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?