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IMF flags worrying financial health of GPL …Says state company reported loss of US$3M last year
Minister of Public Infrastructure
David Patterson
By Kiana Wilburg
The financial health of Guyana Power and Light (GPL) remains in a worrying state. This was highlighted by the International Monetary Fund (IMF) in a comprehensive report it prepared on its Article IV mission to Guyana earlier this year.
According to the Fund, the reliability of electricity in Guyana continues to be low, and it is linked to the technical and institutional deficiencies of GPL. The financial institution said that GPL’s technical losses in electricity transmission are about 10 percent, while commercial losses are about 30 percent.
What was also troubling to the Fund was the fact that GPL reported a loss of US$3M ($600M) last year.
The Fund said that GPL has turned to the government for financial support to upgrade its power generation and electricity grid so that it can be able to increase reliability and meet the growing energy demand.
It was noted, however, that any significant investment that is being requested by GPL would likely require additional borrowing or a Public Private Partnership (PPP) arrangement.
Speaking with Kaieteur News last night, Minister of Public Infrastructure with some responsibility for energy, David Patterson, acknowledged that indeed, GPL is facing financial constraints.
Patterson said that since last year, GPL has been grappling with rising fuel prices, but it took a decision not to pass it on to consumers. He said that this is the reason for the company sustaining the aforementioned losses.
The Minister said, “The fuel prices started to rise since last year…We took a decision not to pass it on, because obviously we gained some positives when the prices were very low.
The losses… this is something that has been around all the while, and that is the reason why we are doing all these upgrades. But we plan to borrow from a multinational donor agency.”
He added, “The Islamic Development Bank was here and we agreed that we would take some money from them. And then the Inter-American Development Bank had given us some money. After that we can look at other sources of funding, but the rising fuel prices led to us sustaining such a great loss.”
MID-YEAR REPORT
In the mid-year report, the Finance Ministry provides an overview of the state of public enterprises. With regard to GPL, no mention was made of the issues outlined by the IMF.
Be that as it may, the Finance Ministry said that the Guyana Power and Light Inc. recorded a deficit of $3.7 billion, for the period under review (January to June 2018), compared to a surplus of $1.3 billion, for the first half of 2017.
In keeping with its commitment to repay an On-Lending Loan to the government, valued at US$43.3 million, which was granted in May 2010, the company remitted $500 million of a budgeted $1 billion to the central government, for 2018.
For the period under review, it was also noted that GPL’s receipts were $15.1 billion; $1.9 billion lower than the first half of 2017, largely due to a 15 percent decline in local sales.
Total expenditures for the first half of 2018 amounted to $18.7 billion, $3.1 billion above the expenses for the same period in 2017, reflecting, in part, the increased acquisition cost of fuel.
The Finance Ministry, like the IMF, said that the revised outlook for 2018 shows GPL’s deficit to be $9.0 billion.
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