ACTING President, Samuel Hinds has justified government’s decision to integrate Linden into the electricity grid with the rest of the country. Speaking at a press conference held at his Kingston office yesterday to deliberate on reforming the electricity system in Linden, the Prime Minister noted that the main bugbear to the electricity supply in Guyana is the reduction of losses, both technical and commercial.
“The reduction of losses requires investment in doubling up the distribution networks. Such an investment needs financing and would add cost,” he explained.
To reduce the commercial losses significantly, he said, there is need for a change in culture; adding that government was introducing stiffer laws and penalties and introducing network configurations to make theft more difficult. This also adds cost, he said.
While the issue of electricity reform in Linden surrounds reaching an economic price and integrating Linden into the national grid of GPL. He said, those issues were also recognised by the late President Linden Forbes Sampson Burnham and were addressed by him in July 1976.
“To make electricity available at the prices charged in Linden now, and to meet the consumption there, the national budget has in the past provided increasing support to customers there. Last year it was $2.576B, which works out at a subsidy of $17,000 per month per residential customer, and $204,000 (cost per year),” according to Mr. Hinds.
However, he said central government, this year after taking into account all the country’s income, taxes and other revenues, and its needs for roads, hospitals and other services, allocated $1.865B, a reduced sum from the previous years.
This he pointed out as a first step in the reform of electricity in Linden, and to integrate the region fully into GPL’s electricity grid.
He made reference to the town of New Amsterdam, which was incorporated into the grid and was enjoying an arrangement like Linden.
Residential customers are paying 50kwh at the current rate, which is $5; and whatever is consumed above that, they will have to pay $50.
Meanwhile, commercial customers pay $65 kwh, which is still subsidized at a rate of 20 percent, he further explained.
“We have done this rate to structure the tariff and still keep within the budget allocation for this year; but we’ve done it this year because we sought to protect those people with smaller incomes. And we also want to give an incentive to those with larger incomes and who would burn more than 50kwh,” he explained.
At the current tariffs and rates of consumption of electricity in Linden, the allocation of $1,885,884,000 (G$1,886B) in the 2012 national budget to subsidise the cost of providing electricity in Linden will be exhausted by early September.
The electricity generating station in Linden, fuelled by diesel, is achieving the fuel efficiency specified; nonetheless at the diesel prices prevailing this year, the cost of generation has been put between the G$59 and $62 per kwh. This is the cost of generation alone. Hinds explained that when one takes into account the 24 percent losses and the distribution and commercial costs, the average cost recovery price to customers in Linden would be about $75 – $80 per kwh
Central government desires to spread the remaining subsidy as evenly as possible to each customer to the end of the year. It is just possible, and therefore proposed to retain the existing charges for the first 50kwh consumed in a month, and charge a price just a bit below cost for electricity consumed beyond 50kwh,” Hinds asserted.
This, he said, is being taken to begin the standardization of electricity prices to consumers on both banks of the Demerara River in Linden.
Consumers are therefore being urged to conserve electricity and avoid wastage. Prime Minister Hinds explained that the monthly consumption of the 50,000 smallest residential customers averages 45 kwh, and for residential customers in Linden with such consumption (45 kwh per month), the monthly billing would be G$225 per month on the right bank and $315 per month on the left bank.
The monthly consumption of the remaining 100,000 of GPL residential customers averages 150 kwh, while for a residential customer in Linden, with such a consumption (150 kwh per month) the monthly billing would be G$5250 per month on the right bank, an average of $35 per kwh and $5350 per month on the left bank, an average of $36 per kwh.
However, he denied that the provision of electricity in Guyana should not be rated as too costly, taking into consideration the country’s history, and even amongst CARICOM countries, excluding Trinidad and Tobago and Suriname.
According to Hinds, Guyana’s prices are about the same dollars in CARICOM as they purchase fuel and materials from the same places.
Meanwhile, Chief Executive Officer of Linmine Electricity Company Incorporated (LECI), Horace James, noted that there is a small group of pensioners who currently receive 300kwh per month free, and for consumption above that they pay $5. However, he said that when comparative analysis of the general consumption of the customers, it is surprising that the pensioners are the highest consumers, utilizing about 300kwh per month, while the residential customers utilise 260 kwh.
He said that, over the last six years, LECI has been appealing to the customers in Linden to reduce their consumption, but has “hopelessly” failed in convincing the Lindeners.
“However, after careful study and consultation with them over the past few years, we always wanted to protect the vulnerable, and the determination was how much kw they should get at the current rate in balancing the budget. We could have only arrived at 50kwh at the current rate,”
James stated that LECI is also continuing with its conservation message, which is the first step to the reform process.
Chief Executive Officer of GPL, Bharrat Dindyal, who was also present at the media conference, stated that the company loses 40 percent generation, while at the end of 2011 it was approximately 31.6 percent.
In supporting Prime Minister Hinds’s sentiments that Guyana’s tariff is no way above that of CARICOM, Dindyal explained that GPL’s tariff for residential customers is below the medium, while for commercial consumers it is just above the medium.
He also pointed out that there is a cross subsidy from commercial to residential consumers. “In the GPL licence, we cannot discriminate between consumers in the same tariff category, so if the consumers in Linden become part of GPL system, we cannot charge one residential tariff in Georgetown and another residential tariff in Linden, it is not allowed by our license,” Dindyal explained.
GPL is collaborating with LECI after recognizing that, with increased tariff, it will encourage electricity theft. Some of the training and expertise from Georgetown will have to be shared in ensuring a smooth process of reform.
It is the belief of the government that with less subsidy tariff structure, Lindeners will use electricity more carefully and reduce consumption significantly and also save themselves money.
Government has undertaken to make any net savings on the electricity subsidy available to customers in Linden, by some procedure that customers may propose.