US$55M plan to spark major power improvements
next year
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US$55M plan to spark major power improvements next year
-GP&L boss -US$1M for rural electrification in 2000By William Walker
Stabroek News
December 18, 1999
The Guyanese public will have to wait until later next year to see major improvements in the delivery of electricity, pending the Guyana Power and Light Inc (GP&L) accessing funds for major capital projects which would increase capacity or extend services.
In the meantime, improvements in billing and distribution of power will accrue benefits to consumers. Chief Executive Officer of GP&L, Noel Hatch, said at the company's first press conference yesterday, that the company was currently preparing a System Development Plan that looks to "set out future requirements for the generation and transmission systems in particular the system protection adjustments needed and finally the change over programme we would propose for the 50 cycle to 60 cycle system in Georgetown."
strenuous efforts have been made to improve the revenue income from customers... The revenue income from customers in November was 50% higher than that for October. On October 1st many customers had not received their April bill. By the end of November all customers on our records had received an estimated or actual bill covering electricity consumed up to the end of October"
This should be complete by April and will be a blueprint that the company can present to international financing agencies to solicit funds for capital expenditure. Hatch said that the company expects to invest US$55 million over the next five years. However, he stressed that it was vital that the company first showed itself to be viable by improving revenue collection to standards "acceptable of a well-run utility business" and operational efficiencies that meet the conditions of lending institutions. "Pending approval of this funding, short-term bridging finance will be required and this is being pursued, mainly in the Caribbean."
Hatch noted that the money invested by CDC/ESBI (US$23.45 million) in its 51% share of GP&L was being used primarily on the day-to-day operations of the company and would not necessarily be put towards significant capital programmes. These would have to be financed by loans.
Hatch said that while the "business is trading at a loss, strenuous efforts have been made to improve the revenue income from customers... The revenue income from customers in November was 50% higher than that for October. On October 1st many customers had not received their April bill. By the end of November all customers on our records had received an estimated or actual bill covering electricity consumed up to the end of October." Whilst expressing appreciation to the customers who do pay, Hatch warned of the "large number of consumers who continue to use electricity but are not paying for it. These customers are placing an unacceptable burden on paying customers. GPL is determined to identify the non- paying consumers and follow through for payment."
Ryan Murphy, chief financial officer, said that to his knowledge no government ministry was past due in its payments. He estimated that about 25% of the power provided to customers was not paid for resulting in a drain on the company to the tune of US$20 million per year. The onus was on the customer to regularise his situation should he not be receiving bills. GPL will be discontinuing the practice of extended estimates when preparing bills as this has proved to be inaccurate. Instead it will continue to use estimates as this is cost efficient but will alternate these with metered readings. There will be four tariff increases next year in January, April, July and September, comparable with this year's increases which saw residential rates increase by 14% as mandated under the quadripartite agreement signed with the government to subsidize tariffs until the year 2001. He also noted the 70% rise in oil prices in the last year saying that this was a significant cost for the company. Murphy said that significant progress has been made in collecting the $1.24 billion owed to the old GEC which is to be split 50/50 with the government. Hatch said that in the long term it was the aspiration of the company to rebalance the tariff structure away from a cross-subsidized system that places the burden on commercial and industrial customers to one that addresses the concerns of the business community.
Referring to the number of requests for new connections Hatch said: "Availability of finance for the distribution system equipment is a major constraint, since there is no provision in the tariff to provide funds for this purpose." However, he announced that the company was making available US$1 million for new rural areas for the year 2000 and similar amounts for the next four years as part of the agreed rural electrification programme. This will fund 25% of the capital cost of the new distribution system with the remaining 75% to be provided by funding agencies and/or government agencies. Hatch said that he has had discussions with the Ministry of Housing to identify and prioritise areas in Georgetown. He said that all decisions will be made objectively and based on cost effectiveness to the company.
Regarding public lighting, GPL has made a commitment to develop a Street Lighting Programme by the end of March 2000. Preliminary studies indicate that around 50% or less of existing lights are actually out of service due to bulb failure or wiring problems or both. "Following our enquiry to the Inter-American Development Bank we have been informed that some funding is available under its urban development programme. The use of these funds is entirely up to the ministry and the municipalities involved in the project." Hatch said that he has had talks with Georgetown Mayor, Hamilton Green on the matter.
On the operational side Hatch said: "During 2000 we expect to address some of the more critical low voltage areas with the elimination of most serious problems in the second half of 2000." He said that over the holiday period critical areas such as Berbice, Bartica, Wakenaam and Leguan "will experience some minor load shedding due to the absence of generation capacity. Regarding Georgetown, the demand is expected to be about 66 megawatts (MW) against an available capacity of 70 MW. ...I stress that all these comments assume that no plant failures occur, particularly at the critically peak times of the 24th and 31st of December."
A © page from: Guyana: Land of Six Peoples