‘Cash-strapped’ GPL now borrowing to generate electricity

Dec 09, 2021 News

---

…no pay hike for workers, likely increase in customers bill in New Year—CEO

Kaieteur News – The Guyana Power and Light (GPL) is currently operating at a G$2.6B deficit while surviving on loans, leading to a situation where, not only will the company’s workers not be benefitting from any increases in wages and salaries for this year, but there is also the likelihood of customers’ bills being hiked next year.

A stark contrast to the financial situation the power company was in under the previous administration, evident in the removal of the multi-billion subsidy that was being handed to the utility company annually.
The damning situation was laid bare yesterday, by the utility’s Chief Executive Officer (CEO), Bharrat Dindyal, who along with other executives briefed media operatives on GPL’s preparedness for the Christmas season. The revelations outlined were among some of the glaring admissions made by the power company’s boss, during the press engagement, held at the GPL’s Headquarters, Duke Street Kingston.
He told media operatives, that GPL’s situation is in such dire straits, that at the end of October this year, the power company would have already spent some US$69.7M in fuel for power generation—some US$26.6M more than it had anticipated.
In fact, Dindyal said, the power company anticipates that by the end of the year, it would have to spend some US$35M more than it had anticipated.
Additionally, there was the disclosure that the power company has in its Demerara Berbice, Interconnected System (DBIS), together with the isolated grids in Essequibo, a total generation capacity presently of some 182.5MW.
This information was disclosed by Bharat Harjohn, the entity’s Divisional Director of Operations, who during the briefing, outlined that while persons would expect that December would see peak demands, this is not the case.
According to Harjohn, in light of the recent changes on weather patterns, it has been observed that during the month of October, electricity demands spike to their highest at some 136MW, and as such, the company is confident that it will have sufficient generation capacity for the upcoming holiday season. This, since GPL would have in excess of 40MW in reserve generation capacity.
Pressed on the losses, despite the base load capacity, the CEO conceded that the power company currently experiences technical and commercial losses at some 26 percent.
He quantified this, to mean some G$16B being lost annually.
According to the GPL CEO, loses some $5B directly related to the theft of electricity. This is in addition to losses incurred as a result of tampering and other mechanisms.
Additionally, he said, the technical line losses amount for some 11 percent of losses.
As such, it would mean that GPL loses in excess of 18MW directly through losses in the aged transmission and distribution network.
Referencing the planned maintenance works for the year, at a cost in excess of $500M scheduled to be completed by December 15. At this point in time, the planned maintenance having come to an end would see the teams being deployed for emergency responses.
Dindyal did note that the investments in maintenance was targeting the reliability of the system and as such would not impact on the system losses significantly.
Compounding the situation with regard to losses, he cited as example that between 2015 and 2021, “we have seen an additional 15,000 street lamps being installed, the majority of those by private persons.” Lamenting the state of affairs, the GPL CEO said, electricity theft in Guyana is a “huge problem; it is an ongoing problem.” Lamenting the failure of the power company to effectively police losses as a result of theft, Dindyal pointed to a backlog of cases in the court system.
Meanwhile, as it relates, to employees, the power company boss said there will be no salary increases or bonus paid out this year, owing to the company’s financial situation.
According to Dindyal, it is simply a case where the power company was unable to afford it.
He told media operatives, “the unions are aware that coming to the end to the year we started discussions with them on the CBAs (Collective Bargaining Agreements); we have been trying for the last three years to discuss multiyear CBA but the sticking issue has always been remuneration.
Speaking directly to this year, Dindyal said, “we essentially don’t have, from a business standpoint, we don’t have enough money to pay an increase.”
To this end, he explained that in discussion with the Ministry on a particular increase, “it has to be discussed in the context of how it’s funded.”
He said, “…we know that seven percent has been awarded to public servants and the expectation of the union currently is that they would get the seven percent.”
To this, he responded with the question, “is it sustainable” and sought to argue that GPL wages are already among some of the highest in the country.”
Dindyal told media operatives nonetheless “we are still waiting on a detailed discussion, essentially, and mandate on what we can offer to the union.”
He did note, however that at present the company is unable to pay any increases.
Dindyal was quick to point out “we don’t have a breakdown in negotiations with the union,” since the engagement is ongoing.
According to Dindyal, “GPL’s ability to pay and to sustain this increase is what’s going to be discussed.”
He told media operatives when asked about considerations for a bonus to be paid if not a salary increase, “we can’t afford anything, nothing at all.”
According to the GPL CEO, by the end of the year the deficit incurred by the power company will be over $2.6B, so whatever we pay basically has to be borrowed.”
He explained that the operation of the entity, in light of this shortfall is not being met by any government subsidy but rather “your tariff is being subsidized essentially by GPL borrowing money.”
As such, “we are actually running an overdraft which is funding the fuel which has to be used to provide power.”

 

---

---