Cabinet, during its meeting last Tuesday, approved a $1.6B contract for the provision of consultancy services for the implementation of a Management Strengthening programme for Guyana Power and Light Incorporated
(GPL). The contract was awarded to Manitoba Hydro International Limited.
This was made known by Minister of State, Joseph Harmon at this week’s Post-Cabinet Press Briefing held at the Ministry of the Presidency.
Harmon explained that the project is part of a European Union (EU) and Inter-American Development Bank (IDB) Power Utility Upgrade Programme (PUUP) which will be rolled out in phases.
Minister within the Ministry of Public Infrastructure, Annette Ferguson, further explained that the first component of the project involves the improvement of capacity building for the executive management of the power company.
The IDB’s Website has indicated that GPL is facing various challenges in trying to provide additional electricity on an efficient and reliable basis, which includes high levels of electricity losses. As Guyana’s energy demand increases, the distribution infrastructure will experience greater stress, and in turn, this will challenge GPL’s management and its ability to manage electricity supply.
The Minister was asked about whether this project will include the hiring of foreign managers. She said that she could not pronounce whether persons overseas will be hired.
She was also asked if there will be any increase in electricity tariffs, to which she said, “the power company does not foresee any increases currently”.
Ferguson added that the second component of the project will focus on the improvement of the company’s loss reduction programme. She noted that currently, loss reduction stands at approximately 29.3 percent, and it is expected that this project will contribute to a reduction in technical losses by about 23.8 percent.
“With these monies being released, we will see a more effective and efficient GPL at the managerial level, and that of the services being provided to the populace in Guyana,” Ferguson said.
Recent reports have indicated that the EU-IDB funded project will also cater for capital works, which include acquiring prepaid smart meters and upgrading the distribution systems and other facilities to improve electricity distribution. Tenders for this component of the projects are currently being reviewed.
There will also be an adequate number of prepaid meters being available by year-end, and the implementation of smart meters.
The use of a more advanced meter, installed to a high standard in a secure manner, has delivered acceptable returns for large consumers. Thus, through PUUP, GPL intends to implement a well-designed social management strategy to be the mechanism which encourages consumers to embrace the project.
Meanwhile, the IDB has indicated that previous experiences in Guyana and other countries in the Latin America and Caribbean region have proven the importance of approaching electricity loss reduction measures in a way that tackles both technical and commercial losses, while highlighting the value of supporting improvements in management practices and operational systems.
The three main components of this loan reflect this approach with the expected results: a sustained trend in overall loss reduction; an improved and accountable management performance against consistent Key Performance Indicators and within minimum international standards; and more modern, efficient, and reliable operational systems in GPL.
This new programme will rehabilitate approximately 830 kilometres of GPL’s distribution network by implementing an integral approach to tackle overall losses while strengthening GPL’s management and technical capabilities.
The total estimated budget is US$64,573,000. The IDB’s financing will consist of up to US$22,500,000 in credit from Ordinary Capital loan resources for a 30-year term, with a 6-year grace period. A second IDB credit will total up to US$15,141,750 Ordinary Capital/Fund for Special Operations “parallel loans” for a 40-year term, with a 40-year grace period. The European Union is expected to contribute €19,375,000 (equivalent to US $26,931,250) through a Project Specific Grant (PSG), which will be administered by the IDB.
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