He made the assertion at the opening of the 44th Annual Meeting of the CDB’s Board of Governors on Wednesday at the Guyana International Conference Centre, Liliendaal.
Dr. Smith stated that for regional development and economic growth to be sustainable they must be underpinned by competitiveness on a global scale but the latter was being stymied by high energy costs.
“The high price of electricity is a major source of our region’s uncompetitiveness and our vulnerability to external shocks.
We cannot transform the Caribbean’s competitiveness landscape without a frontal attack on energy costs and the generally poor state of our electricity infrastructure.”
The CDB president stated that electricity rates at the high end of the scale in the region was as much as four times the cost per kilowatt hour as that in North America.
He attributed the high costs to the region’s reliance on high-priced diesel and heavy fuel oil and the inefficiencies of those old technologies that accompany them. Dr. Smith added that fuel prices were further compounded by the volatility of the international market.
He also pointed to the small markets within the region and the fact that most of the electricity infrastructure was decades-old.
“High electricity prices erode the competitiveness of the region’s economies and therefore their ability to earn the required foreign exchange to pay for imports including oil. Unless we can reduce our dependency on imported fossil fuels and unless we can substantially reduce energy costs we will not succeed in improving our competitiveness and reducing our vulnerability to external shocks,” Dr. Smith said.
He posited that the region’s energy independence could be boosted by going the route of alternative energy for which there is capacity and he pointed to Guyana and Suriname’s hydropower potential and the geothermal potential of several Caribbean islands.
He called for a restructuring of the legislative and regulatory framework for the pursuit of these new energy sources, specifically to remove the monopoly on power supply wherever it exists.
Guyana’s own efforts at realising its hydropower potential has been stymied at the political level.
On the CDB’s role, Dr. Smith said the Bank has intensified its programme on the use of renewable energy primarily through its Basic Needs Trust Fund initiative which operates at the community level in member countries. Guyana is a major beneficiary under the programme.
Dr. Smith added that the CDB has also been working with micro, small and medium size enterprises to improve their efficiency and competitiveness. A unit has also been created within the bank to address renewable energy and energy efficiency with support from the German government.
“It is estimated that as much as US$10B of new investment in generation capacity could be required within the medium term if the region’s electricity producers are to benefit from the efficiencies associated with the new technologies and for them to maintain adequate reliability. To radically transform energy generation landscape the investment requirements could exceed US$20B,” Dr. Smith stated.
The CDB president concluded by saying the region knew what needed to be done to boost its competitiveness on the global stage as the rest of the developing world continues to outpace it.
“We are very good at analysis but we need to become excellent at practice.”