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Chairman of the recently appointed board, Mr. Ronald Alli told a news conference that it has already embarked on a committed process to place GPL on a sound financial footing and deliver an efficient and cost effective power supply to the country.
At the news conference in the studios of GTV 11, Georgetown, he also introduced to the media the other members of the board.
He recalled that as a result of the agreements which provided for the termination of all the 1999 accords to which the Government of Guyana and AC Power were parties, on April 9, 2003, the Government, as the sole shareholder of GPL, appointed a five-member board.
The other board members are retired Managing Director of the Guyana & Trinidad Mutual Fire and Life Insurance Company Ltd., Mr. Errol Cheong (Director); Technical Services Manager, Factory Operations, Guyana Sugar Corporation, Mr. Narvon Persaud (Director); President of the Guyana Trades Union Congress, Mr. Carvil Duncan (Director), and Executive Head of the Privatisation Unit, Mr. Winston Brassington (Director).
Alli is a chartered accountant and head of the accounting firm, Jack A. Alli Sons and Company.
He noted that Prime Minister Sam Hinds, at a news conference on March 31, pointed out when announcing the transition of ownership of GPL, that "we are faced with a formidable challenge if we are to successfully return GPL to an efficient and viable operation".
According to Alli, the Prime Minister emphasised that "this is not a task for Government alone".
"Our board reflects those sentiments, representing as it does persons appointed from Government, the private sector and the Trades Union Congress," he noted.
He said a most important challenge for the board is to secure the company's financial viability and restore a reliable supply of electricity to consumers.
"Our cash flow projections must be able to assure our creditors that the company will be in a position to meet its payments (and) we must be able to secure loans which are in place," he said.
He noted that on January 28 this year, in accordance with the requirements of the Electricity Sector Reform Act (ESRA), the company submitted an Interim Return Certificate reflecting an increase in its basic rate of 21.68% over the base rate for 2002, but this translated only to 15% over the rates charged in the last quarter of 2002 which carried a fuel surcharge.
"As you are aware, the order of the Court made on January 31, prevented GPL from implementing the increased rates on February 1. The block on the implementation of the new rates contributed to the company's income shortage and the resultant power cuts, failure to meet critical payments to creditors and a dangerous postponement of scheduled maintenance to generators," he said.
Alli also noted that at its inaugural meeting last Friday, the board instructed management to immediately cease the scheduled power cuts.
He said the company must, however, be able to collect sufficient revenue to meet its costs, and, in particular, purchase sufficient fuel to sustain its operations and avoid any further power cuts other than those which may result from time to time in order to perform line maintenance.
The new GPL Board Chairman also pointed out that fuel prices increased enormously in the first quarter of this year.
He said this unavoidably gave rise under GPL's licence to a further increase of $6.07 to the kilowatt hours charged on tariffs and should be applied to bills issued from April 1, representing a further increase of approximately 15% on the tariffs charged in December 2002.
"Therefore, both the fuel surcharge and the increase in base rates compound to a total upwards adjustment in tariffs of approximately 32% on the tariffs billed to consumers since the beginning of the year which should have been applied to bills issued from April," he explained.
"It would be useful for me to explain that the GPL licence allows for the adjustment of the kilowatt hours charged on the tariff rate to account for the cost of fuel; in fact the base rate in any year could be increased or decreased depending on the actual cost of fuel in the previous quarter," Alli told reporters.
This, he said, is described as a fuel surcharge or fuel rebate as the case may be.
In this regard, he recalled that on April 8, the Court Order was dismissed and as a consequence, GPL is now able to implement the necessary rates on bills issued from that date.
The board, quite naturally, is committed to providing relief to consumers, once the company is able to sustain the total cost of its operations, Alli said.
He said the board, therefore, approved the application of a tariff increase of approximately 17.5%, instead of 32%, in rates for April and May.
According to him, the ESRA allows GPL to apply in any financial year, a rate less than the calculated rate of increase, with the company retaining the option to recover the amount deferred in a later year.
Alli said in arriving at that decision, the board took into account the following considerations:
** Maintaining the Kingston steam power plant off line because of its high operational cost. However, this has a trade off of reduced reserve capacity and reduced system stability and reliability.
** Projected savings in management fees of approximately 60% of the fees paid to AC Power/ESBI.
** The current drop in fuel prices will result in a reduced fuel surcharge to the consumer in the beginning of the third quarter (from July 1).
** Cash flow projections provide reasonable assurance that the company can meet its outstanding liabilities, overdue maintenance obligations as well as all other operational costs.
Alli also said there has "been a good deal of misinformation peddled about the role of the Public Utilities Commission with regard to the implementation of the rates".
"It is important, therefore, that I remind you that GPL is required to file a Final Return Certificate with the PUC by April 30 (and) this must be verified by an independent firm of accountants and is calculated on the company's audited financial statements," he added.
He also agreed with Prime Minister Hinds when he announced at a news conference last month that it will need substantial sums of money, invested over a number of years, at minimum, to introduce state of the art transmission and distribution systems and reduce technical losses to an acceptable level.
He said, too, that the board is determined that rates reflect, not merely the cost of operations, but a cost efficient operation.
"Millions of dollars are lost by GPL, through meter tampering (and) Guyana is not unique in this regard," Alli said, adding that the board has under active consideration, methods of meter reading and collection which would eliminate the fraudulent use of power and provide for automatic disconnections.
The Chairman and other board members also urged persons to report known instances of theft of electricity to the GPL Loss Reduction Unit in Middle Street, Georgetown.
Yesterday's news conference was chaired by Communications Consultant, Mr. Kit Nascimento.