Thursday, May 31, 2012

IMF Echoes the GHTA's Concerns about Energy Costs

Statement by the IMF Mission to Grenada

[IMF] Press Release No. 12/198
May 30, 2012

An International Monetary Fund (IMF) mission led by Ms. Nita Thacker visited Grenada during May 7–17 for the 2012 Article IV consultation. This consultation is a bilateral discussion which the IMF typically has with its members, once a year. During this Consultation, a staff team visits the country, collects economic and financial information, and discusses with officials the country’s economic developments and policies. The mission met with Finance Minister Nazim Burke, Permanent Secretary Timothy Antoine, other senior government officials, the opposition leader and members of his team, representatives of the business and financial sectors, and labor unions. At the end of the mission, Ms. Thacker issued the following statement:

“Following two years of consecutive decline, there are signs that a fragile recovery may be underway. Real GDP grew by 1.1 percent in 2011 and is expected to reach 1½ percent in 2012, on the back of a continued growth in agriculture and a gradual recovery in tourism stay-over arrivals. Inflation is expected to stay broadly stable at about 3 percent in 2012. However, the fiscal situation deteriorated in 2011, in part, reflecting revenue shortfalls due to the extension of various temporary tax exemptions. Private sector credit growth remains sluggish as banks continue to remain cautious and tighten lending standards given the increase of nonperforming loans. The current account deficit is expected to remain around 25 percent of GDP, reflecting high food and fuel prices. Looking ahead, significant downside risks remain. These include the high public sector debt level and budget financing constraints, high current account deficits and net external liabilities, and financial sector vulnerabilities, including potential spillovers from the region.

“Discussions focused on three policy areas: (i) restoring sustained growth and generating employment; (ii) resuming fiscal consolidation to put debt on a firm downward trajectory and to build a growth-oriented budget; and (iii) strengthening the financial sector. Ambitious reforms in these areas are essential to create jobs, boost medium term growth, and reduce poverty.

“Grenada faces a sizeable competitiveness gap. During the past years, increases in production costs—including from higher energy costs and wages, and lower productivity—have put downward pressure on profit margins and stifled investment. Achieving higher growth and sustained employment generation will therefore require the steadfast implementation of key structural reforms. Some measures for improving the business climate, including implementation of ASYCUDA World, have been implemented. Other key reforms that need to be implemented include wage discipline to reflect productivity combined with efforts to enhance labor skills, improving flexibility of labor and product markets, facilitating access to credit, fostering small enterprise development, addressing high energy costs by using alternative sources, better exploiting the linkages between the agricultural and tourism sectors, and more effective monitoring and implementation of efficiency-enhancing reforms at state-owned enterprises.

“On the fiscal front, the high public sector debt combined with budgetary rigidities and limited sources of financing are key challenges and underscore the urgent need for more lasting and significant fiscal consolidation. The authorities are committed to generating primary surpluses of at least 1½-2 percent of GDP over the medium term to put debt on a sustained downward trajectory and achieve debt sustainability through a combination of revenue and expenditure measures. Addressing existing budgetary rigidities on current spending, in particular with respect to the high wage bill, will strengthen the budget’s pro-growth orientation and create space for capital expenditure. On the revenue side, reducing and streamlining tax incentives and exemptions could generate fiscal space for much-needed investments in infrastructure and other development priorities to ensure sustained growth and create buffers against future shocks.

“Ongoing efforts to strengthen the financial sector could benefit from further improvements in monitoring and forceful action to address weakening of credit portfolios, low profitability, and the rising level of nonperforming loans, both at banks and credit unions. Potential spillovers from regional financial markets should continue to be monitored.

“Upon its return to Washington, the mission will prepare a report, to be discussed by the IMF's Executive Board, tentatively scheduled for July 2012. The mission thanks the authorities for their warm hospitality, candid discussions, and close cooperation during its stay in Grenada. The mission also thanks all other stakeholders for taking the time to discuss various issues.”

Tuesday, May 29, 2012

The Grantwriting Grind

When I work with clients who want me to develop project proposals for them, I often encounter an expectation that I will just fill in a form, make a budget and funding will follow. Thankfully Grenada’s Hotel and Tourism Association knows better - because the project planning process to reach a zero carbon and energy liberalization goal is pretty involved!

As it is I am splitting hairs over it already. It seems like such a simple goal, but it’s a logistical nightmare. We have to consider timing – there is a need to make changes now – not years from now. So this is something I have to factor into everything. Then, the harsh reality is that none of the funding pools are sufficient to make a dent in converting to renewable technology. Either the pots of money are too small, or the technology is too dear. Private sector funding and fast-track funding is an option, but the best place to get access to that would be at a conference like the Rio +20 but we don’t even know who Grenada’s delegation members are, let alone whether they’d be any good at attracting corporate or bilateral sponsors.

As I keep saying though – where there’s a will, there’s a way – and I will find it.
Looking at various scenarios to pursue is a start. Retrofitting properties is a nice idea, but it’s not possible to just develop an open ended proposal for a pot of money to buy products for retrofitting. Energy audits must be done, cost comparisons must be made and if the product orders are big enough, tender dossiers must be prepared.

For example, LED lighting can reduce carbon emissions and electricity costs significantly. Using a typical small grants scheme as an example; I can only raise enough money to get about 1500 bulbs to share among 20 properties (even with the properties putting in 30%) unless we are willing to wait years and years for them by going for larger long term grants. Small grants usually take 1.5 years to get, while larger ones usually take 2.5 years and longer. We don’t have that kind of time.

Solar panels are a great solution, but the funding out there would only convert about 3 properties, leaving everyone else out, and even if I could raise all the money needed there are issues with maintaining the stability of the grid. Commercial financing for solar panels are out because the local utility forces properties to sell 100% of their renewable energy to the utility and then the utility sells it back with an almost 200% mark up.

The national conversion seems to be the most logistically sound path to follow (and most results oriented) since the entire country’s peak energy draw is only about 30Mw. But this will not be a quick fix because national renewable energy conversion should not be done with a monopoly arrangement, which means the monopoly needs to be broken first. In the meantime, the hotels are being strangled by one of the highest electricity rates in the world. The hotels have been trying to get the utility to cut rates for a long time now and the utility won’t budge.
I’ve got to develop a more effective lobby on that front, for sure.

So, I sit at the ‘drawing board’ working out scenarios, phases, matching up funding sources to possible activities all the while knowing the clock is ticking........tomorrow I have meetings scheduled with what I will call high value “Assets” who may be able to help me see the forest for the trees!
At least I have been doing this long enough to know that I usually feel the most lost right before I come up with my brightest ideas.

Friday, May 25, 2012

Civil Society to Guide Development in Grenada?

In an interesting turn of events yesterday; participants of the Non-State Actors Panel were informed that the Alternative Growth and Poverty Reduction Strategy has been very warmly received by the European Union Delegation in the Barbados, and with some extra time and effort invested – it could become the “official” country PRSP! According to the EU, what the Non-State Actors have done is the first of its kind in the Region, and the PRSP that was written for the Government was deemed ‘not-acceptable’ by the EU leaving the Civil Society document as the only functional development strategy for the nation at this time.
This is a really commendable development for Grenada, and an incredible opportunity to transform Grenada’s future. Ample praise and appreciation is due to the people who invested their time to consult with stakeholders and prepare the document – particularly since most of the document was prepared with volunteer resources (I will rant about the inequities of consultant contracts another day) by people who should have been paid for their work. But I know that like me – those of us who are really committed to a sustainable future for our children don’t do this work for the money so the work will get done anyway.
If this PRSP is ‘mainstreamed’ it could be used as a benchmarking tool for EU Budget Support and for this fact alone – the prospect is thoroughly thrilling! The 10th EDF budget support is worth nearly €10 million Euros. Imagine if it was spent wisely!?

For generations the world over, development strategies have been defined by powerful elite and technocrats, and that neglected community oriented priorities, indigenous knowledge and many practical considerations. The cornerstone of sustainable development is local ownership – and that means ownership at the community level – not just among the elites. Put in simple terms – imagine any team oriented sport where the players on the team are all trying to score in different nets. Practically speaking, it means that if sustainable development is to be achieved, all the players must know what the win-zone looks like and they must have a desire or at least an interest in reaching it. Without that kind of buy –in, it means people are struck with the antiquated trickle-down effect, which yields muted results at best.

So for these reasons Grenada is poised to mature as a nation in a very important way, and quite ironically the global economic slowdown has put development pressures on the private sector (such as electricity prices) that have moved all the non-state actors closer together in terms of how they perceive the win-zone.
Now it is up to those of us who are good at communications and strategic planning to enable this momentous opportunity! As one local activist said yesterday, ‘It is time to inspire’ [people]. Development from the bottom up, that is informed by sound fiscal policy and technocratic experience is in my view, the best and most durable approach for getting on (and staying on) a sustainable development path that respects the economy, society and the environment.

As far as the Hotel and Tourism Association and my company are concerned, our contribution to this will be our efforts to bring some energy justice to Grenada through our lobby for price reductions, energy liberalization and ultimately the conversion to renewable energy. There is no way we can consider a sustainable future for this nation if our energy production leaves us import dependant in an unstable global environment – and there is no way we can be a sustainable nation if households earning $800 XCD a month (yes, that’s a full time wage for some people here!) have to pay $20 XCD a month for every fan they use to keep the mosquitoes and heat away from them at night.
So we will be contributing to the PRSP process by defining our energy goals that will very likely become part of the Strategy’s action plan. I am quite confident that the GHTA’s plans will be adopted by the Non-State Actors Advisory Panel and eventually mainstreamed as a national development priority.
How amazing is that!!????

Maybe just maybe, I will be able to look into my daughters eyes when she grows up and tell her ‘I did all I could to preserve your future and it made a difference’. I shudder to even think what kind of a world she will inherit if we fail.

Thursday, May 24, 2012

The second day of meetings with the Non-State Actors Advisory Panel is about to begin. Yesterday, was a full day dedicated to presentations and discussion around thematic areas such as corporate social responsibility, investment, ICT4D and of course, energy.

Today, the group will be working together to provide input into project ideas for an action plan that will supplement the The Alternative Growth and Poverty Reduction Strategy for Grenada. This strategy is important, because the current development paradigm (at the international financial institutions, at least) places a great deal of emphasis on Poverty Reduction Strategy Papers (PRSPs). These are supposed to be 'home-grown' strategies developed by countries that outline the Nations own strategic development plans. The Non-State Actors Advsiory Panel is financially supported by the 10th European Development Fund (10th EDF) and it is a mandated requirement for the 10th EDF Budget Support (The European Union is now providing Official Development Assistance through budget support - but that's a whole other posting to explain!). The emphasis on local ownership is in part, a corrective measure from the era of Structural Adjustment Programmes (SAPs) of the 1980's and early 1990's that 'un-developed' a lot of countries due to the high level of outside influence on country development strategies. SAPs were focused on creating a favourable global investment climate that included devaluing local currencies to attract foreign investment, and cutting social spending. It was an appauling experiment in development that came with a high price tag for people and the environment.

So now, we have PRSP's serving as our global development rennaisance. Is it working? In Grenada's case, the country's official PRSP has not been published, so it's hard to tell. But if the Alternative PRSP developed by the Non-State Actors Panel gets any traction, it could be quite successful here. The Strategy applies critical development theory to practical local circumstances, and that is a good foundation for developing a practical action plan. It also has created a participatory forum for non-state actors to actively participate in development planning.

In yesterday's meeting, the most exciting contribution came from Dennis Noel, who owns a company called "Noelville" which makes a hugely successful pain relief product called "nutmed" produced with nutmeg oil. His proposal to the group was for us to focus on developing Grenada's herbal products and emphasize pharmaceudical research and development that would enable us to develop pharma products in Grenada for export to the world market. That's the kind of practical, forward thinking approach that can transform the nation if we all get behind it!

I explained the Grenada Hotel and Tourism's 'Earth Day Declaration' to the group; so that they might be informed of what private sector stakeholders are planning to do with respect to renewable energy. It wasn't clear whether the facilitator understood that our intention was to garner their endorsement, rather than asking them to take up our agenda. Needless to say that can be cleared up today.

I am quite proud of the fact that Grenada's private sector as a whole is ready to embrace sustainability and I think it is really important to blow that trumpet as often as possible, because if ALL of civil society can get behind a vision and own it, Grenada's development future is certain to be more prosperous and sustainable.

Tuesday, May 22, 2012

ETHICAL IDEAS: Where There's A Will - There's A Way

ETHICAL IDEAS: Where There's A Will - There's A Way

Where There's A Will - There's A Way

The Grenada Hotel and Tourism Association Members (GHTA) were treated to a presentation by Ethical Ideas (me!), titled "Grenada's Sustainable Tourism Future" last evening at the True Blue Bay Resort. The presentation outlined what we have done to-date, such as defining, voting upon and circulating the GHTA Earth Day Declaration. The presentation also profiled some of the things we are learning such as:

Converting to renewable (solar) energy isn't as easy as it sounds.....

The cost of setting up individual solar systems is one problem - because the electricity rates offered by the local utility GRENLEC are so low, commercial financing options are not viable. Grant funds are available but they take a long time to obtain and will not be sufficient to cover individual properties if the grants are obtained with a 'small project' fund. There is also the challenge of maintaining grid stability, which apparently could be affected if a bunch of properties started generating large quantities of solar power. It's starting to look like we'll need a feasibility study if we have systems put on hotel roof's, and it's not even clear if is this is the right way to go yet.

It may be wiser to look at National renewable solutions instead.......

This isn't set in stone of course, but it does look like the more practical route would be to convert ALL OF GRENADA to renewable energy. I've been told by a very reliable expert that the most cost-effective option for national conversion would be to aim for 70% renewable with a diesel back-up system. There's technical reasons for this (That are beyond my understanding!) that are apparently very costly to solve if we want to go 100% solar. Based on expert input, a national conversion would cost about $90 million USD! That's a lot of money!!! But...

Where there's a will, there's a way!

So, the Members have been given a briefing on where we're at, what I plan to do to keep the ball rolling in the right direction and we press onwards!!! The Grenlec Marketing Manager was present at the Members Meeting yesterday and the Members sure gave her a hard time, expressing frustration at the high electricity prices and arguing that it is in no-one's interest to be one of the most expensive countries in the world for electricity prices. I looked up figures for that argument today and found that indeed - Grenada is among the top 10 countries in the world for high electricity prices. The only country I could find with higher electricity rates was Tonga.

Friday, May 18, 2012

Background for Grenada's Hotels Zero Carbon & Energy Liberalization Campaign

It's an ambition that is being pursued against the backdrop of a business community that has encountered more than its fair share of challenges in recent years. Eight years ago, over 90% of Grenada's homes and hotels (buildings of all types, really) were destroyed by Hurricane Ivan. Imagine a small island state where over 90% of the buildings have literally been stripped to their foundations! The reconstruction process did provide jobs for the local populace, but the owners and operators of the hotels lost a lot of money while their properties were out of business as they rebuilt.

Grenadian business people are resilient, and despite their losses, many used the devastation as an opportunity to upgrade their properties, including environmental retrofits (which will be profiled on this blog later). But then, just as the hotels climbed out of rebuilding after the hurricane, the global economic recession hit and pummelled tourism and Grenada's economy. In 2009 Grenada economy contracted by nearly 8% and it hasn't grown above 1.4% since.

Seems like an usual time for hotels to be worrying about the environment doesn't it?

Well according to the President of the Board of Directors for Grenada's Hotel and Tourism Association (GHTA), Grenada's hotels endure more than hurricanes and recessions - they also endure the world's highest energy prices (Grenada being among the top ten). Renewable energy provides the opportunity to reduce those costs, as well as to revitalize the nation's tourism sector as it responds to the growing environmental conscience of their customers.

So, with the help of Ethical Ideas, the GHTA is pursing a zero carbon future and energy liberalization. We have a lot of supporters already and I am very confident we will achieve the goal. Watch this space as I post updates on what we're doing and how we're progressing!

Monday, May 7, 2012

Zero Carbon Future for Grenada Hotels

April 27, 2012- Grenada Hotels Declare Energy Ambitions
St. George’s, Grenada – Russ Fielden, President of the Grenada Hotel and Tourism Association (GHTA) announced at the Sustainable Development Council meeting today that the business association will be pursuing a Carbon Free future and energy cost reductions for the sector. The Sustainable Development Council met to discuss Grenada’s prospects in the global Carbon Trading Market. The GHTA ambitions, dubbed by the GHTA as the ‘2012 Earth Day Declaration’ include a desire for Grenada Hotels: - To be the first zero carbon hotel sector in the Caribbean, if not the world. - Safeguard Grenada’s global competitiveness through an immediate cost reprieve on electricity prices until renewable conversion takes place - To support the development of the Eastern Caribbean Electricity Regulatory Agency (ECERA) by OECS Governments and the World Bank According to Mr. Fielden, Grenada’s electricity prices are among the highest in the world and this is making Grenada’s business environment very uncompetitive in an already limping global economy. As the GHTA sees it, failing to realize a cost reduction in electricity prices will spell disaster for Grenada’s already foundering economy. Renewable energy is one of the most cost-effective ways of reducing energy costs. The business association has come out strongly in support of liberalizing Grenada’s energy sector and for having an energy infrastructure that is 100% carbon free. This is because Grenada’s current electricity pricing means that a hotel must, by law, sell 100% of the energy their solar systems might produce and then GRENLEC will sell it back to them at nearly three times the cost. The GHTA acknowledges that GRENLEC clearly cannot manage an electrical grid if too many people are operating different electricity producing systems that feed into the grid, but the Association is confident and determined to see a hotel sector that is carbon free. The GHTA’s has retained Ethical Ideas Consulting Services to negotiate on their behalf to obtain grants, concessional loans, and negotiate agreements with other stakeholders. You can contact Jennifer Alexis through the GHTA office at 444-1353 or by emailing Jennifer Alexis at