Lindeners urged to reduce electricity consumption as new tariff structure takes effect

Georgetown, GINA, June 20, 2012

Source - GINA

Prime Minister Samuel Hinds, who is at present performing the duties of President, at a press conference at his office today, set the record straight about various misleading articles about the Guyana Power and Light (GPL) Inc. that has been making the rounds in some sections of the local press.  

Firstly, with regards to statements proffered by a group of consultants that GPL needs an investment of US$250M, he informed that while such an opinion has been expressed, that kind of financing is not at the country’s disposal.

Prime Minister Samuel Hinds flanked by Chief Executive Officer, LINMINE Secretariat and Linden Electricity Company Inc. (LECI), Horace James and Chief Executive Officer, GPL, Bharrat Dindyal at the press conference at his Wight’s Lane office

As it relates to statements that GPL needs experts to run its aspects of its operations, he said that such personnel would have to be contracted from countries like United States of America and Europe, a move that would also incur a heavy expenditure.

“Nothing is free, we have to be able to pay for certain things…someone is paying for every subsidy. The questions we have to ask as Government and individuals is how should we distribute the money we have,” the Prime Minister said.

Linden Electricity Reform

Turning attention to the provision of electricity in Linden, a bone of contention for opposition parties, there are certain historical issues such as getting to an economic price, integration into the national grid of GPL, and combining the east and west banks of Linden and then merging it into GPL. These issues were brought to the fore since the late LFS Burnham was Prime Minister.

To make electricity available at the prices charged in Linden now and to meet its consumption, the national budget has in the past been providing increasing support for Lindeners. Last year, the region was allocated $2.5B, which worked out to a subsidy of $17,000 per month per residential customer.

This year however, Central Government allocated a reduced subsidy of $1.8B, which is a first step in the reform process.

At the current tariffs and rates of consumption of electricity in Linden, the allocation of $1.8B to subsidize the cost of providing electricity in Linden will be exhausted in early September. 

The electricity generating station in Linden, fuelled by diesel, is achieving the fuel efficiency specified; nonetheless, with the prevailing diesel prices, the cost of generation has been between $59 and $62 kilowatt per hour (kwh).

However, this would be the cost of generation alone, when the 24 percent losses and distribution and commercial costs are taken into account, the average cost-recovery price to customers in Linden would be about $75 to $80 per kwh.

Government, in an effort to spread the subsidy as evenly as possible to each customer to the end of the year, proposed to retain the existing charges for the first 50kwh consumed in a month, and charge a price just a bit below the cost of electricity consumed beyond that amount.

“We have done it this way because we sought to protect those people with smaller incomes and we also wanted to give an incentive to conserve to those with larger incomes and those that would burn more than 50kwh,” the Prime Minister said.   

Meanwhile, Chief Executive Officer, LINMINE Secretariat and Linden Electricity Company Inc. (LECI), Horace James explained that BOSAI generates all the electricity consumed by Linden, which is then sold to LECI, at a cost that is borne by Government.

LECI in turn, wholesales electricity to the co-op society in Wismar, which then distributes it to the customers.

Electricity is wholesaled to the co-op society at a cost of $1 per kwh and they retailed at $7 per kwh to residential customers. With regards to commercial residents on the other hand, electricity is wholesaled to the co-op society at $7 per kwh and is retailed at $15 per kwh.

LINMINE pensioners currently receive 300 kwh per month free, but for consumption above that limit they pay $5 per kwh.

James admitted that despite efforts to date, they have failed to convince Lindeners to adopt conservation measures and as such, the hike in tariffs was inevitable.

Chief Executive Officer, GPL, Bharrat Dindyal said that GPL cannot discriminate consumers in the same tariff category; as such if the Lindeners are incorporated into the GPL grid, the power company cannot charge a different tariff in Georgetown or anywhere else in the country and charge a lower tariff rate in Linden.

However, the Prime Minister explained that in this case Government would have to intervene to make up the difference.

GPL has also been working closely with LECI, providing training and other assistance especially in light of the increased tariffs which will give rise to electricity theft. 
           
NEW TARIFF STRUCTURE

Electricity rates in Guyana are about the same as other CARICOM countries with the exclusion of Trinidad and Tobago and Suriname with their special favourable circumstances.

The principal way of improving electricity supply in Guyana is reducing technical and commercial losses. Reduction in technical requires investment that would see the doubling up of distribution networks; while a change in culture is needed for the reduction of commercial losses.

To this end, Government has embarked on a number of initiatives such as stiffening laws and penalties to strengthen deterrence and introducing network configurations to make theft more difficult.

    
On the question of affordability with regards to electricity in Linden, James said that while many Lindeners may not be able to afford 300 kwh per month, they do not need to utilise that amount.

Government recognises that with a less subsidized tariff structure, Linden customers will use electricity more carefully and reduce consumption significantly.