GPL tariff increase still in limbo

Jun 22, 2008 News

Head of the Presidential Secretariat Dr Roger Luncheon has hinted at the possible injection of cash into the Guyana Power and Light (GPL) to avoid a tariff increases by the company.
This is in response to a statement by chairman of the board of directors Winston Brassington who told the Parliamentary Economic Services Committee that unless there was a significant amount of cash from the Government then the company would have to increase its tariffs.
Dr Luncheon did chastise the management of the company saying if GPL management could use funds provided economically then the issue of tariff increase would recede.
He reminded that the power company is a state owned entity and has been supported by government for a long time.
“The issue now is the extent to which support will be provided.”
He also added that it was unclear whether any support will be concurrent with a tariff increase.
The policy of the power company as it relates to rate collection is to have enough revenue collected to meet and not exceed cash flow.
However the current fuel price does not allow rates collection to meet cash flow hence if there is no significant influx of funds from the government then GPL will have to raise its rates again.
This is according to Brassington, when he was subjected to questioning by the Economic Services Committee yesterday at the parliament Buildings.
The company is currently not collecting enough rates to balance cash flow.
According to GPL’s Chief Executive Officer, Bharrat Dindyal, among the problems compounding the issue was the fact that the company was experiencing some 34 per cent of technical and commercial losses.
However members of the committee questioned as to whether enough was being done at the company to improve its efficiency given that when operations were taken over from the then Guyana Electricity Corporation, technical and commercial losses were estimated to be 34 per cent.
The takeover was supposed to see a yearly reduction in technical and commercial losses
According to Hinds, however, the figures at the time of the takeover may have been inaccurate and greater than what was announced.
He noted also that in order to reduce technical and commercial losses then there would have to be significant investments in the company.”
GPL last month had announced that the tariff hike, which it considers a last resort, could come within a month.
At that time Brassington lamented that the company’s losses were recorded at $400M per month.
He pointed out that GPL was examining four alternatives that included the increase of tariff to consumers being one of those.
The other three choices include an increase in conservation measures, load shedding at peak hours to control the peak, and Government support to GPL in the form of higher tariffs for Government customers or an overall level of cash support.
The increased fuel price on an annual basis is over $5B, according to Brassington and fuel prices on the world market is currently in the vicinity of US$130.
Brassington added that since April, the continued increase in fuel prices implies that for the rest of the year, a shortfall of some $4B can be expected.
This, he said, is based on current pricing which has been rising rapidly.
“We do have to make a decision shortly because the situation is not sustainable, given that we are losing about $400 M a month.”
GPL services approximately 120,000 domestic customers.

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