The Inter-American Deve-lopment Bank (IDB) has over the last 25 years pumped more than US$100M into Guyana’s electricity utility and made the observation that maintenance is important if the gains made by those interventions are to be preserved.
But a former chairman of the electricity corporation is hesitant to sing the IDB’s praises just yet and believes that the money was spent mainly on highly-paid consultants who failed to deliver.
Over the years, the power company in Guyana – whether its moniker was Guyana Electricity Corpora-tion (GEC) or Guyana Power and Light (GPL) – in addition to the electricity sector on the whole, has been on the receiving end of loans and grants from the IDB, dating back to the late 1970s.
In addition, the IDB has been funding various studies and other projects aimed at coming up with solutions to energy needs, including hydro-electricity, utilisation of bagasse and thermal electricity.
This newspaper sought a comment from Prime Minister Sam Hinds on the IDB interventions and the outcomes and benefits, but to no avail.
Speaking to Stabroek News on the issue, Repre-sentative of the IDB Marco Carlo Nicola made the point that the IDB would not have been making more financing available to the sector if it didn’t believe that the money was being put to good use.
“We believe that the sector can make it,” he said, attributing the failures to lack of maintenance. He stated that the funds that were disbursed served their purpose, but maintenance is important after monies have been spent. He said the bank’s assistance to the sector is aimed at expansion of the national grid and loss reduction.
He also said that the Bank is trying to get the electricity company to reduce its losses and that with the IDB’s intervention, “GPL was able to bring its losses down from 44 per cent in 2005 to 37 per cent [at the end of 2007].”
Nicola said that for the losses to come down further, would require the company making a lot of investments over the next few years.
The latest intervention by the bank to the sector is the work ongoing for the Unserved Areas Electrifi-cation Project (UAEP). The total cost of the project is US$34.4M of which the bank is funding US$27.4M. So far, the bank has disbursed some US$8.3M with US$13.3M yet to be disbursed.
A portion of the financing being provided for the UAEP is being used for the reduction of losses that the utility has been plagued with for decades. The bank had in the past indicated that financing for the continuation of the UAEP could be in jeopardy if losses are not significantly reduced. The IDB is aiming for the power company to have a loss level of 15 per cent in about three years. Each percentage point that the losses come down, the company potentially saves US$1M a year.
A loss assessment done by a UAEP contracted consultant some months back found that 11.04 per cent of the 28.79 per cent non-technical losses related to theft of electricity, costing the company $2.4 billion annually. It found too that of the total commercial losses, 6.46 per cent resulted from the limitations of the company’s billing system costing $1.4 billion annually, and 11.29 per cent to defective meters costing $2.5 billion annually.
The IDB is said to be working on a new loan for Guyana to aid in further loss reduction and this is to be in the vicinity of US$12M and US$14M and should be ready for disbursement some time this year, the IDB had said last year.
Back in 1985, the bank had approved a loan of US$16.1M for the rehabilitation of the GEC. The bank lists this project as completed and US$14.8M of the money has been repaid to the IDB.
In January 1991, the bank signed a loan of US$15.5M for the rehabilitation of GPL installations.
This project was completed on December 22, 1998 and the government has paid back US$2.8M while the bank cancelled US$13.7M.
Former chairman of GEC Ramon ‘Rambo’ Gaskin is of the view that all the money spent by the IDB behind the corporation has been wasted. He said that the main focus of the two loans by the IDB to the government was for the “beautification of the corporation so that it could be sold to private investors.
“In 1992 when I went there, the company had 40 per cent of losses.
“Those programmes aimed to rehabilitate and repair old junk. These [machines] were already 35 years old, having been commissioned in the 1960s,” Gaskin said.
He said most of the money for the two loans, 163/IC-GY and 853/SF-GY, were used primarily for the payment of over a dozen consultants, some of whom received as high as US$10,000 per month. “When I went as chairman I refused to renew their contracts. There was not one provision for one new megawatt of power.
“All they wanted was money. Thirteen of them were running the place,” Gaskin said.
He said that back then there were two critical issues that the company faced and that the loans didn’t address. These were a lack of generating capacity and a lack of proper transmission and distribution systems. “The loans did nothing
