Bujagali has proven that more electricity DOES NOT translate to cheaper electricity
Dear Editor,
I found Emile Mervin’s article titled “ The Bujagali story which started out with near tragedy and ended with triumph could be Amaila’s” (SN, August 17, 2013) very troubling, misleading and poorly researched. Mervin cannot use Bujagali, which was partly built by Sithe Global, as a success story when electricity rates were raised on Ugandans AFTER Bujagali was commissioned. Before Bujagali construction started in 2006, electricity rates were raised to cover the immense US $900 million debt incurred for Bujagali along with the guaranteed super returns and profits for Sithe Global and other financiers.
Ugandans had their electricity rates raised by 24% in 2005, by 35% in June 2006 and by 41% in November 2006. AFTER Bujagali came on stream on August 1, 2012, Ugandans’ businesses had a 69% increase in electricity rates while domestic consumers suffered a 36% increase.
Now in 2013, Umeme, the Ugandan electricity provider, is most egregiously asking to raise electricity tariffs again! Umeme is another poorly managed and failed institution like GPL with commercial and non-commercial losses of 26% in 2012 compared to the 30% losses GPL suffers every year. Just like GPL, they spent hundreds of millions of US dollars preparing their grid for Bujagali and yet still after Bujagali came on stream they are still bleeding losses.
GPL is the same mess. They have to pay for the power they take from the hydropower stations at a fixed high price but they lose a significant portion of that power through inefficient and failed systems, yet they will increase electricity rates on consumers to make payments to the hydropower station. It is either that or the taxpayers have to subsidize them every year.
Clearly, anyone with eyes and an open mind could see the travesty the PPP was going to sink this country into. Amaila is a very similar fiasco to Bujagali just like Umeme is a very similar scandal to GPL. In fact, there is no other project that gives a more powerful glimpse into the future of what Amaila will do to this country than Bujagali. It took US $900 million to build 250 MW of hydropower at Bujagali.
Currently, Amaila costs US $858 million for a measly 165 MW of hydropower.
Naturally, this situation of less power for more money at guaranteed higher profits for Sithe Global and others will lead to higher tariffs for all Guyanese. GPL will have to do like Umeme in Uganda and raise electricity rates. There is no way the Amaila debt and stupendous guaranteed investment rates of return and profits will be paid without electricity rates raised. Going by the cost escalation for the road to Amaila, by the time Amaila is done, it will cost more than US $1 billion.
At that frightening price, electricity tariffs must climb higher, like they did for Ugandans after a cost-overrun Bujagali. The big companies like DDL and Banks DIH that produce their own electricity will not join the grid and pay exorbitant prices for electricity. If they are forced to join the grid to pay extreme prices for electricity and to be saddled with electricity tariff increases like Ugandan companies, they will likely pack up shop and open elsewhere in the Caribbean or South America, costing this country tens of thousands of jobs.
Just like Uganda, increased supply of electricity does not translate to lower price for consumers. Since they started building Bujagali, electricity prices have increased an average of 116% for consumers and yet still the electricity distributor is asking for another increase of 5-15% in 2013. Bujagali has proven that more electricity DOES NOT translate to cheaper electricity. Uganda is still suffering blackouts on a regular basis despite the commissioning of Bujagali.
I have no regret in saying what follows because my patriotic blood is boiling on this Amaila disaster and I hope the Editor has the gumption to publish it. It applies to any party that makes a catastrophic economic decision like Amaila. The egotistical dunces within the PPP more concerned with craven pocket-filling, self-enrichment, brazen arrogance for arrogance sake in the face of overwhelming truth, Champion of the Earth pats on their empty skulls, misplaced agendas and white elephant political grandstanding rather than doing the right thing and making economically feasible and fiscally sound decisions, are willing to drown this nation in a sea of debt and abominable decision-making with this project.
Ugandans are showing us the future and it is truly going to be messed up and financially crippling. This country needs hydropower but not at this cost and certainly not with this future of punishing electricity rate increases. See the following sources –
http://www.independent.co.ug/c...-umeme-power-tariffs
http://www.theceomagazine-ug.c...ike-a-necessary-evil.
html http://www.independent.co.ug/n...id-metres-nationwide
M. Maxwell