ST. GEORGE’S, Grenada – The Grenada government Tuesday said it had taken a decision to discontinue the 25 percent on the nonfuel charge associated with electricity supply by the island’s lone power company, noting that the company had been losing “significant revenue” as a result of the measure.
Prime Minister Dickon Mitchell speaking at news conference (CMC Photo)Prime Minister and Minister of Finance, Dickon Mitchell, speaking at the weekly end of Cabinet news conference, told reporters that the state-owned Grenada Electricity Company (GRENLEC), had as of September 12, had accumulated EC$16 million (One EC dollar-US$0.37 cents) in losses due to the initiative that had been put in place by the previous administration to cushion the impact of increased global energy prices.
“That has had a very negative impact on the cash flow of GRENLEC and on its ability to meet its commitments as they fall due. In the circumstances this particular aspect of the stimulus package, as difficult as the decision is, is not sustainable,” said Mitchell.
He told reporters that his administration cannot risk jeopardizing the financial stability of the electricity company continuing with this part of the stimulus package.
“So the discount will be discontinued (and) based on GRENLEC’s billing cycle …the impact if any, will probably be felt around November of this year. We, however, are going to look at alternative measures to cushion the impact, particularly for customers who consume less than or up to 100 kilowatt hours per month.”
Mitchell said that the statistics provided by GRENLEC suggests that there are 15,000 households and small businesses to be affected “and so we will look to see what measures can be taken from the government’s perspective to cushion the impact…”
“We are hopeful that if the fuel prices for electricity continue to trend downwards that eventually we will also see a downward trend in the cost of electricity,” he said, adding that his administration is mindful of the cries from consumers about the high cost of the product.
“But we also have to be honest with the population (and) to a large extent the cost of electricity is determined by the price of fuel and we all know that worldwide the price of fuel has gone up significantly partly because of the Russian –Ukraine war…”
Mitchell said that the power outages that have been occurring on the island in recent times have been due, according to GRENLEC “mainly because one of its main engines has in the last months or so experiencing some technical glitches”.
He said that the engine is still under warranty and that an official from the company is on island assisting in finding a solution to the problem.
But he acknowledged that the state-owned company would need “significant investment” in the coming months if it is to continue to meet the demands for the growing consumer base.
Mitchell said that there were a number of hotels slated to become operational over the next two years and “GRENLEC would have to be in a position to meet that demand.
“For it to be able to meet that demand its generating capacity needs to grow. It is clear based on the initial report provided to me that the prior administration did not pay any attention to this. There is in fact no strategic plan particularly to deal with the growth in demand and for GRENLEC to meet the generating capacity
“Our administration is keen to ensure that GRENLEC is in a position to do so and therefore the mandate to the board is to provide the government with a comprehensive plan on how GRENLEC intends to meet the generating needs of the society,” he said.
During the news conference, Mitchell also announced that the government would maintain the freight rates for goods being imported into the country at the 2019 figure and that the measure would be reviewed by the end of March next year.
However, the government has decided against waiving the petrol tax that had been capped at EC$15 per gallon.
Mitchell said that the measure is unsustainable in the current context, adding “the government simply cannot afford to continue not collecting the tax and at the same time finding itself in a position where it has to pay the petrol suppliers.
“So the Cabinet has taken the decision to continue with the removal of the petrol tax as of the next price change on the 18th September,” he said, adding however the government anticipates that the price per gallon will drop below the EC$15 benchmark, expecting “confirmation of that within the next 24 to 48 hours”.
