PM solicits support on Linden’s electricity tariff structure arrangement
PRIME Minister Samuel Hinds sought support of the National Assembly for the actions that government may need to take against Lindeners in regard to the new electricity tariff structure arrangement. He also spoke of the challenges in regard to the provision of electricity within the national grid of the Guyana Power and Light (GPL) Incorporated.
The Prime Minister said many commentators have been speaking disapprovingly about the country’s electricity supply, but he pointed to the fact that the difficulty started in the 1970s and continued through the 80s and 90s. This, he says, has been immensely improved over the last two decades.
Historically, the tariffs for the Guyana Electricity Corporation (GEC), now GPL, have lagged costs by 10 to 30 percent. When the GEC was privatised, it was agreed that electricity rates would be set and maintained at sustainable prices; and that at some time after 2010, citizens would have been widely taking up the shares in GPL as a demonstrated blue-chip, low-risk investment providing reasonable returns.
He explained that, with the departure of the foreign partner in GPL; Government, mindful of its circumstances, has been foregoing the calculated increases in tariffs which GPL needed to sustain itself.
According to Prime Minister Hinds, at the end of 2011, a total of $19.78B (approximately US$100M has been forgone), but a similar quantity of investment has to be found separately to sustain and improve the GPL operations.
He reminded that everyone should be aware that nothing is free, and added that if the service is to be sustained, the issue is where, when and how the service is paid for?
As a result of foregoing calculated necessary increases in tariffs since 2003, GPL had accumulated various forms of liabilities worth some $10B. The last tariff increase was in 2008.
Government had proposed in the 2012 national budget an allocation of $6B to support, in particular, the purchase of fuel for GPL, the price of which had increased greatly over the years.
The annual final return certificate determined in April this year had indicated that GPL needed a tariff increase of 27.91 percent from May. Government is hopeful that it would be able to forego, delay or diminish that required increase in tariffs.
“You would recall that the $6B we proposed for a subsidy was cut by $1B. That cut could mean that GPL is out of fuel and we could be out of electricity for about two weeks. Government believes that there is a strong case for the restoring of the full allocation for GPL,” Hinds added.
Turning his attention to Linden, he said that prices there have been about 90 percent below what is required, while electricity consumption and unit prices have been increasing so much so that, in 2011, Government had to find some $2.72B to pay for subsidising electricity to communities in Linden.
He explained that the subsidy averaged at $17,000 per household per month, and $204,000 per household per year during 2011.
The Prime Minister said: “In our circumstances, any national government would need to take notice of this very high level of subsidy.”
At the rate at which the budgeted allocation to subsidize electricity in Linden is being consumed, it will be exhausted by early September. As such, in an effort to ensure that it extends to the end of the year, the new tariff structure, which comes into effect on July 1, has been fashioned.
He went on to explain to the House that Linden Electricity Company Incorporated (LECI) customers on the right bank will receive the first 50kwh at the current rate of $5; and for consumption above that limit, they will be paying $50 per kWh, while businesses will pay $65.
Linden Utility Services Coop Society Linden (LUSCSL) customers, whose current rate stands at $7 for residential consumers and $15 for commercial consumers, will see a similar increase.
Further, he said that residential consumers in Linden, who could hold their consumption rate to be similar to counterparts on the GPL grid, would be billed about $250 or $350 per 50kwh; while those burning up to 150 kwh would be paying $5,250 or $5,350 per month, an average overall of $35 or $36 per kwh, which the Prime Minister said is reasonable.
Lindeners currently pay $12 to $15 per kilowatt hour, while the rest of the grid at the lowest level in the commercial category pays $63.
“The government expresses its concerns (over) the statements we have been hearing from persons who claim to be, and have put themselves forward as, leaders in Linden,” he told the House.