Feb 11, 2015 News
– says 10% reduction to be reviewed every three months
A 10 per cent reduction on electricity tariffs for customers is not permanent and will be reviewed in three months, the Guyana Power and Light Inc. (GPL) said yesterday.
The disclosures were made as the power company dismissed questions that the decision was politically influenced with elections around the corner.
“It was a bold decision. Everyone was looking at us to see what we can do. Our actions have to be guided by our licence and numbers and we did look at it, and this is what we came up with,” said Chairman Winston Brassington, during a press conference at GPL’s headquarters at Duke Street, Kingston.
The reduction savings would range between $4.84 and $7.29, and be applied to residential, commercial and industrial.
“Consumers whose billing cycle begins in the latter part of February and ends in March, will benefit from the reduction on their entire consumption for this period.”
The rebate will be applied to energy charges and not to the fixed charges, he said.
Brassington admitted that GPL, after years of being in a tight cash situation because of oil prices managed to be in a better position last year.
Last year, GPL projected to spend upwards of US$120M on fuel, but lower prices on the world market for oil was good news for the company which ended up spending US$105M. This year, GPL is forecasting US$70M.
The situation means that GPL has cash to afford the 10 per cent reduction, GPL officials said yesterday.
Present at the briefing also were Chief Executive Officer, Bharat Dindyal; his deputy, Ash Deonarine, Board member, Carvil Duncan and Divisional Director (Finance), Loris Nathoo.
GPL may seriously be looking to hike the fuel rate if a barrel of oil goes above US$70, the breakeven point.
The 10 per cent reduction to tariffs would translate to almost $3B annually being foregone, GPL said.
Defending GPL’s decision not to reduce the tariffs further, Brassington said that the decision was influenced by the fact that the entity wanted to be cautious.
He stressed that while GPL’s licence allowed for periodic increases in tariffs, there has not been any for some time, despite high world prices for oil. GPL even had to get Government’s help in the form of subsidies. It is unlikely that GPL will be requiring any this year.
“In the past we have received subsidies from the government. I believe what we are doing here is modest… it is reasonable…it is affordable. It passes on benefits and it doesn’t deprive the company from having a sustainable position, and sufficient cash flows to cover its expenditure.”
He said that with GPL expected to make savings this year on fuel of about US$35M (G$7B), the 10 percent is affordable, as it will leave the company with a little “cushion” if prices go up.
In the last few weeks, in the face of mounting pressure as oil prices dropped almost 50 percent to below US$50 per barrel, Government relented, reducing fuel taxes by 30 per cent. Prices for fuel dropped from over $900 to just under $600 per gallon at the pumps.
But there has been reluctance from operators in the public transportation sector to pass on the benefits and reduce fares.
AUBREY NORTON FRIGHTEN RENEGOTIATION AND RING-FENCING
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