CDC open to selling its stake in GPL
By Gitanjali Singh
Stabroek News
February 28, 2003
Wes Griffin, head of the CDC power investments in Guyana, says its subsidiary, AC Power, is open to talks with any investment partner willing to invest equity or capital into Guyana Power and Light (GPL).
Speaking to Stabroek News from St Lucia yesterday, Griffin also confirmed that CDC Globeleq had been talking to a Caribbean investor with interest in the electricity sector to sell all of its assets in the Caribbean, including its 40% stake in the Guyana Power and Light (GPL). However he said these talks began last year and as it related to GPL were not dead but had gone “very cold”.
Griffin, who is a director on the GPL and AC Power boards with responsibility for CDC Globeleq investments in Guyana, Dominica and St Lucia, said it made no sense to talk to an investor on GPL given the poor shape of that operation and the nature of the discussions between the government and CDC to restructure its operations to improve its financial situation. Nonetheless, Griffin indicated that CDC Globeleq would be open to any and all arrangements once the current discussions with the government were concluded, as the power company needed capital. He said that such investment could come in as part of AC Power.
The BBC monitoring service has reported that CDC Globeleq is negotiating the sale of its interests in a number of utility assets, including those in three Caricom member states, namely Guyana, St Lucia and Dominica. This report was based on a statement made to the Dominica Electricity Company employees to stem reports circulating on that firm’s future.
According to the BBC report, CDC Globeleq is discussing the sale of assets over the next few months with a number of interested parties and if any or all of the assets mentioned are sold, the company will focus on its investments in Africa, the Americas and Asia.
Griffin indicated that the discussions with the investor on the Caribbean investments went as far as allowing for some level of due diligence but he said that the discussions were progressing “fairly slowly”.
As to the negotiations with the government, Griffin said a significant number of issues were outstanding with the most important being how the Public Utilities Commission (PUC) compensation order of US$7M against GPL would be treated as it made it very difficult to justify future investments in GPL.
Stabroek News was told that the government was considering meeting this expense if the GPL appeal in the High Court against the PUC order was to be overturned.
Griffin said that the targets set to reduce the system losses at GPL had been ambitious and could not have been achieved in light of additional information at hand. He said the managers confronted a broad array of issues when they took over the company and whilst it was successful on the technical side, it did not have such an impact on the commercial losses.
His position was that when AC Power took over GPL, there were significant outages and the management was able to reduce the level of outages.
He doubted that if the equity had been injected up front this would have had a significant impact on the system losses. It was because of the risk of investing in Guyana that AC Power insisted on bringing in the US$23.45M investment over a period of three years and in four tranches, the last of which is still outstanding.
Griffin would not comment on claims that AC Power had contributed to the financial crunch by withholding the final tranche of its equity and by the managers writing off $1.1B in bad debt from the accounts which is said to be inconsistent with previous decisions on this issue.
CDC Globeleq is currently negotiating changes to the agreement with the government including the removal of the managers and further diluting the powers of the PUC to regulate the quality and cost of service provided to consumers.
