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GPL lost US$450M in 19 years to electricity theft, poor networks
By Kiana Wilburg
The Public Utilities Commission (PUC) is concerned about the billions of dollars in losses being suffered by the Guyana Power and Light (GPL) due to electricity theft and network issues. To underscore the gravity of this matter, the Commission highlighted in its latest report that the entity has lost close to US$450M since its inauguration in 1999.
In its report, the Commission said, “System losses continue to be the bane of the company and this phenomenon has continued for the last twenty-five years. There appears no robust programmes on the part of the company to reduce these losses on a sustained basis.”
It added, “The gravity of this problem can best be highlighted by noting that from the inception of the company’s inauguration in October 1999 to present, the cost of system losses to the company is calculated to be more than eighty billion dollars or the equivalent of about US$450 million dollars. These losses are ultimately borne by the nation and it could be considered a barrier to national development.”
Furthermore, the PUC said that since 2013, GPL had indicated that it would begin a programme to install AMI meters nationwide to replace the current installed electromagnetic meters. The AMI meters are thought not to be susceptible to tampering and it would have significantly reduced commercial losses (one of the components of system losses).
In the company’s Development and Expansion plan 2016-2020, the Commission said that the company had projected that at the end of 2017, it would have installed 28,000 AMI meters within their service area.
The Commission said, “We are now in 2018, and the programme is yet to commence in a meaningful manner. The management of the company together with the major shareholder is no doubt cognizant of the current prevailing situation and we recommend that some urgency be given to implement a comprehensive plan to begin the long journey of having these losses reduced on a sustained basis to acceptable levels.”
In addition to the aforementioned, the Commission said that the size of GPL’s liabilities is of concern. The PUC said it believes that the company’s debt is unsustainable and that the company would be unable to service its debts based on its current cash flows and its continual commitments.
“We would suggest for the consideration of the relevant parties a restructuring of the company’s balance sheet and that the related party debts which are an astronomic figure be converted into equity; and thereafter the company be allowed to implement its allowable rate of return and the fuel surcharge/rebate mechanism in accordance with its license,” the Commission noted in its report.
FIVE YEAR PLAN
The Commission also expressed concern that GPL had not submitted a copy of its 2017-2021 Development and Expansion Plan as required by Section 38 of the Electricity Sector Reform Act (ESRA).
Section 38 3(a) of the ESRA states as follows: “Except as otherwise provided in its licence, every public supplier shall, no later than sixty days prior to the end of each of its financial years, submit seven copies of its annual development and expansion program and a current version of its five year development and expansion programme, as approved by the governing body of the public supplier to the Commission for approval in accordance with part seven of the Public Utilities Commission Act 1999.”
The Commission, therefore, said that it is uncertain of the approved targets the company was mandated to achieve in 2017. The Commission said that whilst it is not authorized to approve the targets to be achieved by the company, it is required to review the performance of those targets and in the event, they are not achieved may require from the utility the reason(s) for its failure and to decide what action, if any, should be taken against the company.
The PUC said that it finds this omission by GPL disturbing. The Commission said it points to uncertainty in planning by the company and leaves no approved targets to work with.
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