Jan 13, 2016 News
By Sase Singh
The primary electricity service provider in Guyana, the Guyana Power & Light Inc (GPL) has neither published its 2013 and 2014 annual reports nor has it held its annual general meeting for these years in clear violation of Section 107 of the Companies Act. This is in spite of the fact that this company took over G$8 billion from the Treasury during these two years.
If the Government sector fails to follow the law and good standards of corporate governance why should the private sector? It is imperative that the current Minister of Public Infrastructure discontinues this mode of operation, where he is being seen as abrogating the rights of the shareholders without permission. Please level with the owners of GPL and lay the Annual Reports in the National Assembly.
Corporate governance at GPL and for that matter, any other company, is extremely important since, in an environment of secrets, this corporation has shown in the past that it has the ability to be severely mismanaged and can directly hurt the taxpayers of Guyana in the pocket to the tune of billions of dollars. Therefore, the Guyanese people must be given the opportunity to assess the performance and state of affairs of how their assets are being managed.
The last audited financial statements laid in the National Assembly by the Minister responsible for GPL was the 2012 Report. It was delinquent of former Prime Minister Sam Hinds not to have laid the 2013 Report in National Assembly, but I suspect that was as a result of his government conducting that silly act of prorogation.
But there is no excuse why the current Minister, David Patterson should not have laid the 2013 Report in the House by now. To compound this executive slackness in the electricity sector, the 2015 Auditor General Report clearly stated that the 2014 audited financial statements have been completed and certified since September 30th, 2015. What is the Minister of Public Infrastructure doing with these reports by not releasing them to his fellow parliamentarians and the Public Utilities Commission to study?
While turnover has been relatively stable over the years, the operating cost declined by some 21.3 percent between 2014 and 2015 as a result of the steep decline in fuel cost. But what does not add up is that the fuel cost declined from some G$20 billion to G$10.9 billion between 2014 and 2015, which meant other operating costs actually increased by over a billion dollars.
The answers to these concerns remain a secret although it is ordinary Guyanese who are being called upon to fund these increases in operational cost with some extremely high tariffs. (US$0.32 cents per Kwh in Guyana vs US$0.05 in Suriname).
Are we paying more for GPL’s operation and maintenance contract with Wartsila, a private company from which GPL buys power, in an environment where fuel costs went down by some 50 percent over the last 12 months? Accountability and transparency at GPL remains an essential ingredient if we are going to progress socio-politically. The people have very low confidence in Project GPL; and thus their buy-in is critical if this is going to succeed.
But the good news remains that GPL made a profit in 2015. The consumer might be asking why none of this profit is being passed on to them, but there is a good reason at this current time why this not happening. As a result of the high fuel prices between 2010 and 2014, GPL has all but depleted its equity as a result of consecutive annual net losses.
If it were not for a series of equity injections from the government and absorption of some of the international debts by the Ministry of Finance, GPL would not have been able to pay its bill during these years. Therefore, these 2015 profits are needed for critical infrastructure works in 2016 and to rebuild its equity base for the tough years when fuel prices rise again. Fuel prices will rise again (maybe not in 2016/2017) but I see GPL taking little action in these years to move away from fossil fuel in a material way before 2020. Even if we start Amaila Hydro Project or the Hope Wind Farm Project in 2017, it will take 4-5 years to come on-line into the National Grid. What a lost opportunity for GPL!
GPL has finally turned a profit of around G$3,400 million in 2015 after many years of accumulated losses. Finally, GPL was able to not directly depend on the Treasury for its survival, although it charges one of the highest electricity rates in the Caribbean. Low fuel prices are expected to continue for most of 2016, which means GPL is expected to have another profitable year.
But in light of all of this, GPL has been badly managed for years and continues to be badly managed today. It is expected that members of the Economic Services Commission of the National Assembly have to oppose this incompetence, expose the poor management practice at GPL and gently ask for a more professional leadership team at the company to protect the assets of the people.
Shareholders should not be too happy with the performance of GPL, which definitely has its root in poor governance starting under the previous leadership team and continuing today. To its benefit, under Mr. Brassington/Mr. Dindyal leadership, the company did prepare a 2013-2017 Development and Expansion Plan which does include some good strategies, but it will not be worth the paper it is written on unless it is followed.
One area where it has not been followed is “Technical Line Losses and Commercial Theft of Electricity” which still remains a challenge for the company. In 2015, the combined technical and non-technical loss was reported at 29 percent; one of the highest in the world, when the company promised the Guyanese people that by now it would have been 24 percent which meant pure savings of some G$2 billion which could have been passed on to the consumers.
Even after spending more than G$10,000 million since 2007, constructing so many sub-stations and on programs to curb commercial theft, we are still stuck with such a high rate of electricity losses. Clearly the metering infrastructure has many loopholes that continue to harm the company. I was excited by the information shared with me on how the prepaid meter services have helped to cut commercial theft. I was wondering: why not implement this system countrywide?
GPL has earned the unenviable record of being the worst run Guyanese public company both under the PPPC and the APNU+AFC. Some things never change!
Please share your feedback with me at [email protected]
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