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House approves $25.8B for GPL to subsidise fuel
(Kaieteur News) – The sum of approved $25.8B was approved on Tuesday in the National Assembly via the Committee of Supply to enable the Guyana Power and Light (GPL) to subsidise fuel for this year.
During the examination of estimates Opposition Members of parliament (MPs) Amanza Walton-Desir leader of the Forward Guyana Movement (FGM) and Saiku Andrews of the A Partnership for National Unity (APNU) grilled the Minister of Public Utilities and Aviation Deodat Indar on the sums allocated to power companies GPL included.
The overall sum cleared for the power companies is $33.3B but GPL takes a large chunk of the allocation. In her questioning MP Walton-Desir referred to line item 3621 and asked the minister through the Chair if the Minister can indicate the specific purpose for the subsidy GPL is slated to receive and to provide a breakdown.
Indar turned the attention of the House to page 490 where he pointed out that the details of subsidies and contribution to local organizations, to the sum of $33,313,253 is explained.
“So $25,800,000 million is for GPL, and it directly relates to the fuel subsidies that we give to GPL. Mind you, you have known that fuel price fluctuate and it’s been on the rise year on year and counting, so GPL budgets at a break-even point around $70 US per barrel. Anything above that, it puts GPL at a loss position. So fuel is traded all the time at a high. Right now is the average for last year is by US$83,” he said.
He went on to explain that every dollar that is increased on the price of fuel costs the company $543 million, and this is simply because of the amount of fuel that is used. Heavy Fuel Oil (HFO) accounts for 93% of what GPL consumes on a yearly basis while Light Fuel Oil (LFO) accounts for the other 7%. The total per annum spent on fuel adds up to approximately $47 B per annum.
“It represents the lion share of generation costs. So because of that and we as a government did not increase fuel on nobody in the country, we subsidise the fuel and that is the figure there, (but) it’s not the full amount. It’s a subsidy, it’s part of the total cost,” he added.
MP Andrews pointed out that the Mabaruma Power Company got a subsidy last year through the Prime Minister’s Office of $228.376M, but this year the budgeted sum has increased by $316M to $545M. He then questioned if the subsidy covers the same things as GPL?
Indar explained to the House, “So the scenario is not the same but the money is for fuel. So, the scenario as I painted with GPL is not the same for these small power companies. So, let’s go, so Mabaruma $545 million, it’s for fuel, but every part of the country that receives fuel receives it at a different price. As you would know fuel has to be transported. The transportation cost makes up for the difference in costs at the various spots, Lethem being the most expensive.”
All of the monies for the various power companies are for fuel except for Kwakwani, as it is not just a power company, it is more of a various utilities company including water and other things. Therefore, the subsidy for Kwakwani represents fuel and other areas because it does not act as just a power company.
To this end the approved allocations are as follows the Hinterland Electrification Company Inc. is budgeted to receive $95M, Matthews Ridge Power and Light Company, will get $75M, the Kwakwani Utilities Inc, is budgeted to received $998.937M, hopping over to the hinterland areas, the Lethem Power Company, has a budgetary allocation of $662.5M, LINMINE stands at $4.812B, while the Mahdia Power and Light Company Inc. is budgeted to receive $158.6 Million. Still in the hinterland the Mabaruma Power Company, will received $545M, Port Kaituma Power and Light Company, is budgeted to receive $105.3M, and the Moruca Power and Light Company, $60M.
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