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Govt insists on electricity rate increase, despite opposition’s rejection

FLASHBACK: Chinese electrical engineers at one of GPL’s power stations.

Despite the combined political opposition’s stiff rejection of a proposed 26.7 percent increase in electricity tariffs, government on Monday appeared determined to ask businesses and homes to pay more for the necessity.

Reiterating that the rate hike was largely tied to the opposition’s GUY$5.2 billion dollar budget cut from the Guyana Power and Light (GPL), Prime Minister Samuel Hinds said the company would have to earn its own revenue in the absence of government subsidies.

“This 26.7 percent is a big step, but it comes after five years of no increases and five years of greatly increased cost, especially for oil…the alternative for the future is for the annual review to be put into effect, in which case one would probably see increases of no more than five percent per year,” Hinds was quoted as saying by the Government Information Agency (GINA).

A Partnership for National Unity (APNU) late Monday joined the Alliance For Change (AFC) in rubbishing the planned increase, arguing that the board should be sacked and “top-tier” management overhauled for what they say is its dismal failure to improve GPL’s efficiency.

“APNU sees this conspiracy between the PPPC (Peoples Progressive Party) administration and the Board and Management of GPL as an attempt to punish the people of Guyana for their (GPL) own failures. The tactic is clear to all that this government intends to link this proposed rate increase with the 2013 Budget cuts,” APNU said in a strongly worded statement.

Justifying its demand for the board to be fired, APNU noted that GPL has admitted losing more than 31 percent of the power that it generates with technical loses at 14 percent and commercial loss at 17 percent.

APNU said it “totally rejects” the proposed tariff hike because Guyanese are burdened by high cost of living, stagnant wages and exorbitant taxation and rampant unemployment.

The Prime Minister countered the opposition by noting that the price of fuel accounts for 80 percent of the cost of producing electricity. At present, the average price per kilowatt hour is $63 and with the 26.7 percent increase the new rate will be about $80 per kilowatt hour.

On the issue of technical losses, Hinds explained that the Inter American Development (IDB) has calculated that GPL needs to invest US$250 million to trim technical losses. He dismissed opposition claims that the state-owned entity was being badly managed because the big issue was technical and commercial losses.

Commercial losses, Hinds suggested, was a result of electricity theft because calculations show that one in every 10 customers is billed for less electricity than they use.

“The commercial losses require investments, but most of all it requires a culture change from people…it is essential that we have a culture change in Guyana with respect to paying for less electricity than one uses,” said the Prime Minister.

The 26.7 percent is calculated in accordance with the 1999 Electricity Sector Reform Act (ESRA) and its Licence. GPL’s 2012 audited accounts showed that the company suffered a loss of $7.6B in 2012.

The AFC earlier Monday urged the Public Utilities Commission (PUC) to hold public hearings before the new rate is implemented. That party also warned that the rate hike could provoke serious unrest.

Lindeners in June and July 2012 had staged massive street marches and other forms of disruptions that eventually led to the police shooting death of three townsmen on the Mackenzie-Wismar bridge.

That incident had moments later sparked off widespread arson of government buildings and the PPP’s office in Linden.