Power company warns budget cuts may lead to tariff hikes or blackouts

The Guyana Power and Light Incorporated (GPL) is now between “a rock and a hard place” as it will soon have to choose whether it will increase tariffs or reduce operations.
This is a direct impact of the joint opposition’s decision to axe GPL’s proposed subsidy by Gy$5.2 billion, almost 50 per cent.
GPL Chairman Winston Brassington said despite extensive explanation before the presentation of the Gy$208.8 billion budget, the opposition, using its one-seat majority, proceeded to cut critical funding for GPL.

“In the next few weeks, we will have to make serious decisions on what we do. Do we increase tariffs? Do we cut service? Do we reduce cost which can impact any area within GPL, including employees?”
According to Brassington, the approval of the Gy$10.2 billion was a one-way ticket to improved services, but now the company’s plans have been crippled.
He explained that the money accounted for major projects, including the infrastructure development project – which included completion of the 69KV transmission line from Berbice to Essequibo and the construction of seven new substations to improve voltage and stability. This project, which is slated to be completed by December, is being funded by the Chinese Import Export Bank.
“The second big project is the supporting infrastructure to complete the 26-megawatt power plant that is being built in Vreed-en-Hoop, that is the new Wartsilla power plant… that project will add additional heavy fuel oil capacity to GPL,” the chairman added.
Additionally, GPL in its 2013 work programme had catered for the completion of the frequency conversion, which would have paved the way for Demerara to operate by 60 hertz. Reducing technical and commercial losses with the installation of smart meters also formed an integral part of the programme.
With a growing consumer population of approximately 166, 000, the power company’s operation continues to be crippled by technical and commercial losses.  Brassington explained that losses have stablised for the past three years, after peaking in 2009 at 44.3 per cent. From 2010 to 2012, it remained at approximately 31 per cent. Even as GPL continues to address operational losses as a result of overloading and the network system, electricity theft is a major hurdle.
In 2012, 5,604 illegal connections were removed. To reduce the incidence of theft, the company was hoping to beef up its programme by installing thousands of smart meters.
Brassington also alluded to the Amaila Falls Hydro Electric Project, noting that it will be impacted as well. With financial closure expected this year for the project, GPL has to sign onto the power purchase agreement to purchase power when it is completed.
“We need to make certain financial commitments to be able to say that we can secure the payment of that power and the subsidy would have helped us in that area.”
Owing to the reduction of funding by Gy$5.2 billion, the company, he reiterated, will have to downsize its operation or increase tariffs. He said the company is now entitled to increase tariffs by 17 per cent to 27 per cent. Tariffs were last increased in 2008, but since then, the price of fuel has escalated. Brassington however, noted that this would be “a last resort”.