Chairman of the Guyana Power and Light (GPL) Winston Brassington says the company is assessing the full impact the $1 billion budget cut will have on its ability to hold to its current tariff – in the light of sustained increases in fuel prices – and to do maintenance.
“The first thing to get cut would be maintenance,” said Brassington, speaking yesterday at a public presentation, one of three per year as mandated by amended electricity sector regulations, held at the Regency Hotel on Hadfield Street. Further, he said that the company’s investment programme will also take a hit because of the cut in the allocation for the company.
During the examination of the estimates in April, the combined opposition voted to slash $1 billion from a proposed $6 billion subsidy for GPL. Prime Minister Sam Hinds and CEO of GPL Bharat Dindyal are on record as saying that the subsidy was more to the customer than to the company itself, since it was meant to avoid the company having to pass on increases in fuel expenses to the final user of electricity generated.
Brassington said that because Banks DIH – a self-generator for a number of years – has said to GPL that it wishes to get back onto the national grid, GPL finds itself in the position of having to possibly make additional investments in generation capacity, until the Amaila Falls hydroelectricity project gets on stream. “We may need to buy 15 to 20 megawatts of power [equipment] before the hydro [commences operation],” Brassington said.
He said losses are on the increase even though there have been efforts at reducing these over the years. While commercial losses are coming down, it is not happening at a fast enough rate. He said GPL remains challenged in reducing the losses, which stood at 31.6 per cent at the end of 2012.
With regard to commercial losses, he said that while residential customers comprise 90 per cent of the customer base, they only pay 40 per cent of the revenue. Of the thousands of persons arrested for theft of electricity, just a few of them make it to court and fewer still are actually convicted.
He noted that the company has seen a 56 per cent increase in revenue over the past six years. “We have achieved a very high overall collections level and it has been picking up,” he said. Brassington added that City Hall owes $700 million for power provided to streetlights in the city.
Brassington noted that close to US$175 million has been invested in the last six years in power generation and he called this level of investment unprecedented in the history of the company. He noted that much of this investment has been financed by the government which on-lent concessionary financing received from the Inter-American Development Bank (IDB) and other institutions.
Brassington said GPL is the largest utility in the country and it is operating under the most robust and rigorous legal and regulatory framework. “Today GPL is more accountable and more responsible. Close to $18 million has been credited to accounts because of GPL’s failure to meet standards,” he said.
Brassington said the company is doing its best to avoid a tariff increase and this is made more challenging with the budget cut to the subsidy. He said too that in the light of the coming hydro, the company would have to reorganise in terms of staff, reducing in some cases and hiring special skills that would be required at that time.
Fuel
Brassington said the entire debate on GPL’s financial position revolves around the price of fuel, which has risen significantly over the past four years or so. He said the price increases for fuel far outstrip the last tariff increase at the beginning of 2008, which was to cater for the fuel price increases at that time. According to Brassington, GPL’s fuel bill was US$48 million in 2005 and US$125 million in 2012. He said this represents an increase of 150 per cent in the price of fuel since 2005.
Meanwhile, PM Hinds strongly expressed his disappointment at the poor turnout of stakeholders to the presentation yesterday. He said that people who constantly knock the company had their chance at yesterday’s forum but failed to take it. He said people must be more earnest in the things that they say and do and it is only then that the country would progress.
