LINDEN SHOULD HAVE BY NOW BEEN THE INDUSTRIAL CAPITAL OF THE CARIBBEAN

Apr 23, 2012 Features / Columnists, Peeping Tom

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Linden is one lucky community. Imagine having to pay $15 per KWH for electricity while the rest of the country is burdened with tariffs that are three and one half times this amount.
Not many Guyanese were aware of this discrepancy in the cost of electricity between Linden and the rest of the country. If a survey was conducted today, it is likely that 90 percent of the people of Guyana would not be aware of this positive discrimination in favor of Linden.
Yet the people of the mining town are complaining. Most will eventually have to accept that they cannot enjoy such luxuries anymore. The excuse that Linden cannot afford to pay anything more at this time is not going to be convincing, more so considering the substantial subsidies that that community has enjoyed over the years, including since the PPP took over.
When the PPP took office in 1992, bauxite was already on its knees. It was losing billions and the government for more than ten years made direct transfers to the industry to the tune of billions each year. No other industry, no other sector, no other town, no other community in Guyana has enjoyed such a high per capita subsidy as the people of Linden. In fact today, the electricity subsidy is calculated at in excess of $300,000 per year per consumer.
There were also indirect subsidies to that community which when aggregated and combined with the direct subsidies would probably make Linden the most subsidized community in the entire English-speaking Caribbean.
On top of this the government has promoted new investments to the tune of hundreds of millions of US dollars, secured over two billion dollars in funding under the LEAP and LEAF initiatives spent hundreds of millions in infrastructural work, including opening hundreds of house lots in Amelia’s Ward and established a thriving agricultural settlement in West Watooka.
With extremely low electricity rates Linden should have by now been the industrial capital of the Caribbean. Businesses in the rest of the country should also have been moving their operations to that area to take advantage of the low electricity tariffs. After all, a business should enjoy superior competitiveness if its energy costs are one third that of other local competitors.
The fortunes of Linden by and large still however revolve around bauxite and this is one of the disappointing developments in Linden. One has to ask why despite all the preferences given to this community, it is not much richer today. Why has it not diversified faster away from bauxite given the fact that the fortunes of that industry fluctuate with world market prices and once China stays as a major player the future for bauxite is not good?
These are questions that need to be addressed because on the basis of the electricity tariffs alone and the other indirect and direct subsidies that have been given to Linden, it should have been thriving today.
It is for the development planners to assess why Linden has not turned out to be the developed industrial hub for the country.
But for now what has to be questioned is the long-term application of direct subsidies such as what has been given by the electricity sector in that area. In fact, the government itself says that the average household consumption of electricity by the people of Linden is almost one and half times the national average.
This is the downside of too many subsidies on electricity. Once electricity is too cheap, people will waste electricity.
In the old days electricity used to be free in Linden. That was when electricity used to be provided by the bauxite industry. There were stories about electricity consumption in those days.
There was for example the story that you could drive around Linden see houses having their exterior lights on all day. Nobody bothered to switch off the lights because electricity was free and there was no incentive to conserve.
There were other stories also including one about a homeowner who hired an electrician to rewire his home. The homeowner bought all the electrical wiring and fittings.
When the electrician began to rewire the home he noticed that there were no on/ off switches and so he asked the homeowner where were these switches.
The homeowner told him, so the story goes, “No need to switch off anything here. Electricity is free.”
The rationalization of the electricity tariffs as proposed by the government must therefore be seen as helping the people of Linden to become more efficient in the use of electricity and to avoid wastage of this precious power source. It should also drive home the economic point about the effect of subsidies. While in the short term, these provide a cushion, excessive reliance on direct subsidies leads to a lack of competitiveness and reduces the incentive to be innovative.
Obviously for a community accustomed to paying low tariffs, it will take some time for persons to get used to paying increased electricity bills. And no one likes to pay more for anything.
The government has however said that the full impact of rationalization will be phased in over years. And even with the increases, Linden will still enjoy favored treatment because it will still have far lower tariffs than is paid by the rest of Guyana.
Instead of protesting the increase in tariffs, greater energies should be devoted to addressing how Linden can build a strong and sustainable economy without having to rely so much on government subsidies. The extent to which Linden can reduce its traditional dependence on bauxite, is in fact far more important to its future than all the brouhaha about the proposed rationalization of electricity tariffs.
Linden has enormous potential for tourism, but as you drive along the banks of Wismar you encounter a range of structures blocking the view of the tranquil river. Just imagine if there could be a clear view from the road running alongside the river. Imagine what that would do for tourism. Imagine if that entire waterfront area was cleared and re-developed.
Linden should therefore use this period to develop a road map to develop the town into a thriving but diversified industrial centre, one that would reduce and eventually remove its extreme dependence on subsidies from the State.

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