Recent outages were a result of intensified maintenance on generating assets and the grid

Dear Editor,

GPL takes its responsibility to the nation to supply reliable and stable electricity seriously at all times. In fact our customers are its ultimate stakeholders and therefore we have an unwavering commitment to this mandate.

The recent spate of blackouts in the city and around the country has caused much concern among customers. While we apologize for these interruptions, it is important to understand the constraints and challenges affecting GPL’s everyday operations and the circumstances surrounding these outages.

The outages were the result of intensified maintenance works on both generating assets and the transmission and distribution network (grid).

The age of the electricity grid requires frequent maintenance to replace cables, connectors and the like. The absence of redundancy lines means that the areas serviced by the lines scheduled for maintenance would obviously be affected.

Executive management has recently been mandated to implement live wire maintenance which would require a minimum disruption of service during maintenance. Currently we do not have this expertise, and it would require much training of local technicians, but it’s the way forward.

Over the years investments in generating assets have lagged behind the need to retire aging Gensets. Currently we have 50MW of generators in Kingston and Garden of Eden that are over 22 years old, and their replacement is now being planned. These units are now de-rated resulting in lower generating capacity. While the units under maintenance have now been restored, a shortfall in supply at SEI in Skeldon has made our reserve very thin. Currently we have a total available generating capacity within the Demerara/Berbice Interconnection System (DBIS) of 123MW against a peak demand of 115MW. This leaves us with a reserve capacity of only 8MW. This means that in the event of an unexpected breakdown or even scheduled maintenance the generating capacity may be inadequate.

To arrest this scenario we have invited expressions of interest for the installation of 50MW of generation based on natural gas under a power purchase agreement, but the lead time for such supply could be two years, leaving GPL in a most challenging situation.

Divesting all new generation is the new model GPL would be using going forward to allow private sector investment in the electricity sector, while allowing it to focus its operating cash flows on modernizing its electricity grid.

The same neglect of renewal was evident at Bartica, Anna Regina and Canje, where the generating sets are more than 30 years old, which logically would give rise to maintenance challenges and affect the reliability of electricity. We have purchased new gensets for these areas which after commissioning would remove outages in those areas. Nonetheless a sensible policy of scheduled retiring and replacement of gensets is vital in ensuring adequate long term generating capacity.

As regards the grid, the Public Utility Upgrade Program (PUUP), a US$64M investment would see 54,000 smart meters installed and more than 1000km of low voltage distribution lines aimed at reducing losses, management strengthening and capacity building. In addition the Infrastructural Development Program phase 2 will soon be commissioned. This program costing in excess of US$22M would build 4 new sub-stations, expand 7 existing sub-stations, build 55km of transmission lines and integrate generation with transmission through the SCADA system.

GPL is now in a stronger financial position from where it was a few years ago. Over the past two years it has added more than G$8 billion in free cash flows through prudent management, better inventory control and scheduling of procurement, even after extending a 20% reduction in electricity rates.

In addition it repaid the government G$1.0 billion in interest in 2017, the first time it has done so in its history. It is now able to finance its own operations from operating cash flows instead of needing state funding. All executive posts are now filled and a CEO will soon be on board.

The focus going into 2018 is to complete the PUUP and execute the IDP 2, build generation capacity through private sector partnerships, intensify the reduction of losses, and improve operational efficiency and productivity.

Customer service in all its aspects has been found wanting, with frequent complaints in one form or another. A new Director of Customer Service recruited a few months ago should make significant improvements in this area.

Strong leadership which a substantive CEO would bring should propel us to achieve these goals.

Yours faithfully,

Robert Badal

Chairman

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