10% cut in power charges nothing to do with elections, says Brassington

The  10 percent reduction in electricity charges by Guyana Power and Light (GPL) company will result in its customers being able to hold on to an additional Gy$3B annually, in disposable income.

Head of State, President Donald Ramotar on Monday during the commissioning of the power company’s Vreed-en-Hoop plant, its latest installation, announced that GPL will be reducing its rates by 10 percent.

Chairman of the Board of Directors, Winston Brassington and Chief Executive Officer Bharat Dindyal met with media operatives on Tuesday at the entity’s Duke Street, Kingston head office along with key directors, to offer clarity on how the power company proposes to effect the reduction.

It was revealed that in addition to the Gy$3B, which would be foregone in revenue this year as a result of the reduction in tariff, the power company, between 2003 and 2014, had already foregone an estimated Gy$29B, in order to stave off increases in charges.

He reminded those present that in recent years, when fuel prices had escalated, the power company did not seek to increase the amount passed on to consumers but rather opted to forego the revenue to be recouped in future.

“This tariff reduction,” according to Brassington, “reaffirms GPL’s continued commitment in providing quality electricity supply at fair cost.”

Pressed on the company’s ability to sustain the reduction in tariffs, taking into account the volatility of the oil market, along with the fact that GPL has over the years been dependent on subsidies, Ash Deonarine, the power company’s Deputy CEO told media operatives that as long as oil prices stayed below US$70 a barrel, the reduction can be afforded.

Should the price of oil on the international market increase above US$70 per barrel, then the company would not be able to break even, and may very well have to restore its tariffs.

Brassington was quick to point out, however, that at present, the company can afford to make the reduction in tariffs charged, but this situation will be reviewed on a quarterly basis and adjusted, based on the prevailing circumstances at the time.

“We’re doing this on a quarterly basis, so in July, we will again review where fuel prices are and depending on that, adjustments to what we are doing may be made,” Brassington said.

Noting that Government’s strategy in the past has been to stave off any increases, Brassington said: “That strategy is likely to continue.”

The GPL Chairman did point out that the current 10 percent reduction will be applied to Residential, Commercial and Industrial Tariffs.

In fact, Brassington further noted that “consumers whose billing cycle begins in the latter part of February and ends in March will benefit from the reduction on their entire consumption for this period.”

Brassington was however quick to dismiss any notion that the revision downwards in the amount being charged by the power company for electricity had linkage to the May 11 General and Regional Elections.

According to Brassington, the decision to reduce the electricity tariff was one made by the Board of Directors and was in response to the declining fuel prices over the past year.

He stated further that this year, the power company will not have to rely on Government for any subsidy to meet any of its operational expenses.

He said, however, that on the capital side, the power company, despite the reduction in tariffs, will have to still depend on Government for assistance in that regard.

According to Brassington, this year a substantial part of the European Union/Inter-American Development Bank’s US$65M project, will continue and will see the money being channelled through Government.

He said that this would be in addition to Government funding some of its capital programmes directly, the details of which will be made public when the 2015 National Estimates are presented to the National Assembly.

In order to deliver on its mandate while foregoing revenue when there was high fuel prices, the power company was forced to seek assistance from Central Government in the form of subsidy and loans in order to ensure the tariffs were not increased.

According to Brassington, “when we faced high fuel prices GPL has not increased tariffs, instead we relied on Government to provide operating support both on the operating side and to fund our capital expansion programme.”