Published On: Wed, Jun 26th, 2024

The real problem

By Hilbert Haar

Plans to help St. Maarten move forward in a positive direction are wonderful, unless those plans are at odds with reality, or if those plans go in the opposite direction of other plans.

I remember that years ago the European Commission funded programs that aimed to discourage smoking, while the same Commission at the same time subsidized tobacco farmers in Greece. That did not make a lot of sense to me.

Now we are confronted with another impressive report from the European Commission about the multiannual indicative program (MIP) for St. Maarten. Reading Annex IX of that report (which deals with the situation in St. Maarten) made me realize that European technocrats are damn good at shoving a truckload of incomprehensible acronyms down your throat, which makes reading this stuff not exactly a pleasure cruise.

The MIP makes money available for St. Maarten to move towards using renewable energy and towards cooperation with the French side of the island. At the same time, it wants to ensure the sustainability of the company that is supposed to provide electricity and water to the population: GEBE.

The European technocrats are not the only ones showing an interest in the way St. Maarten provides its citizens (sometimes) with electricity. There is also a report from TNO, the Dutch organization for applied scientific research, entitled The energy transition of Curacao, Aruba and St. Maarten.

That report sheds some light on what is really going on with GEBE and with the politicians that have its destiny in their hands. TNO’s conclusion: the tariff structure (consisting of a base tariff and a fuel clause) makes it unattractive for GEBE to step into the market of renewable energy.

The reason? The base tariff of $0.13 is not enough. The European report confirms this, saying that the cost for the production of one KiloWatthour of electricity is around $0.43. The report furthermore states that the fuel clause (an addition to the invoice consumers receive based on the current price of fuel) is supposed to cover the costs of the fuel GEBE uses to power its generators (assuming that they are working). The base tariff should cover all other costs – and it doesn’t.

The MIP nevertheless aims to push St. Maarten towards the use of renewable energy and claims that existing contracts for fuel supply with large petro companies stand in the way of that development. At least, that part got most of the attention, while in reality the tariff structure is the real problem.

Fighting climate change and moving towards the use of renewable energy is obviously a lofty ambition, though the thought comes to mind that a St. Maarten fully powered by renewable energy is not going to make a dent in global warming. And if the result is that our national utilities company goes bust this solution is surely going to be worse than the problem.

St. Maarten seems to be caught between a rock and a hard place. On the one hand the European Commission is dangling a multi-million dollar carrot in front of our nose, while on the other hand a reputed scientific research organization like TNO issues a fair warning: “With the current tariff-structure energy transition only results in more financial problems for GEBE.”

On days like this I am happy that I am not a politician because our decision makers find themselves in an impossible situation. Damned if they do, damned if they don’t. I do not envy them and I wish them lots of wisdom and creativity to lead the country out of its miserable energy-supply crisis. With or without European subsidies.

Oh, before I forget: the bill for any solution, whatever it may be, will sooner or later land on your doorstep and it will not make you happy.

Related article: European millions available for energy transition