Anglec is the familiar
name of the Anguilla electricity company.
Structurally, it is a statutory corporation whose shares are owned
mainly by the government of Anguilla and its agencies. In 1991, when Anglec was formed, government gave
it the assets of its Electricity Department.
In exchange, government got most of its shares. The Commonwealth
Development Corporation (CDC) which had earlier invested in the electricity
service also became a shareholder.
Government purchased CDC’s shares in 1998, becoming the sole shareholder
in Anglec. Dividends were paid to
shareholders for the first time in 2002.
That dividend yield was 2.8 %. It
was paid to the sole shareholder, government.
In
2003, in the face of public protests, government offered 6 million shares to
the public. A total of 17 million of
Anglec’s authorised 30 million shares have now been issued. Government holds 40%. The local banks and the Social Security Board
purchased 40%. A number of individuals purchased
20%. Either directly or through its
subsidiaries government now owns 80% of the shares. In 2010 the dividend was a high of about
6%. In 2015, the last year of its
published accounts, the dividend was about 2.5%.
In
the 2003 Prospectus, the stated objectives of the share issue were to improve
the quality and reliability of the electricity supply, develop the professional
and technical skills of employees, maintain stable and affordable prices, and
achieve financial viability. It was
hoped that the Public Utilities Commission would begin to regulate tariffs by
the year 2004. (This never
occurred. To this day Anglec’s
rate-setting continues to be supervised by the government’s Ministry of
Infrastructure.) Electricity rates are
said to be among the highest in the region.
There
are several valid arguments against privatisation of electricity. One is that maintenance teams that were once
fully staffed will be dramatically cut to reduce costs. The effect of such cuts will be an increase
in equipment failure, leading to a rise in outages. Consequently, a privately owned electricity
company may be able to blackmail government into a bailout or allowing an
increase in the rates with a threat of blackouts.
The
privatisation of electricity is not something that citizens normally demand or
want. Once shares are offered to the
public, there is typically little interest in public participation. On the contrary, privatisation frequently
gives rise to bitter protests.
At
the time in 2003, many persons objected to this transfer of the Electricity
Department to a private company. It was
said that electricity was a basic human right and should not be run like a
commercial enterprise. Ownership by a
government department meant that social welfare concerns could be brought to
bear. However, the majority of us knew
that the Government’s Electricity Department was running the service very
inefficiently and that there was a lot of waste. We hoped that putting management under a
Board of Directors would ensure the service was better managed than by the
government bureaucracy. So, the
privatisation proceeded.
We
were soon to be disappointed in the management of Anglec. As each administration took power after a
general election, they appointed political hacks to the Board of Anglec. These political Boards have made a mess of
management. Such political boards are now
recognised to be generally unprofessional and unsophisticated. They wrongfully dismiss employees, resulting
in litigation that causes the corporation millions in damages. Some high-ups engage in serial sexual
harassment of junior female employees. Management
seems ineffective in halting this abuse.
Staff say that repeated complaints are ignored by the Board. Morale has been falling and dissatisfaction is
rising. It is time for this to change.
The
government of Anguilla now proposes to sell all of its shares in Anglec in
order to raise money to meet its expenses.
This proposal has caused a renewed controversy among the talk-shows in
Anguilla. The radio waves are filled
with words of condemnation against this supposed “giving away” of a national
treasure. We hear warnings that this
planned privatisation will bring doom to Anguilla. It is said to be a betrayal of the people by
its own government. That is the
controversy that I want to look at today.
Normally,
in the West Indies, electricity rates are controlled by an independent statutory
Public Utility Commission (PUC). Normally,
no public utility can increase the rates without securing the consent of the
PUC. An electricity company should not
be allowed to exploit the consumer by unreasonably increasing rates. On the other hand, the electricity company
should not be driven into bankruptcy by not being able to increase its rates to
make a reasonable profit. Such a system (of
putting a PUC in the middle between the consumer and the utility company) is
designed to install an independent and transparent institution to ensure
fairness to both the consumer and the utility company.
In
Antigua, for example, the Antigua and Barbuda Public Utilities Authority (APUA)
controls the increase of rates for electricity, telephone, internet, and water. In Anguilla this is not so. In Anguilla there is a Public Utility Company. But, its mandate is limited to the telephone
companies. If Cable and Wireless or
Digicell want to increase their rates, they have to get the permission of the
PUC. But, in Anguilla that process does
not apply to electricity or water. There
is no independent body to control the rates charged by the Water Corporation of
Anguilla or Anglec. These two utilities
are under the control of the government’s department of Infrastructure. This department is headed by a Minister of
government, a politician. In other
words, electricity and water prices to the consumer are controlled by the political
directorate. There is no independent
body to supervise increases rates in Anguilla.
Just as Anglec cannot increase rates without the permission of
government, so any purchaser of government’s shares in Anglec will not be able
to increase the rates without political permission. I ask the question, which politician will
permit electricity or water rates to be increased if there is likely to be a
public outcry?
Anglec
holds a Public Supplier’s Licence. This
provides for Anglec to submit a claim to government to increase rates. The rules are that if the requested increase
is refused, Anglec can submit its claim to an independent arbitrator. That arbitrator is the High Court judge
assigned to Anguilla. You may well consider
that a lawyer or judge is not the best qualified person for determining the
justification for an increase in rates.
This is a technical area that requires to be dealt with by suitably
qualified experts in the field.
When
the Anglec shares were originally issued to the public there was a conditional promise
that dividends would be in the range of 6%, or EC$0.15 per share. This promise was subject to a number of
conditions. I am told by private
investors that level of dividend is seldom met.
Over the past twenty years the average return per annum has been more
like 4%. In other words, this investment
has not lived up to the promises (conditional as they were) that were
originally made.
There
is an overriding reason why government should be encouraged to divest itself of
the remainder of its shares in Anglec if it can do so. Given the culture in Anguilla of Ministers appointing
unqualified cronies to the Boards of statutory corporations, any effort to take
the appointment of such a Board out of the hands of a politician and put it in
the hands of the shareholders is to be encouraged. The present and continuing appalling lack of
morale among the staff of Angec because of the unprofessional and oppressive conduct
of some in high office requires that they be all swept out of office and
replaced by persons chosen on the basis of merit.
The
sooner that Anglec is fully privatised the better for all of us. Any objection to such a long needed and
overdue reform is nothing but the most blatant political posturing.
But,
tell me again, based on the history above, without fundamental restructuring, which
honest and well-advised foreigner is going to invest tens of millions of
dollars in purchasing government’s shares in Anglec?
