GPL signs US$31M deal with gov’t

The Guyana Power & Light (GPL) yesterday signed an agreement with the Ministry of Finance for US$31.36M which is intended to finance three projects that are expected to reduce generation cost amidst record fuel prices, the company announced in a press release.

The money will finance a 20.7 MW of Heavy Fuel Oil (HFO) fired generating capacity for the Demerara System and 5 km of 69 kV transmission interconnection; 20 km of 69 kV transmission lines to interconnect Guysuco’s Skeldon factory with GPL’s substation at No.53 Village; and the refurbishment and conversion of 1O mw of diesel generating capacity at the Canefield Power Station to HFO operation.

“These three projects are critical to GPL’s efforts to reduce generation cost at a time of record fuel prices,” GPL stated.

Upon implementation, the release stated, the company will be able to reduce production cost by over US$1.8 million per month, considering the current difference in price of US$60 per barrel between HFO and diesel.

According to the release, GPL’s plan is to “reduce drastically its dependence on diesel generation from 32% now to about 5% by the second quarter of 2009 and to rely on renewable resources to provide 98% of its power supply by 2012.”

And by making US$31.36 million available on concessional terms, the government is positioning GPL to cushion the impact of rocketing fuel prices on tariffs, the power company said.

Meanwhile, it is expected that the Canefield upgrade and conversion will be completed by December this year while the transmission interconnection to Skeldon will be completed by March next year.

These projects, the release said, will significantly im-prove the quantity and quality of the power supply in Regions Five and Six, and will be an important milestone for all GPL’s consumers in Berbice who have been demanding an improvement in the service.

Moreover, the new 20.7MW power station in Demerara will be located just north of the old Kingston Steam Plant and will consist of three 6.9MW Wartsila generators.

These engines are the latest version of the Wartsila 32 that GPL has been using very successfully since 1994.

This new HFO-fired generating capacity will allow the company to retire old and unreliable diesel generating capacity at Garden of Eden and Versailles and reduce its dependence on Caterpillar power modules which have been pressed into base load duty.

The release said that this “timely intervention by government, utilizing scarce resources, will certainly help GPL manage its spiraling production cost and improve the quality and reliability of its supply.”

However, consumers should be cautioned that conservation will remain a vital element of the strategy to deal with spiraling fuel prices.

“Every opportunity taken to reduce our energy consumption would help and if we act collectively we can survive without the need for drastic action,” GPL concluded.