GPL’s chairman defends company’s performance

Dec 01, 2017 News

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– Minister to report on performance to Cabinet; new CEO to be named soon

With yet another year of growing anger over the national power company’s performance, the Cabinet of Ministers is set to hear next week on the current situation at the Guyana Power and Light Inc. (GPL).
The company is continuing to face problems in its service delivery, with Board Chairman, Robert Badal, yesterday stressing that despite a stronger financial position because of tighter systems, when it comes to generating power, the company is skating on thin ice.
On Tuesday, last, Minister of Public Infrastructure, David Patterson, was set to make a presentation on the situation at GPL to his colleague Cabinet ministers and President David Granger. However, because of constraints, that presentation will now be accommodated in the next Cabinet meeting set for Tuesday, says Minister of State, Joseph Harmon.
Harmon made the disclosure yesterday while being questioned during the post-Cabinet press briefing.
In recent weeks, there have been prolonged outages, with scheduled line maintenance two Sundays ago shutting power to the city.
This was despite billions being plugged into the utility company in recent years.
More than two years ago, a US$40M project including seven sub-stations and new transmissions lines were commissioned.
This year, a US$23M project to introduce smart meters and run medium voltage lines on the coastland, was also launched.
Prior to this, a new 26 megawatts power plant at Vreed-en-Hoop, West Bank Demerara, was commissioned in the last few years. However, generation, transmission and distribution issues continue to plague the power company, Badal said yesterday.
“GPL takes its responsibility to the nation to supply reliable and stable electricity seriously at all times. In fact, our customers are its ultimate stakeholders and therefore we have an unwavering commitment to this mandate.”
The official said that the recent spate of blackouts in the city and around the country have caused much concern among customers.
“While we apologize for these interruptions it is important to understand the constraints and challenges affecting GPL’s everyday operations and the circumstances surrounding these outages. The outages were the result of intensified maintenance works on both generating assets and the transmission and distribution network (grid).”
According to the chairman, the age of the electricity grid requires frequent maintenance to replace cables, connectors and the like.
“The absence of redundancy lines mean that the areas serviced by the lines scheduled for maintenance would obviously be affected. Executive management has recently been mandated to implement live wire maintenance which would require minimum disruption of service during maintenance. Currently we do not have this expertise… this would require much training of local technicians, but it’s the way forward.”
Badal insisted that over the years, investments in generating assets have lagged behind the need to retire aging generators.

LESS THAN HALF
“Currently we have 50MW of generators in Kingston and Garden of Eden that are over 22 years old and their replacement is now being planned. These units are now de-rated, resulting in lower generating capacity. While the units under maintenance have now been restored, shortfall in supply at SEI in Skeldon has made our reserve very thin.”
Currently GPL has total available generating capacity within the Demerara/Berbice Interconnection System (DBIS) of 123MW against a peak demand of 115MW.
“This leaves us with a reserve capacity of only 8MW. This means that in the event of an unexpected break down or even scheduled maintenance the generating capacity may be inadequate.”
To arrest this scenario, GPL has invited expressions of interest for the installation of 50MW of generation, based on natural gas, under a power purchase agreement, but the lead time for such supply could be two years, leaving GPL in a most challenging situation.

According to Badal, divesting of all new generation is the new model GPL would be using going forward, to allow private sector investment in the electricity sector, while allowing it to focus its operating cash flows on modernizing its electricity grid.
“The same neglect of renewal was evident at Bartica, Anna Regina and Canje, where the generating sets are more than 30 years old, which logically would give rise to maintenance challenges and affect reliability of electricity. We have purchased new gensets for these areas which after commissioning would remove outages in those areas. Nonetheless, a sensible policy of scheduled retiring and replacement of Gensets is vital in ensuring adequate long term generating capacity.”
As regards the grid, which links Demerara and Berbice, the Public Utility Upgrade Programme (PUUP), a US$64M Investment, would see 54,000 smart meters installed and more than 1000km of low voltage distribution lines aimed at reducing losses, management strengthening and capacity building.
In addition, Phase Two of the Infrastructural Development Programme will soon be commissioned.
“This programme costing in excess of US$22M would build four new sub-stations, expand seven existing sub-stations, build 55km of transmission lines and integrate generation with transmission through the SCADA system.”
According to Badal, GPL is now in a stronger financial position than where it was a few years ago.
Over the past two years, it has added more than $8B in free cash flows through prudent management, better inventory control and scheduling of procurement, even after extending a 20% reduction in electricity rates.
“In addition, it repaid the Government $1B in interest in 2017, the first time it has done so in its history. It is now able to finance its own operations from operating cash flows instead of needing state funding. All executive posts are now filled and a CEO (Chief Executive Officer) will soon be on board.”

Next year, GPL is hoping to complete the PUUP and execute the IDP 2, build generation capacity through private sector partnerships, intensify the reduction of losses, and improve operational efficiency and productivity.
“Customer service of all aspects has been found wanting, with frequent complaints in one form or another. A new Director – Customer Service, recruited a few months ago, should make significant improvements in this area.”
With strong leadership, which a substantive CEO brings, GPL should be propelled to achieve the goals, the chairman said. Currently, Renford Homer is acting as CEO.

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