Rawle Lucas is a Guyanese-born Certified Public Accountant and Assistant Vice President of the Lending Services Division.Mr. Lucas has agreed to serve as a columnist with the Stabroek Business and will be contributing articles on economic, financial and development matters.
By Rawle Lucas
Burden Sharing
The electricity grid and supply in Guyana is not a complex system even though its operation has managed to complicate and frustrate the lives and economic ambitions of Guyanese. Thirty-one years after GPL started exhibiting operational difficulties, it remains a troubled enterprise that continues to impose hardships on Guyanese households and businesses alike. GPL is intertwined in the lives of all Guyanese and those who manage the company seem oblivious to the vicissitudes of its entrapped customers and the plight of their suffering. It is no surprise that Guyanese have lost confidence in GPL and have adopted measures to side step its influence and to hit back at what many regard as an insensitive company.
Yet, it may come as a surprise to some that GPL is not the only generator of electric power in Guyana. The installed power generating capacity in Guyana is estimated to be between 235 and 240 megawatts and GPL supplies roughly 60 percent of that capacity. The rest comes from the residual contributions of the Guyana Sugar Corporation (GUYSUCO) and the major gold and bauxite mining companies that are operating in Guyana. GUYSUCO alone contributes about 16 percent of the generating capacity while the three principal mining operators contribute the remaining 24 percent. That is as far as the burden sharing goes.
Control
While it is part of a larger group that generates power in the country, GPL cannot hide among its power generating connections. GPL exerts total control where it matters most in the electricity business. It controls the transmission of electricity and bears sole responsibility for distributing electricity to households and businesses in Guyana. This monopoly position of breaking electricity up into small enough units for residential and industrial consumption makes GPL the most dominant player in the electricity sector in the country. That position of dominance and control gives it the power to switch the lights on and off in the homes and businesses of customers which it often does for its own convenience. Now it is extending that choice to customers with the introduction of a prepaid metering service, an issue of discussion further down in this article.
The position of power that it holds also makes GPL a central architect of the frustration and grief that Guyanese have been experiencing since 1978. Things are not about to get better soon and darker days lie ahead for Guyanese since GPL still faces high energy costs, excessive leakage and waste of fuel, potential damage of equipment and inefficient performance of its generators. All of these factors add up to high operating costs and resentfully high electricity bills and poor service. Since it has the power to do it, GPL is shifting the burden onto the customers.
Flirting With Private Suitors
Before becoming GPL, the company was known as the Guyana Electricity Corporation (GEC). It derived its name from the precursor private sector entity British Guiana Electricity Company which was taken over by the government after Guyana gained its independence in May 1966. For a significant part of its life, GPL has been a public utility under the control of the central government. It changed its name in 1999 to GPL when it flirted for four brief years with two private suitors before returning to the arms of the government in 2003. The brief return to private sector control where it began life over 84 years ago did not do much for GPL nor its customers. Though GPL is once again fully owned and controlled by the Government of Guyana, it retained the new name that it acquired in 1999 and nearly the same old attitude of contempt for its customers.
In The Dark
As the face of the electricity service of Guyana, GPL does not cut a good image. Its service is limited, most unreliable, unfriendly and slow. After 43 years of trying, GPL is only able to provide an estimated 60 percent of the population with electricity. A sizable share of the population remains permanently in the dark and must wonder if and when they would ever get connected to the grid. Their hopes are being raised with the planned pursuit of a hydroelectric project, but that is still to come to fruition. Those who currently get electricity can be divided into residential, business and government consumers. Residential customers use about 43 percent of the electricity generated while private businesses use an estimated 30 percent. According to World Bank data, Guyanese consume approximately 2,751 kwh annually on a per capita basis.
Loss of Electricity
The threat of darker days for Guyanese also come from the reality that GPL loses the equivalent of 40 percent of its electricity in the transmission and distribution process. This level of loss is 200 percent greater than elsewhere in the Latin America and Caribbean region. At that rate, it would be difficult for GPL to acquire enough resources to maintain its current level of operations and to convince business users that it is a serious supplier. The sizable loss also prevents GPL from expanding coverage to under served areas of the country. Moreover, GPL already imposes a high tariff on consumers, an amount that is also double the average of what other countries in the Latin America and Caribbean region charge.
The reasons for the loss are both technical and economic. About 12 percent of generating capacity is lost in the conversion of power into energy. Defective meters and under billing account for another 18 percent of the loss while electricity theft accounts for 10 percent of the loss. These deficiencies signify that GPL relies too much on outdated technology and operational systems. Since GPL owns the meters and designs and controls the transmission and billing systems, it is clear from this statistical picture that GPL has control over 75 percent of its problems and can resolve them quickly if the company tried hard enough.
Electricity Theft
GPL has committed itself to reducing total losses by over 60 percent by the year 2010. This is a laudable goal and
consumers must hold GPL to this commitment. To achieve that goal means improving the distribution and transmission of electricity. It also means improving its billing and metering system. GPL needs to look inward first in trying to solve its problems. However, the most noticeable move by GPL is to tackle the external threat of pilfering. The stealing of electricity is not a good thing and is not in the best interest of any one. Not only does it help to drive up the cost of electricity, it is also dangerous and could lead to fire and loss of life and property. A fire that starts at the next door neighbour’s house could easily spread to the nearby houses if they are close enough. Consumers should really help to discourage pilfering for everyone’s sake and report it if possible.
Prepaid Metering
GPL has moved to reduce electricity theft by introducing a prepaid metering system. GPL explains the benefits of this new service on its web site. While prepaid metering is a useful thing, it could present untold challenges to impoverished households. The greatest demand for electricity comes from households and small businesses. Most households use electricity for lights and for operating a refrigerator. With per capita consumption of electricity at about 2,751 kwh per year, the average electricity bill of a household could be as high as G$14,000 per month. With half the working population earning under G$35,000 per month, a bill of G$14,000 is nearly half the income of a household with only one breadwinner. Prepaid metering could help such a household to control the amount of electricity it uses and the amount of its meager income to spend on this service.
Self-imposed Blackouts
But prepaid metering of electricity is not like other prepaid services such as the telephone where the choice of use is totally discretionary or where the risk could be reasonably shared with other telephone users by borrowing their telephone. The choice for households would be whether to keep the refrigerator on in the day when no one might be home and off at night when light is used for homework, cooking and other domestic needs. This is a difficult choice in a hot country like Guyana and GPL should keep that in mind as it goes forward with the prepaid service. GPL should therefore resist the urge of forcing consumers into prepaid metering service and let that be a choice of theirs if they are comfortable with it. The alternative viewpoint is that GPL could impose the blackout on customers as it has been doing or let the customers do it for themselves. Either way the refrigerator could end up being off and the food in it spoil or the lights could be off during the night when homework and other domestic chores have to be done. The message from GPL is clear. Regulate your own blackouts or GPL will continue to do it for you. Darker days are ahead.
Avoiding GPL
The prepaid service might be more suitable for businesses since it forms part of their operating cost and could be reflected in the income that they earn. But GPL has become largely irrelevant to the medium and large-scale business operators in Guyana. Their mistrust of GPL has induced them to reduce their dependence on the company and to provide nearly two-thirds of their own electricity. Some large companies provide 100 percent of their own electricity. The prepaid service does not guarantee the uninterrupted supply of electricity and that is the biggest fear of business owners. Self-generation of electricity gives them independence from GPL and peace of mind. With this level of self-generation, the demand for electricity from GPL has been declining. But marginalizing GPL comes at a cost. Businesses pay between 25 to 35 percent more for their energy needs than if they bought it from GPL. Residential customers feel the impact of this move the most because they end up paying higher prices for the goods and services that they buy from these companies.
The individual consumer just cannot win. Unless GPL is able to resolve its larger operational and supply problems, blackouts will continue. But GPL sees prepaid metering as the future and is likely to continue pushing this form of service. With the burden shifting to the consumer, prepaid metering could only mean darker days ahead for many Guyanese.