The Guyana Power and Light Inc. (GPL) has not ruled out the application of liquidated damages against a contractor involved in the building of fuel lines and a wharf at its Vreed-en-Hoop facility.
The US$36M Wartsila plant was commissioned Monday by President Donald Ramotar without the critical component of the fuel lines operational.
Chief Executive Officer, Bharat Dindyal, said Wednesday that it may be six weeks before fuel lines become operational allowing boats to dock alongside the wharf.
In the meantime, GPL has been trucking fuel across the Demerara Harbour Bridge from its Kingston location, raising concerns over the additional costs. Almost 20 private trucks are driving across the bridge daily. Because of weight limits, the trucks are forced to fetch just about a quarter of their capacity.
GPL’s Chairman Winston Brassington admitted that GPL is not happy with fuel lines not being in operation because of delays. There is the option of liquidated damages being applied in accordance with the $242M contract signed with BK International, he said.
Last Sunday, Kaieteur News reported on the trucking of fuel across the bridge.
The entire project was delayed by almost two years sending costs up to US$36M. GPL had signed a US$26M contract with Wartsila, a Finnish company that has several engines across the country, since entering the Guyana market in the 1990s.
GPL was responsible for the foundation, fuel lines and wharf.
The GPL officials made it clear that waiting on the completion of the wharf and fuel lines by BK International was not an option. As a matter of fact, one of the three engines that were put down at the West Bank Demerara location was put into operation since in August. The site had to access fuel from somewhere.
The alternative of not putting the new plant into operation meant using the older engines at Versailles and Leonora which run on the more expensive diesel.
Dindyal said that the current contract has clauses for liquidated damages.
The company, which has been criticized for its high losses and costs, admitted Wednesday that cost of trucking fuel is significant.
As a matter of fact, Loris Nathoo, Divisional Director (Finance) of GPL, says that the company is spending about US$1 more per barrel. The power plant requires about 250,000 barrels of Heavy Fuel Oil annually to operate.
Government has hailed the Vreed-en-Hoop plant as a major boost to GPL’s generating capacity. In the inter-connected network of Demerara and Berbice, the company has about 130 megawatts being produced by its engines. The demand is about 110 megawatts.
Another major plus, says the officials, is the fact that Demerara, because of a new power cable link in the Berbice River, has been supplying around 10-12 megawatts of power, stabilizing the systems there. It is much cheaper than Berbice actually generating power.
GPL has been under scrutiny as consumers complain of blackouts and increasing costs. The business community has been calling for cheaper, more reliable power.
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