5th Grenada Private Power Limited (GPP), the 50% shareholder of Grenlec, along with GPP’s parent company WRB Enterprises Inc. (WRB), filed a request for arbitration with the World Bank’s International Centre for Settlement of Investment Disputes (ICSID); the purpose of this arbitration is to enforce the Government of Grenada’s contractual obligation to repurchase the 50% Grenlec shareholding that Government previously sold to GPP.
GPP and WRB commenced the ICSID proceeding in follow-up to a formal share repurchase demand that GPP submitted to Government on March 22, 2017. GPP submitted that repurchase demand pursuant to the Share Purchase Agreement (SPA) that Government, GPP and WRB entered into in conjunction with Government’s privatisation of Grenlec in 1994. The SPA requires this repurchase to be completed within thirty days following Government’s receipt of GPP’s repurchase demand. Given that Government has not made the mandated repurchase payment, GPP and WRB have no alternative means for protecting their contract rights other than by pursuing the ICSID arbitration as dictated by the SPA.
“During the past three years, Grenlec, GPP and WRB have made every possible effort to initiate good-faith, collaborative negotiations with Government focused on facilitating responsible and effective electricity sector reform in Grenada, and thereby avoiding the necessity of our taking legal action to protect our contractual rights,” said G. Robert Blanchard, Jr. Chairman & Managing Director of GPP, and President of WRB Enterprises. “Unfortunately, Government has consistently elected to rebuff these efforts by the Grenlec team, opting instead to pursue a unilateral approach for restructuring every aspect of how Grenlec’s system should be owned, operated and regulated.”
These unilateral actions led to Government’s enactment of the Electricity Supply Act 2016 and the Public Utilities Regulatory Commission Act 2016, which took effect on August 1, 2016. These two Acts cause substantial adverse operational and economic consequences for Grenlec, including (although by no means limited to) Government’s effective abrogation of the Grenlec licence that the SPA parties committed to establish as the central aspect of Grenlec’s privatisation in 1994. This unilateral and injurious course of conduct has left GPP and WRB with no choice but to enforce their contractual repurchase rights in the manner dictated by the SPA.
In accordance with the specific repurchase valuation requirements dictated by the SPA and set forth in Schedule II of the Electricity Supply Act of 1994, the repurchase demand for GPP’s 50% ownership interest in Grenlec amounts to EC$176.65 million.
“We want to stress again that our decision to file an ICSID claim was not driven by GPP’s and WRB’s desire to exit Grenada. We always have been, and remain, dedicated to assuring that Grenlec operates a world-class utility system that provides reliable and efficient electricity service to the nation. However, Government’s unilaterally-dictated course of action, implemented at odds with our agreed-upon and binding contractual arrangements, has left us with no other effective option,” said Mr. Blanchard. “If, on the other hand, Government demonstrates in a tangible and meaningful manner that it now wishes to engage in comprehensive and truly collaborative negotiations with the Grenlec team, we remain willing to participate in those talks in an effort to best serve the interests of our customers, shareholders, employees, and people of Grenada.”