-Wartsila generators
bought for US$27.2M
The Guyana Power and Light (GPL) hopes to save in excess of $1 billion (US$5M) a year by switching almost all of its generation capacity to heavy fuel oil (HFO) which will see the installation of new Wartsila generators and the conversion of the old ones to the cheaper fuel by next year.
This was announced by Chairman of the company Winston Brassington during a press conference held at GPL’s Boardroom on Middle Street.
Three 6.9-megawatt Wartsila generators were procured at a cost of US$27.2M and these will be installed at Kingston, while another five-megawatt engine will be procured from Suriname for the Canefield power station.
The old engine already there at Canefield will be converted from diesel to HFO. Further, a 69 Kva transmission line will be installed from Skeldon to Number 53 Village and there will be upgrades to the substation there.
The three capital projects totalling in excess of US$30M – to be expended over 2008 and 2009 – will allow the company to improve reliability and reduce costs, said Brassington. He added that the investments are also expected to ensure a reliable level of power until a hydro electricity plant can be put into operation.
Brassington said that with respect to the hydro sector, Engineering, Procurement and Construction (EPC) bids for the construction of a key hydro project and the transmission line to Sophia, are expected to be received by September this year by the sponsors of the Amaila Falls hydro project.
“GPL will benefit significantly from the three new projects announced. When these projects are completed next year, GPL will operate with over 90 per cent of its generation being derived from HFO,” said Brassington.
He added that at today’s prices, HFO is generally US$70 to US$80 per barrel versus diesel at $US130 to US$140 per barrel. “This difference of over US$50 per barrel can result in savings for GPL in excess of US$5M per annum,” Brassington said.
According to the Chairman, for 2008 GPL’s budget for fuel exceeds US$85M. He said that this budget is based on 62 per cent of the generation coming from HFO and the remainder from diesel. “This fuel mix is better than 2007 when a 52/48 per cent mix was achieved. The improved fuel mix is attributed to the Skeldon HFO station coming on line from December 2007, the benefits of the conservation programme which is reducing peak demand and by extension diesel generation, and reduced generation as a result of improvements in reducing technical and commercial losses.
Brassington said that GPL continues to be challenged with rising fuel costs but is taking all measures to avoid increasing tariffs beyond the 15 per cent implemented in February.
“GPL continues to seek to improve its efficiencies, reduce costs including employment costs, and maximise collections,” the Chairman said.
He said that despite an increase in oil prices last year by over 50 per cent, GPL’s increase in tariffs of 15 per cent was extremely moderate. The relatively low increase was due to the anticipated savings from improved efficiencies, improved collections, improving the fuel mix in favour of HFO.
Prime Minister Sam Hinds explained that acquiring the three generating units from Wartsila wasn’t an easy task. He said that due to stiff demand because of high diesel prices, such procurements are difficult to land in less than 18 months to two years after placing one’s order. According to the Prime Minister, the units that GPL was able to procure were made available only when another company which had been lined up for them didn’t proceed with the acquisition. As such, Wartsila informed GPL of the opportunity and the negotiations commenced thereafter.
There should be no downtime for the installation and commissioning of the new generating capacity and the rehabilitation and conversion of the Canefield units.
Hinds told the media that a company like GPL can only sustain itself when it receives revenues to cover at least all of its costs. He explained that when the company looks towards Independent Power Producers (IPP) there must be some margin of profitability and return on investment made. He said that the Government is fully aware of the protestations surrounding the cost of electricity and said that steps have been taken to cushion the impact of the costs. He said that the projects spoken of yesterday were designed to contain costs.
Hinds said that the Government is doing its best to facilitate GPL so that the cost of electricity will be the lowest sustainable possible.
