A recent article in this newspaper quoted the Prime Minister’s office as assuring the nation that GPL will have its transmission and distribution system prepared to accept the 300MW of power coming from the gas to shore plant.
“We are moving to modernise the grid, to install the new transmission lines and substations for the integration…The tender is already out for that [the lines’ transmission upgrade]… We are also doing a study… by the time the gas-to-shore project is completed the grid will be upgraded and ready to receive that [power].”
The office did not go into as much detail as it should have. This might reflect the Prime Minister’s and this government’s view that they are not answerable to the independent media. Instead, it’s “In the PPP we must trust”. But it is of interest that while the government hammers on about the benefits of the power plant, the real problem that we continue to get blackouts – transmission and distribution – is considered less newsworthy. That is despite perhaps 90% of all blackouts being caused by T&D failures rather than generation issues. In fact Guyana has more than enough power, about 200MW currently, to relatively comfortably supply peak demand of 140MW. There have been incremental improvements to the T&D system over the years but blackouts are still not few and far between and remain a bug bear to citizens and businesses. There is no company in Guyana with a worse reputation.
One of the justifications for the gas to energy project is that it will halve the cost of power and spur the development of a manufacturing sector. This has been repeated over and over by the Vice President. However GPL’s own Development and Expansion plan 2021 to 2025 does not project such a cut. Instead it estimates that the tariff will go from 25 US Cents per kwh in 2020 to 18 US Cents by 2025. And it cautions that even this might be a challenge given the amount of capital it needs to build out new networks and upgrade existing ones. “Whilst lowered and sustained tariffs are among the Company’s primary objectives, GPL remains challenged to fund network and generation improvement projects without debt financing and grants from multilateral concessional lending agencies.”
The document also projects demand to increase by 218% from 667 Gwh to 2121 Gwh. It is a bit hard to understand this figure given that the estimated increase in residential customers is from 227k to 266k by 2027.
At the same time there will only be a marginal reduction in line losses both technical and non-technical – from 26.5% to 22.8%. Technical losses would reduce from 9.4% to 8.6% in 2025. Non technical (theft etc) would decline – according to the plan – from 17.1% to 13.6%. In other words, even if these targets are met this will remain a system still running suboptimally and far below industry norms worldwide even with a brand new plant feeding it.
With bulk voltage transfer lines running 276 km and primary distribution circuits of 784 km it is already a challenge to maintain the Demerara Berbice Interconnected System and the report points to seven areas of ongoing concern.
1) The reduced life span of pole structures due to poor quality of poles and cross-arms;
2. Impassable accesses to pole structures in remote terrains; mainly for the transmission lines;
3. Frequent line trips due to vegetation encroachments on open conductors;
4. High voltage drops due to long feeder lengths, high electricity demands, and low power factor presented by maximum demand customers;
5. Widespread outages due to fault clearing by protection relay scheme at substation level;
6. A large number of and duration of outages to facilitate line maintenance and emergency switching; and
7. Poor operation visibility and remote control of primary distribution feeders result in a high dependency on customer fault reports.”
So we return again to a familiar theme: the lingering doubts that this country, now suddenly replete with financial resources, has the organisational and technical skills to successfully follow through on big projects. It is hard to see how blackouts will go away like magic once the switch is turned on at the Wales generators. Indeed a much larger system will naturally require more funds along with, most crucially, better management and workers to maintain it. It will require a seriousness and commitment to the running of the utility that has been lacking over the decades.
As for the claims by the Finance Minister this cheap electricity “will trigger a series of major economic development initiatives”, like many of his predictions, it remains to be seen. Reliable electricity is surely more important, especially for manufacturing. Secondly with a small domestic market, and few competitive advantages it is not clear that there is any reason to establish various industries here. Thirdly with oil dominating the economic landscape and all the spinoff services it requires, who among the blinkered business class will be interested in the uncertain world of manufacturing? Agro-processing might be one avenue given our ample and fertile land but this would require a move to much larger farming projects where economies of scale could kick in. Fourthly foreign investors weigh many other factors when making decisions on where to establish projects: enforceability of contracts for example, political stability, corruption, red tape…In these areas Guyana has much more improvement to do despite the President’s assertions of us being some world class place to do business. With all the trips to the Middle East and elsewhere why exactly are investors not beating down the door?
It is understandable that politicians must justify such big ticket projects but what has not been apparent over the decades is their ability to actually run the country properly. Dysfunction and disorder seem embedded and it may be why recent comments by Jamaican economist Damien King although harsh and somewhat simplistic, might resonate with many Guyanese.
The Wales project and the ultimate goal of delivering not just cheaper but reliable power will be an acid test going forward.
