– records massive $4.4B loss last year
– government considers financial intervention again
The Guyana Power and Light Inc. (GPL) has requested a 19.5% increase in tariffs after rising fuel prices led to a preliminary loss position of $4.4B last year.
However, it is unlikely that any approved increases will be passed on to consumers as government is considering a number of measures, including a fuel subsidy.
GPL held its 2010 Shareholders Meeting on Friday last, a government statement said, with disclosures that rising fuel prices led the state-owned power company to a $4.4B loss in 2011.
GPL has since made an application to the regulator, the Public Utilities Commission (PUC), for the rates increase.
“GPL has requested guidance from the Government on whether financial support can be provided to cushion tariff changes, in a manner similar to 2008, when Parliament approved a fuel subsidy of $ 3.3B,” the release disclosed.
GPL’s 2012 projections indicate a further loss of $5.6B, if current tariffs remain unchanged.
Chairman of GPL, Winston Brassington, indicated that as a result of expected fuel prices in 2012 and a financing gap brought forward from 2011, GPL projects an overall financing gap of $11B for 2012.
“GPL’s 2012 fuel bill is budgeted to be $25.3B, compared against $16.5 B in 2010 and $22.4 B in 2011.
It was noted that compared to 2010, when the power company faced an average fuel price of US$78/barrel, GPL projects an average price of US$120/barrel for 2012, representing a 50%-plus increase in fuel prices in two years.”
According to Brassington, the acceptable 2010 performance of the corporation would be overshadowed by the $11B financing gap in its 2012 budget.
The official blamed escalation in fuel prices from a weighted average of about US$80 per barrel to a projected $120 per barrel in 2012 for the major part of the shortfall.
Government’s spokesperson, Cabinet Secretary Dr Roger Luncheon, in signaling recognition of the impact of a 19% tariff increase on the working people and businesses, disclosed that government intends to rely on a number of interventions to offset the increase.
He pointed out that government will only allow GPL to introduce bearable tariff increases while seeking parliamentary considerations of subsidies, similar to 2008.
Additionally, GPL would be expected to pursue more aggressive loss prevention practices and debt recovery so as to meet the shortfall without undue hardships on Guyanese.
In 2010, GPL made an after-tax profit of $553M compared to $1.8B made in 2009.
There was a little comfort in that reduction in technical and commercial losses was down by 3% to end at 31.3%.
However, revenues rose by 10.82% to achieve total sales of $26.5B.
Generation cost in 2010 was $19.9B… up from $15.9B the previous year.
In 2010 also, a total of 5,795 new customers were added to end at 151,288 customers.
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