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$$B approved to avert increase in GPL tariff

Aug 01, 2008 News

The National Assembly last evening passed the first Supplementary Appropriations Bill amounting to some $4.8B in current and capital estimates.

According to Prime Minister Samuel Hinds, the bulk of the money in the supplementary provisions sought, some $3.7B, will be going to the Guyana Power and Light to avert an increase in tariffs which was touted to be some 18.5 per cent and would have been passed down to consumers.

Two months ago, Chairman of the GPL Board of Directors, Winston Brassington, had told the Parliamentary Economic Services that unless there was a significant amount of cash injected into the utility company then it would have to increase its tariffs.

According to Hinds, the subsidy should not be looked at as one for the company but rather as one for the consumer.

He noted, however, that the request was very minimal in that the effect of the current price of fuel projects that the company would require some $4.7B which still presents a shortfall of $1B.

He noted that should oil prices continue to rise then his office may very well have to request additional monies or in the extreme, raise tariffs.

He noted, however, that the company was currently looking toward using a cheaper heavy fuel oil as against diesel which would assist in containing the cost of production.

The legends of the requests in Finance were questioned given that they indicated that the monies would be going to the Linden Power company but it was clarified that the monies was for GPL.

He also noted that the company was embarking on a $40M project aimed at reducing the technical losses in the company.

Current technical and commercial losses in the company are some 34 per cent and, while there is a plan afoot to tackle technical losses, he noted that tackling commercial losses is currently delayed.

Among the efforts to tackle commercial loss is the introduction of pre-paid meters. Losses at the company are currently estimated at some $400M.

GPL’s policy as it relates to the rate collection is to ensure that revenue collection can meet cash flow and current fuel price does not allow rates collection to meet cash flow hence the approach to the National Assembly for the supplementary provisions.

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 Financial papers were tabled by Minister of Finance, Dr Ashni Singh.

Among some of the other requests was that of the Ministry of Agriculture-Crops and Livestock Services which is requesting some $31.5M to meet costs associated with the purchase and resale of small packets of flour.

Increased flour prices earlier in the year forced Government to sell flour at a subsidized cost from May.
According to the Agriculture Minister, Robert Persaud, the flour was purchased from the National Milling Company and resold at a lower rate.

The Ministry of Tourism, Industry and Commerce also requested monies to meet costs associated with cash transfers for bakers/biscuit flour which was also an initiative earlier in the year to address the rising prices of flour.

The Ministry of Culture, Youth and Sport was successful in its request for some $11.7M to compensate for the fire at the National Cultural Centre which is identified as a site for Carifesta events, hence emergency repairs had to be undertaken and some items had to be replaced.

Among some of the other sectors to put in requests are the Education Ministry and The Guyana Defence Force.

The monies requested will be in addition to the voted provisions in the $119B budget announced earlier this year.

The National Assembly last year approved some $17B in supplementary provisions to last year’s $100B budget.

Over the years the PNCR has been arguing on several occasions that the government has a tendency of raiding the contingency fund each time it requests monies.

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