The Guyana Power and Light (GPL) says that the steady rise in fuel prices is negatively affecting its operations and if the trend continues then generating costs are expected to trump revenue earnings.
In a statement on Monday, the power company said that the effects of the Russian invasion of Ukraine are behind the rise in fuel costs.
“As we witness these developments from a safe distance, the effects have already reached our shores and by extension, the Company. GPL’s landed cost for fuel today is approximately US$140 per barrel and has quadrupled from 2016 when the fuel price was approximately US$30 per barrel. Inter-national indicators point to further price increases. GPL currently utilizes approximately 3,700 barrels of fuel daily for electricity generation to meet the daily demand, at the cost of approximately $111.5 million,” GPL said.
It added that the increase in fuel costs has moved the company’s total monthly operating expenses to approximately $4.5 billion explaining that monthly revenue generation is about $3 billion.
“This means that GPL has to utilize every dollar it collects to meet its operating expenditure. This financially challenging position cannot be
sustained at current fuel prices. Every kilowatt-hour of electricity not generated would reduce the Company’s fuel costs and by extension the overall operating costs,” the statement explained.
GPL also urged its customers to conserve energy as it seeks to navigate the increased costs.
Oil prices rose to almost US$130 per barrel yesterday as the world is navigating the Russian invasion of Ukraine. The US has now banned Russian oil and imposed a number of other sanctions aimed at punishing Russia. Moscow supplies a large share of the world’s oil and several key economies will have to find other alternatives.
After breaking diplomatic ties with Venezuela in 2019, the USA is now in talks with Caracas to benefit from its oil and further isolate Russia. Venezuela is a close ally of Russia.
When contacted, Prime Minister Mark Phillips, who holds the energy portfolio, told Stabroek News that government is discussing all sectors that are affected by world fuel prices. He added that policy interventions and other measures will consider all sectors.
“As expected of every government in today’s world, we are monitoring the daily changes in fuel prices on the world market. Also, being a people-centred government we are therefore at present occupied with devising policy interventions to cushion the negative impacts these current phenomena – rising fuel prices, supply chain challenges, continued COVID-19 challenges – continue to have on the Guyanese population. Likewise, as our policy interventions/measures are decided upon, they will be implemented with expediency and will be communicated to the people of Guyana,” the Prime Minister said in a brief statement to this newspaper.
Meanwhile, Chairman of the Private Sector Commission, Paul Cheong said that they are monitoring the situation and expressed some worry about the implications of a steady rise in fuel prices.
“Over the past six months we have seen fuel prices rising steadily and that is affecting everything. Higher fuel prices mean inflation, a rise in freight costs and increased operational costs for us. We are hoping that this trend (goes) down because if it does not then there is nothing we can do than to increase our prices. This is a global issue and not just one that is isolated to Guyana.” Cheong said.
He added that discussions have been ongoing as to how measures can be implemented to cushion the effects on not just businesses but also consumers.
