The Linden electricity rate increase issue

Jul 15, 2012 AFC Column, Features / Columnists

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By Gerhard Ramsaroop
Historically, the bauxite industry in Linden had to produce excess electricity in order to facilitate the periodic peak operation of the famous walking draglines.  The excess was then fed into the community and for many years too, also into the national grid supporting the rest of the country.

When the bauxite industry was allowed to decline by both the PNC and PPP, the power plant went with it.  Since 1992, the PPP Government invested more than G$48 billion in GPL that was targeted at most of Guyana except for Linden, where instead they opted for privatisation.  As a result, the power plant was run down further, including a turbine exploding.  The Government eventually obtained a settlement, but none of this money ever made it back into the plant.
In 2006, the plant was given to the Chinese company, BOSAI, as a write-off.  Since then, the people of Linden have been at their mercy, because the PPP gave BOSAI the power to do whatever it wants.  First, they allowed BOSAI to set electricity prices outside of the Public Utilities Commission (PUC) which is totally wrong, because the PUC is the national electricity regulator.  This cannot be allowed to continue, and electricity pricing in Linden must be placed within the remit of the PUC forthwith.
Second, BOSAI took advantage of the freedom from regulation and charged an exorbitant rate for surplus electricity.  To correct this situation, the Government agreed to a subsidy, but given their record on corruption, it is not inconceivable there is some impropriety here.
This practice by BOSAI must stop.  They must say what they charge and the basis on which they have arrived at that charge.  Since the electricity is produced principally for BOSAI’s own use, the applicable pricing policy should be marginal pricing, meaning only for the cost of producing additional power, and not total cost pricing.  In order to prevent a heavy rate increase in electricity, the Government must renegotiate with BOSAI along these lines.  BOSAI must also be held to its commitment to install heavy fuel generators which will further lower costs.
BOSAI also buys fuel duty-free, and given GPL’s massive losses of 32%, their cost of production has to be lower.  GPL produces at a cost of G$30 per kWH, while BOSAI charges Linden almost double that! Linden is not connected to the national grid either.  So it makes no sense to compare Linden’s rate with GPL.
In all of this, the fact must not escape that under the PPP, Linden has become an even more depressed town, with unemployment estimated at over 70%.  Moreover, despite a loss in jobs in the bauxite industry, from several thousand to only a few hundred today, with very little alternative job opportunities being created, Linden still suffers from severe dust pollution from the industry. Nowhere else in Guyana is there pollution of that magnitude, and it is international norm that there be some amelioration by the offending industry.  This must also be included in the renegotiations with BOSAI.It is obvious that the PPP is more interested in BOSAI that the people of Linden.
Development in Linden by the PPP, particularly under the Jagdeo administration, has been severely wanting.  Major contracts are issued to contractors friendly to the PPP, who are not from Linden, and who hire very little of the local labour force and procure very little in the town.  As such, the residents from Linden receive little benefits from the huge profits made by these outside contractors, whose work is often of the poorest quality. Had Lindeners been meaningfully involved in these works over the last two decades, Linden today would have had major contractors hiring more Lindeners, leading to economic growth and development in the town.
Further, Government initiatives such as the Linden Economic Advancement Programme (LEAP) only produced minor results.  For example, LEAP was intended as an incubator for small businesses such as computer assembly, but that never took off, because the Government chose to import computers from its favoured “barber shop dealers” for schools and Government agencies in the region.  So when the PPP boasts of how much they have spent in Linden, while true, it has resulted in little actual development.  Moreover, the PPP has denied Linden access to more than one TV station.
The PPP suddenly increasing the rate of electricity clearly resulted from their massive defeat in Region 10 (Linden) in the last elections. It was political retribution against Lindeners. We must be clear in saying that nothing about rate increases in electricity for Lindeners was mentioned by the PPP prior to the election.  The PPP ought to know that it was the same bauxite workers who had joined with the sugar workers and stood up against Forbes Burnham.
Predictably, the PPP put a racial spin on the issue, saying the opposition wants to remove the subsidy from the Guyana Sugar Corporation (GuySuCo) which employs mostly Indo-Guyanese, while demanding the subsidy remain for Linden, a primarily African-Guyanese community.  This of course, is a heinous lie as the AFC only called for the corrupt and inept management of GuySuCo to be changed.  The AFC voted for and fully supports the G$4 billion subsidy offered to GuySuCo to preserve the jobs of the working class in the sugar belt.
The reference to the higher rate of electricity outside of Linden has racial overtones as well.  The PPP has been blatantly spreading lies and hatred by telling Indo-Guyanese that their resources are being used to subsidise electricity for African-Guyanese who live in Linden. However, the fact is that the rest of Guyana, including African-Guyanese enclaves such as Hopetown, Buxton and Dem Amstel, is subsidising Linden, just like all of Guyana, including Linden, is subsidising GuySuCo and its failed US$200 million white elephant Skeldon Sugar Factory. Conveniently too, they leave out the fact that the high rate is because of GPL’s extraordinary losses and line transmitting inefficiencies which are costing the taxpayers in excess of $5 billion annually.
So the fact is not that Lindeners are paying too little, but that the rest of the country is paying too much for electricity, because business friends and relatives of the PPP cabal are exempted from paying electricity.
The AFC will not support the increased rates in electricity at Linden until the PPP regime provides jobs for its people and the region becomes developed. In our Action Plan, the AFC had plans to make Linden into one of the new Economic Frontier towns, and we urge the PPP to put these ideas into action by aggressively pursuing the following:
•    Foreign investment from a reputable company to develop an alumina plant;
•    Develop the 200,000 hectares of the intermediate savannahs for citrus, legumes, vegetables, cattle,  etc. As the country’s second frontier for agricultural developments;
•    Intensify block-making capability using lateritic bauxite soil to support the housing industry;
•    Promote furniture manufacturing and value added wood products;
•    Establish a University of Guyana campus in Linden, offering courses relevant to the developmental needs of Regions 7, 8, 9, and 10.
Finally, we urge the PPP immediately desist from engaging in divisive politics, including playing the race card, and get down to the business of governing our country, for all of our people, under this new dispensation.

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