AFC wants regulatory body to probe GPL - warns of national unrest if tariffs hike imposed
June 11, 2013, By KNews, Filed Under News, Source
The weekend announcement by Guyana Power and Light Inc. (GPL) to increase electricity rates by 26.7 per cent effective May, has prompted warnings from the Opposition Alliance For Change (AFC) that it could trigger “huge national unrest”.
The development has also seen the government party blaming the Parliamentary Opposition for exacerbating the financial situation at GPL with a $5.2B budget cut in April to its capital programs.
The AFC is now demanding that the regulatory, Public Utility Commission (PUC), investigate GPL’s call for the rate hike and hear other stakeholders interested in the matter before it orders or ratifies any increases by GPL.
“Electricity increases by GPL comes under the jurisdiction of the PUC, and this regulatory body must not exhibit itself as a toothless poodle. The AFC would like to warn the PPP Government, that this highly ill-advised and unjustified act on the part of GPL, will be provoking huge national unrest,” AFC said in a statement yesterday.
The Opposition party which together with A Partnership For National Unity (APNU), has a one-seat majority in the National Assembly, used that advantage in April to block $5.2B from GPL’s $10.2B Government subvention. The monies reportedly represent draw-downs from loans to repair GPL’s aging network and an electricity subsidy from government. GPL said that it faced severe losses totalling billions of dollars last year because of soaring fuel costs.
The Opposition in blocking the monies for GPL had said that not sufficient reasons were put forward on how the monies will be spent. The Opposition also said that it was not convinced that GPL has done enough to reduce its commercial and technical losses which account for over 30 per cent of its production.
Resist it!
The proposed hike in electricity rates by the state-controlled GPL “must be vigorously resisted by the Guyanese people. After in excess of 20 years in office, the PPP Government has consistently failed to provide reliable electricity to this nation. Even after spending billions of dollars every year through loans and prohibitively high prices on new generating capacity, it is vividly clear that the Government has no solution in sight in the context of its statutory duty to provide electricity at an affordable cost,” AFC said yesterday.
The Opposition party said that despite the abundance of alternative sources of energy in Guyana, including wind, solar and hydro potential, the Guyanese people continue to suffer hourly blackouts with repeated adverse effects on homeowners’ appliances and goods, business-owners’ production equipment and school children’s education.
AFC said that GPL’s Board of Directors, comprising the “familiar square pegs in round holes and soup-drinkers”, has yet to devise a turnaround plan after so many years in office.
“In fact were they in the private sector or in a state entity in any other country, they would have long been fired for incompetence. First to go would have been its Chairman, Winston Brassington. But their loyalty to known PPP powers gives them a licence to pass on their inefficiencies to an already heavily burdened taxpayer.”
Board must go
AFC demanded that the entire board be replaced with competent and independent professionals.
“Whatever is keeping Mr. Brassington and his team at GPL in the face of chronic failure and incompetence, has broken the tolerance limit of all in Guyana.”
However, the ruling People’s Progressive Party (PPP) has said that it is concerned with the recent application by GPL to PUC for the 26.7 per cent hike in tariffs. PPP made it clear that it is the fault of the AFC/APNU alliance which combined to slash $5.2B from the 2013 National Budget that was “allocated by Government to GPL to prevent consumers having to face such a burden.”
PPP said that the cut was despite several pleas by Government, the management of GPL, other stakeholders and the party itself for the AFC and APNU to refrain from cutting GPL’s subsidy but “they ignored this and went ahead; fully aware of the consequences it would have on consumers. The Opposition cannot pretend to be ignorant of the challenges and what is being done to correct them by the GPL’s management as all this information has been presented to both the AFC and APNU.”
The ruling party said that what continues to boggle the mind is that while the Opposition is making excuses to deny consumers along the coast the benefit of such subsidies from Government; “they did not display this level of concern when they approved the subsidies Government had also set aside for Region 10 to the tune of close to $3B.
On Saturday, GPL said it lost $7.6 B in 2012. It last increased tariffs in 2007.
The 26.7 per cent increase in tariffs will help GPL to recover from its deficit position, the statement said.
GPL, in highlighting the fuel costs problem, said prices have risen from a weighted average of US$64/barrel in 2006, to US$108, in 2012. In 2006, GPL’s fuel bill was $12.4B while in 2012, this doubled to $24.2B.
Last year, fuel alone accounted for 83 per cent of GPL’s tariff revenue.
“GPL has delayed implementing full tariff increases implementing increases in only two of the last 10 years, resulting in GPL having foregone revenue of over $21.7 B, after taking account of the $5.2 B to be recovered from the 26.7 % increase.”
The power company said that the fuel situation is not likely to change until 2017 when the Amaila Falls hydro project is expected to be completed and generation costs will be reduced to half of what is the situation now.