RATES AND TAXES ARE PREPAID

Jun 16, 2013 Features / Columnists, Peeping Tom

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Things are becoming gloomy at City Hall. It was threatened last week with disconnection because it reportedly owes the Guyana Power and Light at least one billion dollars.
It should however consider itself lucky. Unlike many consumers, it still has electricity despite owing the power company. Perhaps it should be encouraged, like other consumers, and like the AFC is encouraging the government, to move towards prepayment.
This would mean that it would only be able to consume what it can afford while it decides how to settle its humongous arrears with the power company. This is not the first time that these arrears have been a problem. City Hall was disconnected in the past and there have been all kinds of justifications for its stance over what it is owed.
At one time, it decided that it too was owed, since GPL’s power poles were being planted on council’s lands. This is a wrong-and-strong argument. There was never any agreement, historically, about the power company having to pay for its power poles. In fact, the power company is providing a public good and if it has to pay rent for its poles, it would be unable to provide that public good at an affordable cost.
Already the power company is in red and the opposition has not approved the full subsidy that the government wanted. With half of the projected subsidy not approved, the only logical thing for the power company to do to avoid going under is increase tariffs, which it is allowed to do under the laws of Guyana.
The AFC does not agree that tariffs should be increased. Instead it feels that the government should prepay its light bill so as to bail out the GPL. That is asking the government to dig a hole to fill a hole, because after the government would have prepaid its electricity bill what happens when that money too runs out in the face of high fuel costs.
The opposition, of course, is not going to take any responsibility for forcing the GPL to increase tariffs. It is not going to accept that it is its own refusal to approve the subsidies that has led to the need to increase tariffs. Yet it wants the government to pass a subsidy to a private firm – Berbice Bridge Company Incorporated. It wants this to happen just so that it can satisfy a promise it made to the people of that area to reduce the toll.
The Opposition approved the subsidy for power to Linden, but for the rest of the country, the subsidy has been slashed in half, because it wanted GPL to justify the need for the high subsidy.
Unfortunately, both of the engagements between the government and the opposition are not bearing fruit, and perhaps both sides need to change their negotiating teams to see if reasonable compromises cannot be had.
There is no doubt that both sides would wish for all electricity subsides to be phased out. It is a drag of critical resources when each year billions of dollars have to be deployed to ensure that the GPL does not have to increase tariffs.
The government wants the full subsidy restored. The Opposition says that the subsidy has to be justified. So what is keeping both sides from meeting, examining the numbers, and determining how much is needed and what should be the GPL’s responsibility upon receipt of this subsidy.
These are technical issues that should be discussed by the politicians in the presence of technical persons on both sides. If GPL is claiming that the increase in the cost of fuel justifies the need for the full subsidy, then it should come forward with its numbers to show that the increase in fuel prices necessitates the need for the full subsidy which the government has proposed to be transferred to the GPL.
It is unreasonable for the Opposition to link reduction in commercial losses to the subsidy if GPL can establish that the full subsidy is needed to offset fuel purchases. If, however, the subsidy is also needed to fund capital works, then the Opposition is in its right to seek to ensure that any disbursal from the treasury for this purpose is linked to a programme of reduced commercial losses.
The bulk of these losses is non-technical in nature, and is as a result of persons stealing electricity. But what about those entities that owe large sums to the GPL, should they continue to enjoy transfers from the treasury when they are in arrears to the power company?
When a municipality cannot pay its own electricity bill, it is time to bid it good riddance. But is the opposition willing to go down that road? It should note that citizens are required to prepay their rates and taxes, and if despite this the council still is indebted to the GPL, then perhaps there is a need to remove this Council.  Or increase rates and taxes by 26%?

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