Too early to contemplate adjusting electricity rates - Official

Too early to contemplate adjusting electricity rates – Official

Nov 25, 2008 News

It is too early to adjust any tariff rates for electricity provided by the Guyana Power and Light (GPL), according to a senior GPL official, who said that there was also still the issue of its 2008 income to be reviewed. Then there is the review of the 2009 budget for the power company.

The comments come in light of the fact that Alliance For Change Chairman, Khemraj Ramjattan, has adopted the position that, since the price of oil on the world market has dropped to below US$50 per barrel, the December electricity rates should reflect that reduction.

Ramjattan’s position was prompted by a recent announcement by Prime Minister Samuel Hinds that, if the price were to fall below US$50 per barrel and remain below that mark, a decrease in electricity rates would be possible.

The comment was made in response to a question about when a possible reduction could be seen in fuel prices locally.

At the time, there was already a significant decrease in oil prices on the world market, then down from a high of US$147 per barrel to below US$65 per barrel. Present day prices for oil hover at the US$50 mark.

GPL is currently operating at just about break-even, when one considers its revenue against the total cost of operations, with fuel supply being one of the largest expenses, according to the official.

Earlier in the year, the total cost of operations far outweighed the revenue generated, which prompted the Government to inject more than $3B into the company.

Another factor compounding the situation is the fact that the GPL is faced with 33 per cent technical and commercial losses.

This is a minimal reduction, as reported earlier, and the fact that the company has been more or less strapped for cash is the reason behind the very minimal decrease of about three per cent, given that the company had to almost cease investment in reducing the losses.

Ramjattan posited, however, that he was almost certain that the administration would respond to the AFC call in the same way most minibus drivers responded to the reduction in fuel prices, blaming increased expenditure on spare parts. As such, the company will claim that it cannot reduce its charges.

People’s National Congress Reform executive member Aubrey Norton, in an invited comment, said that there should be an immediate reduction in the electricity rates.

He drew reference to the fact that the Government was demanding a reduction in minibus fares as a result of the said reduction in fuel prices.

Norton added that a reduction of electricity prices will have a positive ripple effect on the country, in that there would be increased economic activity, resulting in growth of the economy, with increased revenue for the state.

He noted that it would also give a little more to the average Guyanese, in that it would be additional money in hand to spend on other needs, such as food.

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Too early to contemplate adjusting electricity rates – Official

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Too early to contemplate adjusting electricity rates – Official

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