The local company now managing 16 Wartsila engines with a total capacity of 104 MWs is assuring the public that it is up to the task and can deliver the same type of performance as the previous Finnish-owned enterprise.
With Power Producers and Distributors Inc (PPDI) projecting savings of more than US$2 million a year, the CEO of the state-owned company, Arron Fraser says that they will be looking to use some of the money to become an Independent Power Producer (IPP) in the future.
Speaking to Stabroek News during a recent, exclusive interview, Fraser, who had been at the previous company, Wartsila Operations Guyana Inc, since 1998, where he started at an entry level position before eventually taking the helm of the company in 2009, said that the decision by the government to opt out of renewing the contract with Wartsila of Finland, came after a feasibility study had discovered that they could produce power for US$3 less than what the company was proposing. He pointed out that Wartsila was proposing a fee of some US$20.52 per megawatt hour of power when the calculations that were done by the study for PPDI showed that they could’ve done the same thing for a price of US$16.50.
“…And for a company that is generating 650,000 Mwh per year it comes up to some US$2 million of savings per year. So that is the initial saving on the top and then there is no more need to send dividends overseas … So those things will be avoided,” Fraser noted.
As such, he explained, the decision was made to form the new state-owned company, with a plan to become the operations and maintenance company for all technologies in the energy sector.
“Eventually it’s government’s vision that we can become an Independent Power Producer, meaning that we can invest ourselves in the purchase and set up of power plants. So that is where the savings will eventually go,” Fraser added, while stating that the type and source of power have not yet been discussed since the vision is still in a preliminary stage.
In addition to the plan to become a power producer, Fraser said that the funds that will be saved will be invested back into their employees. “So there will be investment in employees for sure that when we get to that stage, not only are the employees class room-educated but they have the hands on experience,” he said, while noting that the company will also look to partner with other companies that are highly experienced in using such technologies.
While there were 116 employees when Wartsila was in charge of the engines, Fraser related that since PPDI took over the number has been increased to 137 and the company is now fully staffed. “I can safely say that all of the key personnel, both management and technical remained with the PPDI,” he highlighted, while pointing out that the main reason for the increase in staff was because the company discovered that employees were not being able to enjoy their maximum vacation time because the numbers made it “tight”.
“We are of a firm belief that employees should have some amount of renewal from vacation, which should reduce the possibility of making errors,” he said.
In addition to having more employees and savings, the CEO highlighted that the company was able to raise the workers’ salaries “on average between 10%-15%” across the board. “Back in the Wartsila days there was some amount of imbalance and unfairness in the salary scales. We had cases where a shift supervisor was making less than the person he was supervising,” he said, while adding that all of those discrepancies with wages were fixed with the new company.
In terms of their financial position, Fraser said that the company is “above water” but does face problems with the Guyana Power and Light (GPL).
“Our initiation of our relationship with GPL hasn’t gone according to industry practice. It is normal for a power service provider to be given an installation with a certain amount of facilities like vehicles. Essentially the service provider walks in and operates but that hasn’t been the case,” he indicated, while explaining that currently the company is functioning from its own operating budget to finance some capital costs. However, he said, a meeting will be held soon with GPL to ensure that they can fix their relationship.
Fraser stated that if there were any serious issues with one of the engines, PPDI would be able to afford to fix it. Currently the company is maintaining 16 engines that are producing some 104 MWs of power across the Garden of Eden, Kingston and Vreed-en-Hoop power plants. While the first two Wartsila engines were commissioned at Garden of Eden, East Bank Demerara, in 1994, and the last two at Vreed-en-Hoop in 2015, Fraser pointed out that the engines all come with a lifespan of 30 years for maximum efficiency.
“The Garden of Eden engines are pretty old. As it is, the plants are owned by GPL and PPDI is the operations and maintenance company and part of our mandate is to make recommendations to the customer,” he added, while pointing out that the company does annual efficiency tests to ensure that the engines are performing as they should and they use those tests as the basis for whether they would recommend them to be replaced.
While there were questions on whether the new company would be able to provide the same level of service on the engines as was provided by Wartsila, Fraser stated that persons’ fears should be quelled since the maintenance schedules and practices would remain the same.
“So, this is the thing that is critical. The [maintenance] operations business for Wartsila started in Guyana. Before Wartsila came to Guyana they had no experience [with] operations and maintenance, absolutely none. And except for the period of three months after the plant was commissioned at Garden of Eden we have never had expatriates in our offices, never,” he said, while highlighting that all of the maintenance schedules and practices were developed via a consolidated effort between Guyanese and the Wartsila company, which is still being used around the world.
However, even though Wartsila is not directly involved in the maintenance of the power plants anymore, Fraser pointed out that it will be playing a role in providing spare parts and PPDI will consider in the future whether the company can play a more important role. “Right now their only role is for parts but of course once it makes business sense then yes. We have had preliminary discussions around the spare parts supply and technical monitoring because they have real time monitoring and they can look at the engines and give you advice almost 24 hours but there’s no formal agreement other than the supply of spare parts,” Fraser said.
“There is absolutely no doubt in my mind and the policymakers that this team of assembled Guyanese have the dedication, capabilities and willpower to continue executing an excellent service,” he added.
The board for the company was formed in April with Chairman Mark Bender, CEO Fraser, Secretary Ronald Burch-Smith, Verlyn Klass, Stephen Fraser, Amanza Walton-Desir, Permanent Secretary of the Ministry of Public infrastructure Geoffrey Vaughn and Harryram Parmesar. The ninth position has been reserved for a member of the parliamentary opposition.