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GPL in race against time to find heavy fuel oil supplier
Guyana Power and Light Inc. (GPL) is scrambling to find a new heavy fuel oil (HFO) supplier as time runs out.
The Kingston power plant
The HFO is critical to the running of the major engines of the power company. However, the current supplier, Suriname’s Staatsolie, signaled its intentions to end its supply contract in December. The notification was made around September.
In an advertisement yesterday in Kaieteur News, GPL said it is inviting sealed bids from eligible bidders for the supply and delivery for HFO.
Applicants must submit a bid security of $10M with deadline for bids by December 6th.
Earlier this month, Guyanese went to bed with shocking news: the state-owned entity was low on Heavy Fuel Oil. Several communities for a number of days had no power as GPL implemented scheduled outages because of the shortfall in generation that was triggered by the shortage.
The story that came out pointed to significant mismanagement at GPL over the fuel situation.
Persons close to the Board and Management who spoke out, claimed they were ‘left in the dark’.
They say that the supply of HFO for the bigger engines of GPL, although currently stabilised, is only temporary.
A more medium term arrangement has to be secured.
It was explained that GPL struck a deal with Suriname’s Staatsolie for HFO about two years ago.
All was going well until around September when the supplier told GPL that it was ending the arrangement, as it could not sustain the 30,000 barrels of HFO every 12 days.
The company immediately reduced its supplies after signaling intentions to end by December. Staatsolie did offer GPL another option…pay them US$2 more on every barrel, and it would ship in the HFO from St. Eustatius, an island near to St. Kitts and Nevis.
However, for weeks, there was no decision by the GPL management, including Chief Executive Officer, Albert Gordon.
While the shipping allowed GPL up to 17 days of fuel, the shortfall of HFO started to impact the operations of the power company.
The supply vessel would visit Kingston and Vreed-en-Hoop, and even head to Garden of Eden.
However, it appears that management never informed the Board of Directors of the fuel shortage situation.
GPL was forced to truck fuel from a number of fuel suppliers on the East Bank of Demerara, including Guyana Oil Company and Sol. However, it was not HFO that GPL was acquiring. Rather, it was buying the more expensive Light Fuel Oil.
The faster-burning, more expensive fuel was also proving a major logistical problem for GPL – it could not get the fuel fast enough to the power plants. By the time, the trucks were offloaded and reached back to the suppliers on the East Bank, the fuel stock would run low.
Crunch time hit earlier this month and Minister of Public Infrastructure, David Patterson, learnt of the situation suddenly.
“There was deep anger by the Minister over the situation. The Board was not told. Management knew,” a source close to the company had disclosed.
GPL had been forced to introduce a number of emergency Caterpillar sets, using the more expensive but accessible diesel, to ease the outages.
According to sources, GPL was forced to employ the use of police escorts for the trucks to its power stations – all the while nothing was being told to the Board.
It was disclosed that Minister Patterson called the Ministry of Foreign Affairs where an emergency call was made to Foreign Affairs officials in Suriname.
“They sent out an SOS to state that we have this problem – the country is going to shut down, and the Minister used some leverage. Staatsolie immediately agreed to send two vessels that weekend, earlier this month, averting what could have been an unthinkable situation,” a source indicated.
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