– new deal guarantees PPDI a 4.8% increase in fees

By Svetlana Marshall
HAVING surpassed all of its performance guarantees over the past three years, Power Producers and Distributors Incorporated (PPDI) has secured another multi-billion dollar contract with the Guyana Power and Light (GPL) for the operation and maintenance of four of its power plants.

The contract, which spans for another three years, was signed on Tuesday, April 7, 2020, PPDI Chief Executive Officer (CEO), Dr. Arron Fraser, disclosed during an interview with the Guyana Chronicle on Good Friday. “The contract was executed on the April 7 with an effective date of January 1, 2020 and expires on December 31, 2022,” he explained.
Since 2017, PPDI – a state-owned enterprise – has been operating and maintaining the Garden of Eden (22MW), Kingston #1 (22MW), Kingston #2 (36.3MW) and the Vreed-en-Hoop (26.4MW) Power Plants on behalf of GPL. Under this new agreement, PPDI will continue to manage the four plants, which were previously operated and maintained by Wartsila Operations Guyana Inc. (WOGI). While PPDI operates and maintains these plants, GPL has sole responsibility for the transmission and distribution of electricity throughout the Demerara to Berbice Interconnected System.

Dr. Fraser told the Guyana Chronicle that as part of the operations and maintenance agreement, PPDI offers performance guarantees to GPL that are based on the industry’s key performance indicators: availability, plant heat rate and lube oil consumption. According to him, for the last three years, the power producers company has surpassed the 92 per cent performance guarantee for all three indicators. Importantly, under this new contract, PPDI has secured a 4.8 per cent increase in fees. The CEO explained that under the last contract, the operations and maintenance company received $17.36 per megawatt, however, under the existing contract, it is receiving $18.16 per megawatt. “That will translate to approximately $2.6B annually,” Dr. Fraser explained. He noted, however, that an additional performance guarantee has been added – that is, to facilitate major overhauls within a specified period.

It is anticipated that PPDI’s revenues will likely increase even further going forward. Dr. Fraser noted that in addition to the increase in fees, GPL has purchased a 48 megawatt power station from Wartsila for which the operations and maintenance company will also manage. This power plant, according to the PPDI CEO, will arrive in the country later in the year and will be stationed at Garden of Eden.

“The plan is for us to operate and maintain that new power plant simply because it is technology that we are very acquainted with. That should come on stream later this year and that new facility will be at Garden of Eden,” Dr. Fraser said. Once the power plant is installed, the contract will be amended to include a fifth power station, he posited. The CEO said not only has PPDI surpassed its performance targets, it has also raked in a profit of 10 per cent for the first three years of its operations. PPDI was established in December, 2016. “We generated just about 12.8B in revenues,” he disclosed, while explaining that the operating profit stood at $803M while profit after tax was recorded at $545M. The company paid approximately $258M in taxes and $30M in dividends. Aside from GPL, PPDI has signed an agreement with the Hinterland Electrification Company Incorporated (HECI) as part of its expansion plans. Under this partnership, PPDI will provide maintenance service to seven power plants within the Hinterland. That agreement was signed in November 2019 for a period of two years.

Port Kaituma, Region One is one such community that will benefit under the PPDI-HECI agreement. Last December, Port Kaituma purchased a $12M replacement engine, paving the way for it to receive 24 hours electricity to the sub-district. Dr. Fraser said PPDI is pleased to be executing its mandate. Its success story, he said, must be credited to the hard working men and women who, through their wealth of knowledge and experience, have caused the company to surpass expectations. The company has a total of 145 personnel; of them 105 are technical personnel with a wealth of experience and qualification.

He said there is much, the policy makers can learn from PPDI. “The model that you see at PPDI in terms of how we were able to really have a transfer of knowledge from a multinational to a local company is something that they can emulate because at a macro level, it makes sense for the country because then you are able to employ more people, you are able to return the profit to the country, and overall it is a development to the country as a the whole,” he explained. Notably, the company received ISO 9001 Certification in November 2018, an indication of its firm commitment to quality service and continuous improvement in its operations. Dr. Fraser had said that the ISO 9001 certification was a milestone for PPDI, since the organisation had achieved much in a short period of time. According to him, the process was “important and critical” for the company. The ISO 9000 family of quality management systems standards is designed to help organisations ensure that they meet the needs of customers and other stakeholders, while meeting statutory and regulatory requirements, related to a product or service.