The state-owned Grenada Electricity Company (GRENLEC) recorded a pre-tax profit of EC$19.35 million (one EC dollar = 0.37 US cents) last year, coinciding with the fact that the government has taken over majority ownership of the island’s only power company.
In December 2020, the then-ruling Keith Mitchell administration bought back the majority of shares due to the International Center for Settlement of Investment Disputes (ICSID) tribunal’s favorable ruling to the US-based WRB companies that had first acquired the majority shares in 1994.
The purchase agreement provides that disputes between the majority owner and the government will be resolved through ICSID, established in 1966 for the settlement of legal disputes and conciliation between international investors and states.
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Legal proceedings were initiated in 2017 after Grenada’s parliament approved legislation in 2016 to liberalize the electricity sector. The purchase agreement stipulated that any changes in the law that adversely affect the value of GRENLEC’s assets could trigger a “buyout event”.
GRENLEC held its first annual general meeting since the takeover last month and according to the annual report for 2021, the company reported a profitable year despite the social and economic challenges directly linked to the coronavirus (COVID-19) pandemic. .
“Despite the challenges, the extraordinary efforts of our team members in 2021 resulted in a pre-tax profit of $19.35 million, down 11.91% from the EC$21.96 million earned in 2020. There was an extraordinary item of EC$10.88 million for insurance reimbursement related to an engine. failure in 2020,” the report said.
“Excluding the effect of this refund, true operating profit was EC$8.55 million, 61% lower than 2020. This lower profit margin is attributable to costs of operating costs, as well as an under-recovery of EC$5.5 million in fuel costs. The low fuel cost recovery rate of 93.38% was the lowest ever,” wrote Dr Shawn Charles, then GRENLEC Chairman.
“This fuel cost recovery rate is determined by the three-month rolling average used to calculate the fuel charge paid by customers. When fuel prices rise, customers are protected against large increases and our company under-recovers the cost of fuel. During the year under review, there was a huge increase in fuel costs, which started to increase in January and continued until the end of the year,” he recalled. to shareholders.
“These fuel price increases, the associated lower fuel cost recovery rate and the continued impact of COVID-19 have resulted in lower earnings per share. At EC$0.78, earnings per share (EPS) of your company was down 8% from the 85 cents earned in 2020,” according to the president’s report.
“However, your Board of Directors maintained the same level of dividends as in 2020, with a total dividend paid of EC$0.52 in four quarterly installments of thirteen cents per share. Eastern Caribbean (ECSE) traded between EC$10.00 and EC$11.50 per share in 2021 and traded at a price of EC$10.50 per share as of August 15, 2022,” the report states.