Lest it be perceived that some segments of the Linden society do not see dire consequences for the electricity hike I wish to add my voice to the discussion on the matter. Mr Horace James, CEO Linmine Secretariat made a power point presentation to the statutory meeting of the Mayor and Town Council on June 27, 2012. Naturally, this presentation generated much discussion and suggestions on the way both government and residents can work towards reducing the impact of impending increases in electricity costs. The findings were then presented to Prime Minister Samuel Hinds, who responded almost immediately to our concerns which were submitted by Mr James. I received a copy of the notes returned to Mr James from the Prime Minister and wish to record the following:
1. Residents’ inability to pay the steep increases: It was reported that the high levels of under-employment and unemployment were mitigating factors impacting on the ability to pay.
Councillors pointed to the unemployment statistics thus:
M&TC, Regional Democratic Council (teachers, doctors, nurses et.al) -1,000
BOSAI – 600
Linmine Secretariat – 100
Private Sector (Commerce, trade, manufacturing) -1,100
Logging -1,000
Other extractive industries (gold, diamond) -1,000
4,800
(The total yearly earnings from these sources are estimated at $5B per year including the $1B coming from remittances).
It is estimated that at least 60% of this group are earning less than $60,000 per month which is the effective cost of a basket of goods, services and utilities for an average family of 5 (mother, father and three children). It should not escape the analysis that a significant number of this low income group earn less than the national minimum wage and are single heads of households. In the case of the Town Council employees, 85% are earning at or below the national minimum wage. Council’s collection of rates and taxes stood at 60% for 2011, and this is equivalent to $21M. However, Council’s employment cost is $48M of which pensioners account for about 6%. This shows clearly that the Council’s pensioners cannot survive on their pensions. Even if the Council collects 100% of its taxes this will not suffice to pay the wages of the employees who are again at the level below the minimum wage. To take the majority of employees to a level greater that the $35,000 approximate minimum wage will require an additional revenue stream of $24M annually.
2. Another of the Prime Minister’s argument is that the Linden poverty map is no different from any other in Guyana.
If one looks at the demand for electricity payments for the remaining 6 months of 2012, each household is required to find an additional $12,000.00 per month. For the low income base of 2,500 households (employed) this is more than 25% of their earnings and in some cases 50%.We all argue that there is need for conservation, but the stark reality is that the reduction has to be down by 75% to reach manageable levels currently. This electricity bill then eats into food, clothing, shelter, medical care, transportation, education and emergencies. This is a damnable scenario. No community in Guyana deserves to be in this scenario and it speaks volumes about the governance and management of the economy, as he posits that communities in the interior, East Coast, East Bank, et al, are in similar straits.
3. On the question of street lamps, this is a major source of concern, since the Council has been billed over $60M as debt to the LUSCSL for street lighting. With a deficit to make up for the poorly paid 130 odd staff members from the meagre $21M collected in property taxes, it is inconceivable how the municipality will pay for the street lighting. In 2012, LEI indicated to Council that its new electricity billing had moved from $100,000/month to $0.7/month for customers on the eastern bank.
It is not clear if the new rates have been factored in here. This burden cannot be carried by the penurious Council, and if anything the cost has to be borne by ratepayers at $1,500/month/household. This means that 90% of residential properties will pay for more electricity (street lighting) than their rates and taxes, along with their electricity consumption.
4. Householders in Linden have grown accustomed over the years to the use of electric stoves. It is believed that at least 70% of persons on the East Bank (Mackenzie) utilize electricity for cooking. It is also a fact that many householders boil water for potable uses and this is an additional cost since it uses at least 30 minutes of electricity to bring a gallon pot to boil. GWI has not reclaimed the confidence of residents where drinking water is concerned. It will take time. Some will argue that bleaching is a cheaper option and should be considered.
5. The Prime Minister also argued that the town will be transformed into a modern, regular one when it begins to pay the suggested new electricity rates.
The question of the company town becoming a regular town is welcome, but the transformation requires deliberate policies and new directions with the required resources to match the plans. Much effort was made by local authorities in crafting a new developmental path, but this has not been green-lighted at the central level. Many of the developments have been mired in questionable tactics and systems. One need not rehash these which have been spoken about previously. The town in this electricity tariff crisis will not be modernized and will not be a normal one. There has been no serious effort made at reducing the mendicant predisposition of a company town with deliberate and studied policies. Moreover, too many inequities exist for a modern town to suddenly appear.
The much touted LEAP which gained successes in some areas was not allowed to grow since more than three years would have elapsed without a board and direction on the way forward. LEAF which performed commendably has languished and may have been able to create a substantial amount of jobs with its portfolio. Are we serious about this transformation when matters of this nature which will place residents in a mould of self-reliance and enterprise are being stymied by abject crassness? Just for emphasis, it has been touted that $7B in infrastructure and other works were done in Linden over the past decade. Less than 0.5% went to Linden-based entrepreneurs. Little or no effort was seen in making that possible. The Prime Minister should have been in the forefront of the drive to promote entrepreneurship and self-reliance in the town he once had succour and where he made his name.
Bearing in mind that we are attempting to wean persons away from bauxite, it behoves the administration to work with residents to find new enterprises and provide some support.
The Republic Bank and New Building Society have all been bemoaning the seeming low growth level in business.
Thankfully, Banks DIH Ltd through Citizens Bank has shown some gumption to bet on Linden’s rise and has opened a branch. This demonstration by the conglomerate should have been matched very quickly with a policy which fostered entrepreneurship and business proliferation.
The Linden diaspora continues to be the bedrock upon which survival of the township is resting. A study done in 2006 had shown that in excess of US$10,000 passes through remittances in one bank in Linden. The money transfer agencies did not provide information but the data suggest that more money is transferred through the non-bank system. So we agreed at a conservative level of US$20,000/day coming into Linden.
4. The Prime Minister is of the view that Linden’s poverty map is not dissimilar from that of other parts of Guyana. I can assure the Prime Minister that the distribution of income from employment is a significant show of the poverty map since income levels from the traditional sources have dwindled drastically, eg, BOSAI’s employment of 600 Lindeners is the highest, single private sector entity employer with a yearly income of $1.3B which includes expatriates (Americans, Chinese et al). Most of the contracts in the community, even in the bauxite industry are occupied by non-locals and overseas-based companies as in OMAI. I alluded to this earlier with infrastructure works in the town. For an adult population hovering at about 30,000 it is not guessing when people say that unemployment is at a level of over 70%, by whatever measure is used. It is saying in our layman terms, in our working age group of people, seven out of every ten are not working. In Linden many over 65 are doing security jobs to take care of their homes. When he feels the effect of many ‘swamp-am’ homes he may understand how dire things have got.
The Prime Minister in these circumstances cannot have a distant relationship with the town. If anything, he can have a living together and living apart relationship, where the people are coexisting despite not having fraternal ties. What we see is a scenario where no consultation took place before the estimates, and this points straight to the heart of the matter. The residents were not taken into the authorities’ confidence to discuss their welfare. This is a tragedy and a recipe for catastrophe. No longer must we fail to engage residents in matters pertaining to their welfare. If this had been done, the situation would have been less fractious.
6. On the matter of Council collecting all of its revenues, the Prime Minister is unaware of the picture. Many persons are unable to pay since they have arrived at a pensionable age and the pension cannot suffice. Others cannot pay because they simply do not have the means. The collection of revenues involves all stakeholders with government lapsing over the past six years in getting the valuation process moving.
Reverting back to Mr James pointing to an increase of $500,000 on the street lighting bill, we argued that if 65-watt energy saver bulbs are used in the system there can be significant savings. We intend to pursue these, but there is no time to adjust, and cutting revenue by $500,000 will require the bridge toll be increased by $2,000 per single axle truck plying the interior route. This increase does not affect the repair of the bridge since it does not change the initial or regular use of the facility. The Prime Minister should indicate how the increase changes the wearing, maintenance and management of the bridge, as he asked the question who will repair the bridge. I believe we have exercised great restraint and judgement in this matter, as we all live here and know the issues. I would not want to elaborate further here, but state that the same resourcefulness used in repairing the bridge must be considered.
This is the direness of the current situation and people are angry. Why is there a feeling that this matter is affecting APNU Lindeners only? No, I can say without any iota of contradiction that all Lindeners dread this move by the government. The government’s slight caused its constituents in Linden to bemoan the lack of consultation.
Let it be known that we will try to resist every effort to divide and rule – a penchant of this regime. Already fingers are pointing at some persons who have been attempting to place some level of reasoning in the process. The fact that it is cutting deep into the flesh of all in Linden makes the issue a cross-cutter, now needing careful navigation by the government and residents.
One of the ways of cushioning the tough life of a dwindling bauxite-mining community‘s fortune is through hire-purchase arrangements. It is well known that Courts and other hire purchase establishments have established worthwhile businesses over the years in Linden and will continue to do so, since the postponed payment system is suited to where there is not enough to make outright purchases. With this electricity scenario, I am sure the system will be looked at to avoid major defaulting, since one begets the other. Electrical appliances need electricity to operate. Then it is no secret that these loans are made on the basis of what one’s disposable income is.
Who is looking out for the community? BOSAI Services Inc, the power provider in Linden is about to install two Wartsila sets (remnants of the OMAI Gold Mines) in addition to its current system of six sets. Is the community going to pay for the increased capacity since we know that electricity billing is a combination of energy and capacity costs? Moreover, these ‘new’ sets will ensure that whatever the power needs are for BOSAI in its expansion phase, will be met. Note that the six sets prior to the installation of two took care of the current needs of both BOSAI and the community. In fact just four of the six were needed at any given time to satisfy current needs. As such there was considerable redundancy (a good thing in power systems) but which is a factored cost in electricity billing.
The second question then arises. Is there any incentive for BOSAI to install a Heavy Fuel Oil system on these diesel sets? My answer is no, because government is paying 60% of the electricity bill and that more than compensates BOSAI Inc to continue using high cost light fuels, as in diesel compared with Bunker C, and still get its needs met. This is not a benevolent service they are providing; it is a business and government must ensure it gets the best.
In 2004 when OMAI (forerunner and seller to BOSAI) was enticing residents to see it as a good corporate citizen, it promised many things. One of these enticements was that the Wartsila sets would have been converted into Heavy Fuel Oil using systems and that this would happen in just two years. We are now eight years down the road and there is no evidence that any of this is going to happen, as the two sets now to be installed, I am told, are not going to be converted right now. This would have been the best time to do that modification. Who in government should be insisting on this modification and at this opportune time? This is dreadful negligence and ‘eyepass’ in relation to the good nature of the residents. In these circumstances the people must stand militant as their national leaders are either grossly neglectful or patently invidious.
In summary, the Council sees grave hardships for its employees and by extension the residents of the town. The initial gradualism in the rate increase was deemed a heavy burden. Now this is a very heavy drop with no gradualism. All segments of the society will feel it and may not be able to survive.
Yours faithfully,
Orrin Gordon
