Hinds signals increased electricity rates

- during grilling over $1.5B GPL subsidy

Prime Minister Sam Hinds has warned that consumers may soon have to pay more for their electricity supply as government, under the strain of rising fuel prices, sees the need to recoup some of the investments made in the Guyana Power and Light Company (GPL) to reduce technical and commercial losses.

Hinds made this disclosure during the debate on financial papers in the National Assembly last week Thurs-day, while explaining how government spent $1.533 billion for the provision of additional subsidy to GPL and the Lethem Power Company. He said that an amount of $1.5 billion was paid to GPL and it helped to cover its increased fuel costs. He added that $33.7 million was paid to Lethem Power Company and this helped that entity to cover its increased fuel costs.

APNU MP Keith Scott, however, said that despite the large amount spent on GPL, there are still blackouts. “In 2010 we spent about $70 million. [In 2011] we spent about $100 million or so. I would expect the Prime Minister to explain to us how more efficient the GPL has become,” Scott said.

Sam Hinds

Hinds noted that oil prices have increased “quite a lot” since GPL last had a tariff increase and the government has been supporting the customers of GPL. “This money goes to subsidise charges which the customers of GPL should be meeting. The customers should meet the cost of running the system but because we have been thinking that it would be a significant impact on very many of the 140,000 customers who might find it difficult, we have been constraining the price increase even less than what the formulation allows. But the gaps still have to be filled and the fuel still has to be paid for,” he said.

He also made the point that suppliers threaten not to load ships and even hold up the ships, “so we had to support GPL to cover the increases in fuel.”

AFC MP Khemraj Ramjattan asked why this was not planned for, while noting that the amount voted for in the budget was just $100 million and that the $1.5 billion was just from October to December 2011. To this, Hinds said that it was the timing of the increases and the prices being realized in the market as time goes by. “One does not want to rush from the beginning and put large sums there which may not materialize and we may want to hold the possibility of taking some of it in increased tariffs. Because of those timing considerations, we would not have put in this sum at the beginning at the budget. We have tended to follow rather than be in front of the support that is required for electricity consumers,” he added.

APNU MP Carl Greenidge wanted to know what was required from GPL for a transfer of the magnitude of $1.5 billion. Hinds said the big problem in GPL has been loss of power and this is what is hoped to be reduced. He said addressing the technical losses requires investment.

Hinds also faced scrutiny over the urgency and need for the provision of an additional $2.7 million for expenditure associated with visits to hinterland locations. Accused by the opposition of using monies improperly to finance election-related campaign activities, Hinds said the funds were used to visit the hinterland during times of rainfall and for the execution of the rural electrification programme.

“Could the Honourable Prime Minister indicate whether these visits to the hinterland were associated with electioneering purposes? And if no, please state what were the purposes of these visits?” asked Amna Ally of APNU.

In response, Hinds said that 2010 was a year of substantial rainfall and “a lot of the activities that I manage in the hinterland, such as roads and rural electrification, were greatly constrained in that year. So, in 2011, we did have quite a lot of catching up to do.”

“We had to hurry and get these projects done,” said Hinds, in answering questions as to the urgency which would have merited the use of funds from the Contingencies Fund. “We started 2011 with quite a lot of projects behind time and we needed to hurry these projects up and get them done. These trips were to further hinterland roads and rural electrification and also to inspect the situation in mining in the hinterland,” the Prime Minister said.

“Is the Prime Minister saying that he was aware that these activities had to be carried out and yet they were not budgeted for?” asked Greenidge. Hinds in response said, “I may have to agree a little bit with Mr Greenidge in that in trying to get those things done during 2010 and into 2011, I did not realise the backlog that was there.”

After some seven hours of debate, APNU and AFC used their combined majority to vote against four items in Financial Paper 7/2011 and caused Financial Paper 8/2011 to be deferred until March 15 for consideration by the National Assembly.

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