Though then ruling New National Party Government of Grenada in 2006 registered PetroCaribe Grenada Ltd under the Companies Act, there is now a legal debate as to whether its debt should be included as public debt, or be classified as another kind of debt.
“We, in an abundance of caution, as the FROC when we compute our data, PetroCaribe is part of public sector debt, that is our understanding of PetroCaribe,” said Richard Duncan, Chairman of the Fiscal Responsibility Oversight Committee (FROC), the body established by government to monitor and provide oversight of the Fiscal Responsibility Act.
“There are times when the Ministry of Finance will publish through their debt monitoring unit the data, and they will tell you that public sector debt with PetroCaribe and public sector debt without PetroCaribe; and then the IMF and the World Bank from time to time will discuss it, some people say yea some people say nae,” Duncan said.
“The latest is, I believe they are looking to get a legal opinion on the contractual arrangements that define PetroCaribe that will help to come to a conclusion as to whether it is, or the debt should be classified as part of public sector debt,” Duncan explained during a news conference called by the committee to share more details on the 2018 report which was recently laid in the Houses of Parliament.
PetroCaribe was registered in June 2006 with the Corporate Affairs and Intellectual Property Office. Its head office address was given as the third floor of the Ministerial Complex. At the time of registration, then Minister for Legal Affairs Elvin Nimrod request a waiver of the required fees.
Since operating as a business, both the New National Party and National Democratic Congress Governments have appointed persons to chair and sit on the board. The registration document says that the board should contain between five and no more than nine persons.
The board members normally include the Permanent Secretary and or senior officers in the Ministry of Finance as well as well-known supporters or executive members of each ruling party. Former members include Jerome Joseph, Vincent Roberts, Joseph Andall, Aaron Moses, Phillip Telesford, Chester Palmer, Fred Antoine, Jeff Croome and Wilfred Hercules.
PetroCaribe as a business, only had Grenlec has its client until a few years ago when it lost the bid to SOL. The company ventured into the LPG market with the brand carrying the same name. However, as of 8 February 2019 the LPG ventured was leased to Gavenplast Grenada, a company registered in 2018.
As of May 2019, the Ministry of Finance reported that PetroCaribe debt stock was EC$372.1 million or 11.5% of GDP.
The 52-page FROC 2018 report in its summary report gives government acceptable performance with reservation in three wages, and non-compliance in two areas. The areas of passing grade are: Wage Bill to GDP not reaching exceeding 9%; Rate of Growth of Primary Expenditure not exceeding 2% and Primary Balance to GDP not less than 3.5%. The areas of non-conformity are Public Sector debt to GDP ratio not exceeding 55% and Public-Private Partnership contingent liabilities not exceeding 5% of GDP.
Reservation from the FROC was due to the lack of information and data from statutory bodies and or state-owned enterprises. “The data submitted by the Macroeconomic Policy Unit for the preparation of this report does not capture that of the covered entities. The Unit has been working towards ensuring that the full data set, as required by the act, is available for the preparation of FROC reports. In the meantime, this omission has given rise to the caution applied in the assessment of a number of rules and targets,” said the executive summary.
Under the Fiscal Responsibility Act “covered public entity” means a statutory body or state-owned enterprise which has received transfer or guarantees from government in the last five years or not met the quarterly reporting requirements of three consecutive quarters in the last year or recorded negative equity on its audited balance sheet in the last three years. There are fifteen such entities which include the Marketing and National Importing Board, Spicemas Corporation, the Child Protection Authority, the Cultural Foundation and the National Stadium Authority.
The total debt of state bodies is beyond EC$160 million.