The Guyana Power and Light Inc. (GPL) has embarked on a public relations offensive to press its case for the restoration of a $5B cut in its subsidy that came out of the consideration of budget estimates last week.
The combined opposition on Thursday used its majority to cut $5.2B from a $10.2B allocation earmarked for the struggling entity this year. At a news conference on Monday the company said it was yet to decide on its options but none of them looked good.
Chairman of the Board Winston Brassington outlined the options as being increased electricity rates; cutting the capital programmes for which most of the funds cut were to finance; shift resources from the operational side to the capital programme; and reducing costs to generate funds.
The last two, he said, have other far reaching consequences.
“For many years now GPL has been suppressing the tariffs largely because it would be entitled to obtain a significant increase given the significant increase in oil prices over recent years. For this year when we looked at it in January we would have been entitled, based on last year’s performance, to charge an increase in tariffs of 20.58 percent.
We did not seek to do that but we instead sought support from the government from financing through the budget; unfortunately part of this financing has been slashed and so this is now a very real option we have to consider,” Brassington said.
He added that they would have to inform the PUC within the next few weeks whether they would be implementing any increases. Brassington said the revenue foregone by not raising the rates since 2008 had amounted to some $27B.
The chairman said the company had been deferring its capital works for years and the monies cut were all coming from external sources on concessionary terms.
“You can choose to invest in new meters or pay for fuel so this may be one choice we have, instead of putting money into what is earmarked for maintenance programmes we shift those resources to capital programmes but that has consequences on the quality of supply, on the availability of supply.
And we can cut costs. We spend $2.5B on wages, we have maintenance investments, fuel. We can choose to don’t put as much into fuel, don’t put as much into wages and salaries, in fact a good portion of our workforce is involved in maintenance and capital investment activities, so if you don’t have money for that … people are sitting around without the matching resources to do their work,” Brassington said.
He added that adjusting the workforce until there was need for the employees could be one of the options.
Excerpts from Demwaves