As many Guernsey and Sark residents are aware, it was recently announced that the States of Guernsey is willing to offer a £1.5m government to government loan to its smaller neighbour, Sark, to assist with the acquisition of Sark Electricity Limited (SEL). At first glance, this may seem a run-of-the-mill, everyday thing, one larger jurisdiction helping out another. As always, the devil is in the detail, and as a Conseiller of Sark serving on the Policy & Finance Committee of Chief Pleas, I am going to reveal a much more nuanced story which is certainly in the interests of Guernsey and Sark citizens alike.
Back in early 2023, I began my term as a conseiller and was elected to the Future Energy Committee, which is dedicated to finding energy solutions and security for Sark’s short-, medium- and long-term future. Like most conseillers on Sark, I just wanted to do my best for the island, and its people who have been so kind to me. After meeting with vendors from various renewable energy companies, it became clear to me, with my experience in finance and PR, that we were dealing with salespeople, some of whom I wasn’t convinced believed in their own products. After asking questions and receiving unconvincing answers, it became clear that a far too narrow scope was chosen for the project’s tender process, which didn’t follow Guernsey’s own tender process. Alarm bells rang when we were asked to pay these private renewable energy companies large fees to see a projection from them. In many ways, Sark is a captive audience, it is vulnerable and presently lacks a leader with the relevant, real world experience.
The whole plan was based on a tissue of speculative assumptions and guesswork, which didn’t inspire confidence. I had particular issues with unreliable forecasting and was certain it would cost the end user much more than estimated. A good friend, a director in the renewable energy industry backed my assertions. Commodities, replacement technology, and even the value of money aren’t fixed; they are susceptible to change in the increasingly volatile geopolitical world we live in. The costings were not generous enough or grounded in fiscal responsibility.
I resigned from the committee because I could see the fragility of what was being planned; it would never be investible, and it didn’t seem equitable for the average Sark electricity payer, who might pay in excess of £20,000 in additional electricity expenditure over the contractual term. However, I could see how the consultant from Communities for Renewables CIC, William James Burnyeat (Jake), and renewable energy companies could make a handsome profit from this deal. A £12m+ energy deal was a high-risk proposal, which experienced Conseillers and I could not support with good conscience.
Sark’s Chief Pleas has had a very difficult relationship with its electricity provider, SEL. Disagreements have meant that the Sark treasury is spending in the region an extra £40K per year because of one of these unresolved issues in the north of the island. It’s been a real shame that we can’t get the head of Policy & Finance, Conseiller John Guille in the same room as the SEL director, Alan Whitney-Price. The feud is really costing the taxpayer. It’s a tragedy when personalities and a lack of negotiation skills get in the way of what is good for Sark.
Having failed to secure any commercial lending for this £12m energy plan, Chair of Policy & Finance, Conseiller Guille has asked the States of Guernsey for a £1.5m loan to attempt to acquire SEL. However, SEL do not seem willing to sell, and the two parties seem a long way apart on valuations. I also understand that there may be other interested parties. Conseiller Guille has maintained that Sark has a “compulsory purchase” order option if required, which can be enacted based on safety grounds. There are issues with the safety of the grid, with repairs and maintenance needed in some parts of the island, which have been covered extensively in other press articles. The trouble is that with compulsory purchase as a potential outcome, a sword of Damocles hangs above their heads, would SEL do these upgrades, significantly reinvesting in the system, when they potentially have a diminishing asset, with a lease up in around six years?
Expectations should be grounded in logical thinking. I could envisage a lengthy legal battle between Sark’s government and SEL, with potentially only the lawyers being the victors. Sark can ill afford to be in protracted litigation with an uncertain conclusion. The whole situation presents a huge risk.
Serving on the Sark government’s Policy & Finance committee, I have not been kept fully appraised or updated on this loan tentatively offered by Guernsey’s Policy & Resources committee, nor have other conseillers. A lack of transparency, openness, democratic values and good governance has caused divides. The last I knew is that the conditions of this £1.5m loan were that Guernsey would secure it against impôt revenues, which was slightly more palatable. However, to our shock, the Guernsey government is suddenly requesting conditions such as a taxation review and a constitutional review. If the excise duties service the 5-6% loan offered as claimed, why would the States of Guernsey need further securities? Why would this loan agreement be contingent on constitutional or taxation reviews for Sark? Terms can often seem benign or confusing, but they always serve a distinct purpose. Why would Guernsey like to change Sark’s constitution or tax system?
Those of you who pay attention to international affairs will understand how the IMF (International Monetary Fund) has given loans to many vulnerable, smaller, or struggling nations with conditions that are less than fair; they often undermine the democratic sovereignty or decision-making capacity of the smaller entities. For example, you only need to look at what happened to Greece (2010-2018), Jamaica (1978-2010), Argentina (2001-2018), Zambia (2022), and Tunisia (2016-2023). Those nations experienced harsh austerity, privatisation pressures, debt traps, and a disproportionate impact on the poor and ordinary working-class people. Guernsey is not the IMF, but they are seeking very unreasonable terms. These conditions attached reach far beyond the guaranteed repayment of the borrowed funds. Residents should ask why they are needed.
There is a very uneasy feeling amongst some conseillers and residents on Sark, because we have been down this road before, it’s a familiar track. During the summer of 2023, Conseiller Guille proposed a tripod, with Sark’s chief civil servant reporting to Guernsey’s civil service. This resulted in conseillers signing a vote of no confidence, and our acting chief civil servant at the time making complaints of “treason” and “subversion”. Chairman Guille had to back down and agree to withdraw the proposal from the Chief Pleas midsummer agenda publicly. Sark came that close to losing its self governing status and ending up a vassal state like Alderney. We have recently seen the concentrated media around the 1948 agreement and the lessons to be learnt. Guernsey taxpayers do not need another Alderney, and Sark doesn’t need to become another Alderney.
Vast sums of Sark’s taxpayer monies have been spent on this uninvestable project so far, up to one-quarter of its capital reserves. We still can’t get accurate figures, despite colleagues requesting an itemised breakdown some time ago from Policy & Finance. We have seen little in return for this hopeful expenditure. The original proposal, which would cost £8m, quickly rose to perhaps £12m, with no incentive for private corporations to come in on budget, they would have had a blank cheque. This renewable plan now seems to have been shelved, with the focus switching to only buying SEL and doing some upgrades and maintenance with the £1.5m loan. My question for Guernsey and Sark residents is: will it stop there? Or will this credit facility be added to, either for the rest of the £12 million or other Sark expenditure?
In conclusion, the conditions attached to this loan are unacceptable to an informed, educated public. The loan does not solve Sark’s challenges or problems, it likely adds to them. Sark people love Guernsey, and Guernsey people love Sark. We must unite in questioning our political representatives and their decision making.
These special islands have a unique history and culture. We all want a brighter future for our children, and that starts with us becoming interested in the decisions being made on our behalf by our elected and unelected officials. We deserve better.
By Chris Kennedy-Barnard, Conseiller.