Thursday, 2 May 2019: We refer to a recent article in The New Today, in which Minister Gregory Bowen provided comments on the Social Fund. Grenlec would like to take this opportunity to provide much needed clarification on the Minister’s comments, especially concerning the source of funds for the Social Fund and the Electricity Supply (Amendment) Act 2017 (the “Act”).
Minister Bowen’s recent statements suggest that the Social Fund is to be paid for by Grenlec’s customers, “the people”. If this were what the Act prescribed, then just like the existing VAT and Environmental Levy charges that Government imposes on Grenlec’s customers, a Social Fund charge would be added to customers’ bills, and Grenlec would be required to collect these monies for Government and remit them directly to Government.
However, Minister Bowen’s statements do not reflect what the Act actually says. The Act clearly states that “Every network licensee shall contribute five percent of its pre-tax profit every financial year to the Social Fund.” This means that Grenlec alone, not its customers, is responsible for paying in to the Social Fund. Note that this levy would be in addition to the corporate taxes that Grenlec already pays to Government. In other words, Grenlec’s shareholders must now pay an additional 5% tax on profits; those funds would be paid into a fund that would be subject to the exclusive discretion and control of the Minister and a Minister-appointed committee. Grenlec has challenged the legality of this Act in Court and is awaiting the Court’s ruling.
If Government truly intends to make Grenlec’s customers pay for the new Government-controlled Social Fund, as announced by Minister Bowen, then it should amend the Act and clearly articulate that it intends to impose another charge on electricity customers.