Early on in his `92 administration President Cheddi Jagan expressed exasperation at the situation at the then Guyana Electricity Corporation (GEC). The managers who had been installed by his administration were not producing results, there wasn’t a clear picture of the finances of the corporation and discussions on new power generation went on interminably. President Jagan vowed to take a more active role in the utility’s business to put things right. Unfortunately, he passed away without the corporation being able to get on top of its problems.
This situation continued thereafter with the tedious wrangling over a contract for Sask Power which eventually pulled out of negotiations. The subsequent privatization arrangement between the Commonwealth Development Corporation and the Irish group ESBI also later collapsed with the now Guyana Power and Light (GPL) reverting to state ownership.
Considering where the country was in the literally dark days of PNC governance when the entire power generating system went bust and then Minister Corbin invoked his act of God excuse we have come a far way and credit must go to the post-`92 governments. Power generating capacity is far greater than it was and the nightmarish blackouts which the country had endured for decades had slowly begun to fade from memory i.e. until recently.
President Jagdeo recently advised that there was a possibility that the country would have to endure a black Christmas. He had been misled about the extent of GPL’s liabilities, maintenance of equipment had been deferred for too long leading to breakdowns, arrangements for the supply of fuel had been bungled through an unthinking switch in plans, high fuel prices had become a major problem and there had been a breakdown in communication and planning. As a result two top officials were relieved of their responsibilities.
The President’s dismay sounded very much like the late President Jagan’s. In addition to these problems GPL is also beset by insufficiency of capital for new generators, industrial relations issues, transmission and distribution problems, leakage of revenue through high line and commercial losses, billing queries, a frustrated public and the most expensive and volatile oil market since the OPEC oil embargo.
The government can be faulted on two grounds. First, the fact that GPL has seen slippage that has brought the utility into peril where Christmas generation and liabilities are concerned is most disconcerting. One can reasonably ask why PM Hinds, who has responsibility for the power sector, had not been aware that GPL was heading into a crisis situation. Considering the swingeing rise in oil prices and the steady increase in blackouts one would have expected that he would have been in better touch with the situation. The slippage and reversion to crossed fingers as to whether there will be sufficient power at Xmas is the quintessential product of a government that grows tired at the wheel and takes its eyes off of the road. It should not have taken a showdown at the Office of the President to reveal the truth about the liabilities of the company and its other deep-seated problems. This should have been apparent from regular reports from the GPL board and the government minister performing the role of oversight as opposed to interference.
Second, if one were to take the long view, PPP/C governments have had 15 years to take decisive action to right power generation and its relatively high cost. Not five or six years but 15 years and President Jagdeo has been Head of Government for eight of these and has been aware of the various problems throughout the 15-year period in his various capacities at the Ministry of Finance. He, too, should bear some responsibility for the state of affairs.
There can be no minimizing the severe crisis that confronts small countries like Guyana with the oil price moving from sub US$30 into the US$90s. It is a horrendous situation and requires very careful planning and examination. The government must act resolutely on this matter and there are some questions it must address immediately.
Can GPL continue to charge the present rates and survive? Is GPL in danger of defaulting to creditors? Is access to Venezuelan PetroCaribe oil on soft terms digging the country and GPL into a bigger debt hole and a false sense of security? And just for the record is Venezuela wielding PetroCaribe as an economic weapon with which to push aggression on our western frontier? Can GPL ever be expected to bring down line and commercial losses to acceptable levels? Will GPL be able to undertake a rigorous maintenance programme to minimize outages? Is there a viable strategic plan for GPL that either sees it continuing in state control or being re-privatised?
For much longer but just taking the 41 years of independence, electricity has been an unremitting challenge. In the last few decades there has been a medley of financing from the IDB, failed management contracts, disastrous management, scandals such as the barge, unravelling privatizations, collapsed generating systems, losses to the economy and business community and a severely frustrated public. While laudable, the energy conservation campaign that was recently initiated will not be the solution. The relief power from Miami will help for a while but a much bigger game plan is necessary. The return of instability in power generation and continuing doubts over whether ambitious projects such as the Amaila hydro project will get going will not help business confidence in the economy or tourism interest. It will `brown off’ entire sectors. The government must act speedily and decisively.
