Jan 22, 2017 News
The Ministry of Public Infrastructure (MPI) has been written to by corporate management of the Guyana Power and Light Inc. (GPL) on a new company that has been established to replace Wartsila.
The letter was reportedly dispatched more than a week ago and would come after announcements that Power Producers and Distribution Inc. (PPDI), a supposedly state-owned entity, has taken over the operations of Demerara Power Company, a local subsidiary of Wartsila that has been maintaining almost 20 engines and selling power to GPL.
Under previous arrangements, GPL would provide the fuel to Wartsila, which in turn maintained the engines and produced power that is then sold to the power company.
The Coalition Government confirmed reports last year by Kaieteur News that it was moving to end the two-decade old maintenance and power production contract with the Finnish company.
It said that a Government-owned company would be created, and this would take over the almost 100 staffers and operations countrywide of Wartsila.
PPDI started operations on January 1st, 2017 but GPL is unsure how to handle the new situation.
There is no power purchase agreement signed as yet and GPL is unsure how much it has to pay the new company, and for what.
Officials familiar with the situation said that GPL’s corporate management raised these concerns in its letter to the Ministry.
GPL’s board is supposed to meet next week and the issue is reportedly bound to be raised, it was disclosed.
There are questions about PPDI itself. According to official records at the registry, the company was formed last month, but has only two officials-—one Director and one Secretary.
The Director is Permanent Secretary of the Ministry of Public Infrastructure, Balraj Balram. The Secretary and Incorporator is Attorney-at-Law Ronald Burch-Smith.
The GPL engines that PPDI would maintain and ensure that they produce power, represent a major part of what GPL uses along the coastland.
Government has been saying that Wartsila, which specializes in manufacturing engines for ships and power companies around the world, has been receiving too much money, putting a strain on the finances of GPL.
Wartsila has not altogether left. It still has a contract to manage a power production operation at the Skeldon Energy Inc., located at the Skeldon estate, East Berbice.
Wartsila has also reportedly been retained to supply parts and few other services to GPL and PPDI.
There were very few details on what PPDI would do as at January 1. Its staffers have not met any representatives from a Board of Directors. The management has remained largely the same. As a matter of fact, on paper, there is no evidence that a Board of Directors exists.
GPL would be paying hundreds of millions annually to PPDI for the management of the engines.
According to official documents filed at the Registry, on December 14, Attorney-at-Law Mark Waldron was engaged in the formation of PPDI, which has its offices at Wight’s Lane, the same offices as the Ministry of Public Infrastructure, where the Permanent Secretary is based. Waldron declared that the company had complied with regulations.
The documents said that the company has 100,000 ordinary shares worth $100 each.
It was stated that there are “no restrictions of share transfer” and that the company can have no fewer than one Director and not more than six.
The company was incorporated on December 14.
According to legal officials, based on the documents filed in the Registry, it indeed seems a strange “formulation” for what was supposed to be a State-owned company.
”The fact that a lawyer is the Incorporator and a Permanent Secretary with little or no experience in producing power are the principals and the shares are in the control of the lawyer is indeed strange. It needs to be explained,” according to a legal official last week.
”If this was supposed to be a State-owned company, why has there been a delay in the issuance of the shares of the company? There are some questions to be answered.”
GPL has been facing a spate of blackouts within the last six months with the company denying it has to do with generation capacity.
Rather, the problems have to do with the aging transmission and distribution infrastructure.
GPL has been under pressure to reduce its technical and commercial losses with almost a third of its power being lost to theft and hardware efficiency problems.
GPL has been spending at least US$70M annually, at current prices, to buy fuel for its engines.
Wartsila’s operations in Guyana were the largest for the Finnish company in the region. They were brought here in the 1990s by former President Cheddi Jagan, with one plant built at Garden of Eden. Several more power plants have been built since then.
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