St. Maarten utility company GEBE gets 60 days to comply with concession

POSTED: 07/21/11 11:42 AM

St. Maarten – Vice Prime Minister Theodore Heyliger who is responsible for Energy and Water has again expressed his disappointment in the performance of the management of GEBE when it comes to both the electricity and water side of the utility company. That displeasure has been communicated to the company’s Managing Director William Brooks and the company’s Supervisory Board of Directors which is chaired by Julius Lambert in separate letters dated July 19.

Heyliger informs Brooks in his letters that the government will contemplate whether to cancel the company’s concession for generating electricity in 60 days if no movement is made to take immediate and effective actions to comply with the Electricity Ordinance and Concession that were approved in July 2010. Cancellation of the concession will be considered an immediate default on the company’s loan to California based Pacific Mutual Life.

There are no plans to cancel the Water Supply Agreement even though Heyliger says the utility company has defaulted on its responsibilities in this sense as well. As a sanction Heyliger has said that GEBE must absorb all costs that can be attributed to the mismanagement of the water company.

“The total amount of these costs is to be credited by N.V. GEBE to the reserve account of the water company,” Heyliger wrote in his letter to Brooks.

The letters to the Supervisory Board outline the company’s partial or lack of compliance with the concession and the water supply agreement and informs them that government will hold them co-responsible for the lack of action and calls on the body to take action to protect the company.

“The present situation, with the Managing Director’s engagement not being continued, further strengthens my view that the Supervisory Board of Directors should take immediate actions, safeguarding the interest of the corporation,” Heyliger informed the board at the end of both his letters to them.

Heyliger has also requested legal advice on whether he can also hold the Board of the Shareholding Foundation responsible for the company’s lack of compliance in implementing the terms of the concession.

Tariff Structure

Heyliger’s letters were sent as people continue to complain about especially the high electricity bills they receive from the company. The fuel clause on those bills is burdensome and is often two and three times the amount people are charged for their actual consumption. As part of the new concession the government has the ability to set the company’s tariffs but Heyliger says the company has yet to hand over key information to the Bureau Telecommunications and Post which has been requested to provide an advice. Those key documents are the company’s proposal for new tariffs with a tariff study and details attached, the proposed fuel clause with efficiency factors and fuel cost attached, multi-annual operational, investment and cash-flow budgets, the approved or unapproved budget for both 2010 and 2011 and the business plan for 2009 to 2023 with attachments and investment schemes. The Bureau will use this and other documents already received to create an advice that the government will decide on.

While the battle for the information wages on, the Minister of Tourism, Economic Affairs, Transportation and Telecommunications Franklin Meyers informed the company on July that it must remove all charges related to inefficiencies from the fuel clause calculation per August 1.


Government and parliament also continue to fight over how exactly to give people relief on the fuel clause. The opposition leader William Marlin of the National Alliance has accused members of parliament from parties that support the government of flip-flopping on a motion that would potentially provide relief and again accused Prime Minister Sarah Wescot-Williams of “misleading the people” by stating the fuel clause would be removed from their bills.

At a press conference Wednesday morning the prime minister refuted that she’d ever said that the charge would be removed completely or that she’d attempted to mislead anyone.

“What benefit would it be to me or to the government to mislead the people of St. Maarten. Cone the end of August I have nowhere to go from St. Maarten, so what would it benefit me to mislead the people about such a sensitive issue like GEBE. Yes, it was the intention of the Government of St. Maarten, and I could refer you to statements made by the Minister of Economic Affairs with regards to that, somewhere around the 23rd or 24th of May, the minister was very clear that GEBE would be instructed to basically remove the fuel clause as it was being applied to the tariff. After discussions, you would know that the day before or maybe the morning before that the management of GEBE was to meet the minister, they held their own press briefing, explained certain issues. Never the less following that meeting and communication between the minister and GEBE it was decide to nuance or give a nuance to the position by government regarding GEBE and the fuel clause and that is where, in the end, the letter sent to GEBE spoke of a conditional approval to apply the fuel clause, but not to include anymore the inefficiencies which, from indications by the minister, make up a large part of the fuel clause,” Wescot-Williams said.

She’s now advised Marlin that rather than trying to find a smoking gun that he and members of his faction should “help in governing this country.” She also reiterated that there is no way that the parliament can instruct the government to do something. This is a reference to the motion the National Alliance tabled during the budget debate about GEBE.

The resolution states, “To instruct the Share Holder Representative of GEBE to request the management and Board of Supervisors of GEBE to submit within 30 days an answer on the possibility to grant consumers up to 50% reduction on the Fuel Clause for a period of 6 months.”

In reply Wescot-Williams said, “Parliament has its responsibility as an autonomous organ in the governing of the country. However, things like we instruct the government to do, does not work in the system that we have in the parliamentary system. Parliament can express a wish of desire or request for government to. It is done in that way, in order to make a decision, be it regarding GEBE, the Crime Fund or whatever have you, that parliament needs to interact with government. None of the two can function on their own without taking into consideration the other. That is why a Parliament would express a position towards government. This thing about instructing to do without considering the further or bigger picture for any item doesn’t work. It does not work.”

Though the resolution of the motion states clearly that Parliament would instruct the shareholder representative Marlin said Wednesday afternoon that his faction “was not trying to instruct the company to give 50 percent relief.”

“We wanted to express our desire to provide the consumers of St. Maarten with some measure of relief and give government and the company 30 days to sit and work out a solution. Also we believe that since parliament represents all of the people and the people are the shareholder, GEBE would do well to take heed,” Marlin said.


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